My License Expired, RME Qualifying, Mergers & Reciprocity States

There was a time when LLC’s couldn’t be licensed in California. That changed in 2012, but many contracting rules and regulations put on paper for decades have stood the test of time unchanged. With a nod to the CSLB’s recent look at the roots of contracting law in California, we revisit some contractor Q&A from previous years that show what goes then still goes now. This from 2002 gets us started on this ‘blast from the past’…

 

Q.  I sent my renewal in weeks ago and it shows on the Internet that my license has expired.  Can I still legally work and pull permits?

A.  NO, if your license is expired, you technically are not able to contract. Once the CSLB processes your application, it will show as “active” and in good standing.

 

Q. Can our RME qualify two companies at the same time?

A. The CSLB will only allow a Responsible Managing Employee (RME) to qualify one license at a time.  There are very few exceptions.  Please contact our office if you’d like more information.

 

Q. Our firm was just purchased by an out-of-state corporation. With a pending merger must we apply for a new contractor’s license?

A. Yes, you will certainly need to apply for a new license.  Once your company has merged out, it can no longer legally conduct business.

 

Q. Can I renew my CA contractors’ license even though it expired 4 years ago?

A.  Yes.  The CSLB will allow a license to be renewed if the expiration date is less than 5 years old.

 

Q.  What States have reciprocal licensing agreements with California?

A.  Nevada, Arizona and Utah reciprocate with California.  This reciprocity only applies to the trade exam and certain classifications.  All fees and other paperwork must be completed in each individual state.

 

Q. : A recent column mentioned the term “lower” license number.  What is meant by lower?

A.:  The CSLB issues license numbers in order.  A contractor applying today will be issued a license in the #760,000 range. The CSLB issued license #500,000 sometime in 1986.  License #300,000 was issued about 25 years ago.  These “lower” (i.e. older) numbers tell people that a contractor has been in business for many years.  For example, a partnership formed in 1980, which recently incorporated, will lose their older number and will be issued a much “higher” (i.e newer) license number.  If a prospective customer knows nothing about the contractor except their license number, they may not realize that this same company has been in business for 20 years.

NV Trade Exams, Water Damage Licensing & “C-39”

Water damage sucks, but is a contractor’s license required to just vacuum it up?

Our friends ‘in high places’ will appreciate another question and the answer that is ‘on the house’ as we also clarify rules on Nevada licensing in this edition…

Q: My client is a water damage restoration company.  They only do extraction and drying (no alteration or repair work at all) specifically to avoid having to have a contractor’s license.  Do you have any authority that explains that water damage restoration companies are not required to have a contractor’s license in CA under B&P code 7026?

 

A:  Thank you for contacting Capitol Services.  There is nothing in B & P Code 7026 that directly relates to water damage restoration companies.  However, if your client is simply removing water and drying and not doing any further repairs or alterations, then a contractor’s license is not required.  Some water restoration companies not only remove the water but they also then repair any damage (swelling, warping of floors, removal of mold or other hazardous materials, etc) as a result of the water damage, and in that case a contractor’s license would be required.

 

B & P Code section 7026 defines “contractor” as “any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building…”.  This would not apply to a company that is simply using equipment to remove water from a structure and then dry the area.

 

Q:  I have a roofing project that also includes mechanical work, electrical work (associated with the mechanical improvements), and structural work (also associated with the mechanical improvements).  The mechanical costs are over 50% of the total project (when you take into account the “associated improvements”).  At what point does this move from a “C-39” Roofing to a “B” General Building contractor?  Is there a dollar amount cut off?

 

A:  There is no dollar amount cut off, however if the majority of the project is mechanical work including electrical and structural then it would be more suited for a “B” contractor.  A roofing contractor can only perform work that is incidental and supplemental to the overall roofing project.  Basically, doing work in other classifications is only acceptable if it’s essential to accomplish the roofing project. However, the work in other classifications needs to be a small percentage of the overall roofing project. Again, there is no specified amount written in the statutes but in my opinion it sounds as if the mechanical work you’ve described may be beyond your scope.

