Stop Notices, Removing Qualifier Classifications and JV Licensing

About the only thing you can count on is things are going to change! That means one thing often leads to another when qualifying multiple licenses. A couple of contractors discover just what ‘adjustments’ may be required and it’s a lesson we all benefit from learning…

Q:  Our company currently has a license that holds a “B” (General Building), “C-10” (Electrical), and the “C-46” (Solar) classifications.  The Responsible Managing Employee (RME) for the “B class has left the company and he submitted a Disassociation Notice to the CSLB.   We aren’t really worried about it because we don’t do any building work.  Our projects all fall under the Solar and Electrical classifications.  If we decide not to replace him for the “B” classification, will the CSLB suspend our license?  Secondly, we also have a Joint Venture (JV) license with another company, so that “B” classification is attached to that license as well.  What will happen to the JV license?

A:  As you may already be aware, once your “B” Qualifier disassociates you have 90 days to replace him.  Since you also have two other classifications on the license to operate with, the CSLB will not suspend the license.  Instead, after the 90-day grace period they will remove the “B” classification from the license.

 

With regards to the Joint Venture license, it’s likely that the CSLB won’t automatically remove the classification from the license.  I would suggest filing an Application to Remove Classification from License which is available on their website, or you can call our office for assistance.

 

Q:  The Responsible Managing Officer (RMO) on our corporate license also has his own personal license that he uses on the side.  He recently informed us that he had an issue with one of his customers that may result in a judgment and possible suspension of his license.  Can this impact our corporate license even though they are unrelated licenses?

 

A:  The “relation” between the two licenses is the fact that both licenses have the same qualifying individual, so yes, if your RMO has an unsatisfied/unresolved claim, judgment, or suspension associated with their personal license, it will likely impact all of the licenses that they’re associated with. This goes back to a recent column that detailed the tight interaction of databases among many State agencies, Counties and Cities in CA. When one knows of an issue, they all do.

 

 

At the October 21st Contractors State License Board meeting, the Enforcement committee discussed the recent approval of using the CSLB’s website to disclose disciplinary actions taken by partner agencies.  To get the program started, CSLB has identified two partner agencies: the Department of Industrial Relations’ Division of Labor Standards Enforcement (DLSE) and the California Department of Transportation (Caltrans).  DLSE issues Civil Wage and Penalty Assessments (CWPAs) for Labor Code violations on public works projects, and Caltrans issues Stop Notices for non-payment of monies due for project issues that include project labor, services, equipment or materials.

As outlined in the Board meeting packet, the “CSLB will only disclose CWPAs that involve significant amounts of money owed to employees and Stop Notices that 1) result in a civil court filing or 2) are issued to contractors with a significant history of Stop Notices”.

Disassociation & Partnerships, Reciprocity and Multiple Applications

While the range of experience you bring to the table determines what you might do as a contractor everything starts with getting your first license. Once you have a license in any state you can likely get one elsewhere, as a Nevada contractor hopes to. A corporate partnership learns that when it comes to their license it’s ‘one for all, all for one’…

Q:  I’m going to be applying for my General Building license and I want to also get my electrical and plumbing license so I can act as a subcontractor when I’m first starting out.  Can I apply and take the exams for all three licenses at the same time?  Will I have just one license number or three separate numbers?

A: You can only apply for one classification at a time.  Once the license is issued, you can then apply to add the electrical and plumbing classifications to your license.  Keep in mind that you will be required to show at least four years of full time work experience in each trade that you are applying for.  You can apply for three separate licenses if you wish however it is more common to have all of your classifications on one license.

Capitol Services is familiar with ‘reciprocity’ between states and can help anyone if you’d like assistance with the licensing process in AZ, CA or NV.

Q:  You helped me get my Nevada license years ago and I’d like to be able to do work in California too.  I have had my Nevada license for just over five years so I’m pretty sure I’ll qualify for reciprocity.  But, my concern is that when I applied for my Nevada license I had to provide them with a financial statement and show that I had some financial strength.  Last year wasn’t a good one for me financially so I’m wondering if California has the same requirement.  Will I need to have a CPA prepare a financial statement and show that I have a positive operating balance?

 

A:  The CSLB doesn’t require that you supply them with a financial statement in order to obtain a new license, however B&P Code Section 7067.5 requires that all new businesses applying for a license have an operating capital in excess of $2500.  You will be required to answer a question on the license application stating that your current operating capital exceeds that minimum amount.

 

Q: We currently have a General Partnership license made up of three corporations.  One of the entities was bought out last year and we neglected to inform the CSLB.  We recently received our renewal notice and it requires the signature of an individual from each of the corporate entities.   I looked on the CSLB’s website and was able to find a Disassociation Notice; is this what we fill out in order to remove that partner from that license, or how do we handle the renewal?

A:  Unfortunately it’s not going to be as easy as completing a disassociation notice.  When a General Partner “leaves” the license for any reason, the license is cancelled.  Therefore, you will need to apply for a new contractor’s license reflecting the newly structured entity.  This new Partnership will receive a new license number.  The downside of having a Partnership license is that it’s not as easy to make structural changes with the CSLB without need for a new license.