Q:  You recently helped me obtain my Nevada General contractor’s license

(“B-2”).  I would like to have a “C-3” Carpentry license and also a “C-4” Painting license.  Would I be required to take the trade exams?  Also, do I need to take the Business/Management again?

A:  Thank you for contacting us again.  You would not have to take any exams!  You already took the Business exam to obtain your “B-2” so that would not be required.  Secondly, carpentry and painting are considered to be trades that are included in the “B-2” classification, and therefore you are considered pre-qualified for those classifications.  This may be news to Nevada licensees, if so let us know how we can help you.

 

Contractor Work Experience Information, Vehicle Signage & NV SSN Requirment

LLC’s, SSN’s and INS, oh my! We put a ‘finger’ on some issues with Nevada licensing to get us started on our contractor Q&A. Another contractor needs to avoid digging himself into a hole he can’t get out of, while we have a ‘yes’ and a ‘no’ for two others…

Q:  You helped our company with a CA license and now we need your assistance with obtaining a Contractor’s License in Nevada.  The entity is a General Partnership with one Partner being a corporation and the other is a LLC, or Limited Liability Company.  I understand that we will need to have an Officer/Member/Manager sign on behalf of each entity. The issue we had in California is that all individuals listed on the license application were required to have a US Social Security number (SSN).  The personnel that make up each of these entities are not US citizens and they don’t have SSN’s.  Is this going to be an issue in Nevada?  And does Nevada require that the individuals come to Nevada to get fingerprinted?

 

A:  First of all, thank you for contacting us again.  Nevada does not require that all personnel have US Social Security numbers.  The Qualifying Individual on the other hand will need to have a SSN or INS card for proof that he/she can work in Nevada.  To answer your second question, they don’t need to travel to Nevada to get fingerprinted.  They can do the fingerprinting on the fingerprint cards provided by the fingerprinting agency, or they can request the forms from the NV Board.

 

Q:  I am a “C-27” Landscaping contractor and I have a customer who wants me to re-design and landscape the entire background; including new grass, rock gardens, sprinkler and drip system, a waterfall, etc.  As part of the project my customer wants me to construct an in-ground spa next to their existing pool.  Am I allowed to do that since it’s part of the overall landscape project?

 

A:  No, you cannot self perform the spa construction.  A landscaping contractor may enter in to a contract for the construction of a spa if it’s part of a landscaping project, however you are required to subcontract that portion out to a properly licensed “C-53” Swimming Pool contractor.

 

Q:  I am a “C-36” Plumbing contractor and I have several work trucks that my employees use that have our business name and license number on the side.  One of my employees recently said that on a job site he was told by another plumbing contractor that, “we are required to have our address on our trucks” as well.  Is that accurate?

 

A:  7029.5 of the CA Contractors License Law states that every Plumbing contractor (C36), Sign contractor (C45), and Well-drilling (C57) contractor is required to “have displayed on each side of each motor vehicle used in his or her business…his or her name, permanent business address, and contractor’s license number”, so yes, what your employee was told is in fact accurate.

Q:  We have pending litigation against a contractor who we are fairly certain “fibbed” on his work experience in order to obtain his license.  We would like to get a copy of his Certification of Work Experience that he originally submitted.  Is that something that you can help with?

A:  No, while we can assist with obtaining copies of a Contractor’s entire file, the Certification of Work Experience form is considered personal and confidential so the only way to get a copy of that is to Subpoena it.  Even then, certain entries would be redacted from the form such as the third person information.

SWIFT Justice, Stings and Consumer HVAC Alert

Like everything else, illegal contractors have become ‘hi-tech’ in their pursuit of unlicensed work. Consumers looking for deals online may find sorting the ‘good’ guys from among the unlicensed criminals will take more than a quick ‘search.’ While consumers may get a low price, the people they bring into their homes may not be worth the cost…

 

According to the CSLB, nearly 100 people may face criminal charges after being caught in 14 simultaneous statewide undercover sting operations conducted in mid-July.  Among those arrested during the Contractor’s Board “Summer California Blitz” were 11 repeat offenders, four sex offenders, four suspects with active arrest warrants, four suspects on probation, two former CSLB licensees, and a woman who received widespread media attention last year as a so-called “Sweetheart Swindler.”