 

Hazardous Substances, Qualifiers & Bankruptcy

With our federal government gridlocked and default pending, you may begin to understand how the Romans felt while Rome burned and Nero fiddled. None of that is changing how you obtain your contractor’s license or any of the rules already written in black and white…

Q:  Is the government shut down going to effect how quickly I get my license?

A:  From what we’ve seen so far the government shut down has not had any effect on the amount of time it takes to obtain a Contractor’s license in California.  The CSLB is a State agency, not a Federal agency so I don’t believe it’s been impacted at this point.

 

Q:  One of our Officers is currently the Responsible Managing Officer (RMO) for the corporation and is disassociating from the license. Thus, another Officer wants to become the RMO for the corporation. The replacement, that will be the new RMO, has been an Officer for the company the past 8 years.  Beyond that he has over 25 years experience in the construction industry.  In your opinion do you think the CSLB will waive the exams for him?

A:  It is definitely a possibility!  This waiver would fall under B&P Code section 7065.1(c), which states that the CSLB may waive the exams if the qualifying individual is an employee of the corporation and has worked in a supervisory capacity for five out of the last seven years.

There are a couple other conditions in order to be granted this waiver such as the corporation must have been active and in good standing for five of the last seven years, and he will not qualify if the corporation has requested a waiver under this subdivision within the last year.

Q:  I am an attorney and you have helped me many times with CSLB issues.  I have a client that is a contractor. He intends to file bankruptcy with respect to his personal debts. Do you know if a personal bankruptcy filing will have any adverse effect on his corporation’s contractor license?

The bankruptcy alone shouldn’t have any adverse effects on his current contractor’s license, however it will impact the amount he will have to pay to renew his bond when the time comes.  As you are probably aware, the premium amount is based on credit. Consulting with an attorney is always wise when making decisions of this nature.

Q:  We have an individual who has an “A” and a “B” license with a Hazardous Substance Removal Certification. We also have both General licenses ourselves. We are contemplating adding him as a Responsible Managing Employee (RME) in order to add the Hazardous Substance Removal Certification to our license allowing us to be able to bid on more projects. He would be on an hourly basis when we are only doing Hazardous Substance Removal Certification. He would not be employed full time just when we are doing projects that require his certification. Is adding him as a RME the correct way to go about this? I don’t think he would have a problem “shelving” his ‘A’ and ‘B’ license if that’s required.

A:  An RME is required to be a full time employee of the company working at least 32 hours per week or 80% of the total operating hours, whichever is less.  Additionally, if he becomes the RME on your license he would be required to inactivate his own license.

Since you don’t intend on him becoming a full-time employee, another option is to “promote” him to RMO (Responsible Managing Officer).  Officers do not have any requirement to work a certain amount of the company’s operating hours.

 

Suspension, Retroactive License Renewal & What “B” Contractors Can Do

We help an attorney better understand how interpretation of contractor’s rules may yield a ‘general’ exception in one regulation.  In the ‘good old days’ one branch of government might not always share the same information. In this century technology has brought instant access and a uniformity that keeps all the agencies that contractor’s work with on ‘the same page’…

 

Q: My client hired a “B” contractor to remodel a 2-story home plus add a room addition.  He hired various subcontractors but handled the exterior framing and drywall himself.  I read online that “a general building contractor shall not take a prime contract for any project involving trades other than framing or carpentry unless the prime contract requires at least two unrelated building trades or crafts other than framing or carpentry”.  This is a bit confusing but it appears that this contractor should have performed one more trade to be legal.  Am I missing something?  Did he do anything wrong?

 

A:  In the case you describe, this contractor appears to have acted properly within the definition of Section 7057.  By taking a contract that “involves two or more unrelated trades”, he has the option of subcontracting all aspects of the job; self-performing a portion of the project; or handling the entire contract himself.  This is based on the assumption, or interpretation, that a typical remodel/room addition would certainly involve at least a dozen trades or crafts.

 

The General Builder definition can be a bit confusing and may seem contradictory at times especially when it comes to the “B” being able to take a prime or subcontract for framing or carpentry only.  This would appear to only be one trade; however, “B” licensees are allowed this one exemption from the “two or more trade” requirement if handling rough framing (“C-5”) or finish carpentry (“C-6”).

 

Q:  Our license is due to expire at the end of the month.  We just recently discovered that our corporation is suspended with the Secretary of State.  Will we still be able to renew our contractor’s license?  If we can’t get the license renewed by the expiration date, is there any way we can request a retroactive renewal once the company is back in good standing?  And lastly, is this something that you can help us with?

A:   After inquiring at the Secretary of State (SOS), I was able to find out that your corporation is suspended due to an issue with the Franchise Tax Board (FTB).  The majority of the time this has to do with failure to file/pay taxes on time.

The CSLB will not renew your contractor’s license while your corporation is suspended with the Secretary of State.  You will need to resolve the suspension in order to renew the license.

In rare instances the CSLB will renew a license retroactively and primarily the reason for doing so is if the renewal did not get processed based on an error by the CSLB.  According to B&P Code Section 7141.5, the registrar may grant a retroactive renewal of a license if the licensee files a petition within 90-days of the renewal date and show that “the failure to renew was due to circumstances beyond the control of the licensee.”

If you need assistance with this process we would be ready to help you or anyone who may find themselves in the same fix.