 

According to CSLB Registrar Steve Sands, “It’s particularly disturbing how many of the suspects we targeted turned out to be convicted criminals, many with a history of violent crimes and drugs”.

 

Investigators from Board’s Statewide Investigative Fraud Team (SWIFT) partnered with a variety of local law enforcement agencies to conduct the operations at homes in Apple Valley (San Bernardino County), Artesia (Los Angeles County), Atascadero (San Luis Obispo County), Bakersfield (Kern County), Corona (Riverside County), Los Banos (Merced County), Rocklin (Placer County), and South Lake Tahoe (El Dorado County).

 

The SWIFT program is active year-round and has stopped a number of illegal operators looking to skirt the law.  Properly licensed contractors are adversely impacted because these same unlicensed individuals likely do not pay employment taxes, carry no Worker’s Comp insurance and give the construction industry a bad rap.

 

The CSLB also stated most of those caught this week were identified through “illegal ads they posted on craigslist.org”.  Blitz totals may increase as some suspects are expected to provide their bids to undercover investigators via email or fax at a later date.

 

Also, The CSLB recently released a consumer alert to warn homeowners about deceptive home improvement offers, particularly in relation to the HVAC industry.    Recently there have been a significant number of complaints with regards to contractors using illegal tactics to up-sell unneeded equipment and services.  “Many of the complaints CSLB is receiving are from older adults who are falling victim to unscrupulous operators who make promises of low-cost equipment services over the phone, only to have onsite technicians make false statements that persuade them to increase their purchase.”

The CSLB is taking action to put a stop to these dishonest individuals by hosting conferences and educational HVAC workshops to remind contractors about California’s service and repair contract laws and requirements.  They have also partnered with local District Attorneys, the Better Business Bureau, and HVAC industry leaders to identify the individuals who are damaging their reputation.

CSLB asks that homeowners be wary about low cost home improvement offers that may not be what they seem.  Property owners should always ask for a license number, check the number on the CSLB’s website to make sure the license is in good standing, get a second opinion from a different licensed contractor, and talk to your utility company to verify the accuracy of the costs of the offer.

DIR on Public Works, Renting Qualifiers & CSLB Complaints

While you can ‘rent’ almost any form of construction equipment, that convenience does not extend to contractor’s licenses. A new CSLB enforcement effort is underway in determining who is ‘buying’ into qualifying licenses. Who can and can’t bid on public works is now being sorted out with a new online effort…

 

Q: I am an attorney and I have a client with a competitor who seems to be “renting” a Responsible Managing Officer (RMO). This individual is neither a legitimate Officer, nor is he involved with this company.  This person appears to be an “independent contractor” and is also listed on another corporation’s license as an RMO (I’m going to go out on a limb and take the assumption that he is not involved with this corporation either).

 

As you may know, B&P Code Section 7068.1(d) requires contractors who are on multiple licenses to submit “detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations.”  Can you obtain a copy of what was submitted with regards to the RMO’s claims of supervision and control of the construction operations?

 

A:  I looked up the license in question and it was issued back in 2001.  The CSLB has only recently been getting tough on RMO abuses, so it is unlikely that anything would have been submitted to describe the individual’s duties with regards to supervision and control of the company’s operations.

However, according to the CSLB’s Summer 2014 Newsletter, there has been a significant rise in complaints against license Qualifiers “suspected of acting as paid figureheads for a company, but exercise little to no control over its operations.”  The CSLB has put a Task Force in place with the specific duty of watching for new applicants that apply for a waiver who are seeking to rent their qualification for a fee.

Also explained in the newsletter, a new law took effect January 2014 that is an addition to the Code Section you mentioned (7068.1) that “now authorizes the CSLB to discipline a Qualifier, and the licensed entity they are qualifying, when the Qualifier is not actively involved in the construction activities of the license they are representing.  In addition to administrative penalties, the individual falsely serving as a Qualifier on the license can be charged with a misdemeanor and be sentenced to serve up to six months in jail, and be required to pay a fine from $3000 – $5000, or both, if convicted.”

 

I might suggest filing a complaint with the CSLB against the licensee.  Since the Enforcement Unit has established a Task Force to specifically investigate these particular complaints, they will likely be right on top of it.  You can go to the CSLB’s website at www.cslb.ca.gov for more information on the complaint process.

 

Attention Public Works Contractors:  A new online application system is available for those that must be registered with the Department of Industrial Relations (DIR) to verify that they are eligible to bid on California public works projects.  With the new online system, public works contractors can create an account and complete the required forms.  The new online system also allows agencies that oversee a public works project to search a database of all qualified contractors.  For more information you can visit the DIR’s website at dir.ca.gov

 

DUI Conviction, Disassociation Gap & AZ Reciprocity

Some things you can do for yourself, others require assistance and some just seem impossible, as one CA contractor has learned in seeking a license in AZ.  With real ‘conviction’ in his plea, another contractor seeks to replace his RME, without losing the license…

Q:  I’m in the process of putting my application together to obtain an Arizona Contractor’s License.  I’m applying for reciprocity because I have been licensed in California since 1984.  The instructions for reciprocity ask for a copy of the passing test results.  I do not still have my test records from 1984.  Is there a way that you would be able to assist me with obtaining a copy of my test results from the CSLB?

 

A:  As you are finding, the Arizona Registrar of Contractors (ROC) has new requirements as of July 1, 2014 for requesting reciprocity.  While we can obtain license verifications, license histories, and copies of CSLB files, the CSLB will not release copies of test results.  I spoke with someone in the CSLB’s records unit and they suggested that you send them something stating that Arizona needs proof of your passing test results in order to qualify for reciprocity, and they will provide you with a response that the exam was passed.  It would be on CSLB letterhead as well so hopefully that should be sufficient.

 

The Arizona ROC also requires a license history in order to qualify for reciprocity so let me know if you’d like us to obtain that for you.

 

Q:  I obtained my Sole Owner license back in 2003 and I used a Responsible Managing Employee (RME) because I didn’t have the required experience.  I do now and I’d like to replace my RME on the license.  I’m nervous to do this though because back in 2007 I had a DUI and I didn’t notify the CSLB.  I was told that any time you have a conviction you are required to notify the CSLB.  I am afraid that if I apply now it will raise a red flag and they will pull my license for failure to notify them.  Any advice you have would be greatly appreciated.

A:  The CSLB doesn’t concern itself much with just one DUI.  I would recommend applying to replace your RME, answering “yes” to the question #11 regarding convictions, and providing a disclosure statement detailing the conviction.  If you do this it is highly unlikely that the CSLB would not approve you as the new Qualifier based on one DUI from 2007.  Unless a conviction is something that the CSLB determines to be very serious or substantially related to the contracting business, it seldom affects your contractor’s license.

In a recent column, I responded to a contractor who was concerned that his license showed — on the CSLB web site — an approximately one month gap between the disassociation of the old qualifier and qualification of the new one. To clarify, as explained, since the license remains in good standing for 90-days once a Qualifier leaves the license this gap does not exist.  To prove to the Prime Contractor — which is withholding payment — there is no official Suspension, the contractor may want to secure a Verified License History from the CSLB.

Corporate License Transfers, Disassociation, Bonds & Adding to Inactive Licenses

Like holidays we get good feelings about and enjoy coming back on the calendar, it’s always a pleasure to hear from a contractor we’ve helped before. Especially when we can offer good news in response to the question. Another contractor wants to “C” about adding some class to his Inactive number, but first we dispel a mistaken notion about ‘handyman licensing’…

Q:  My license is currently suspended because my Bond expired.  I attempted to renew it but the bonding company wants close to $1000 to renew it for one more year!  I have no complaints or claims filed on my bond so I don’t understand why the premium is so high.  Can I get just a Handyman license since most of my projects have been small lately?

A:  Just FYI,  even when there are no claims/judgments against the bond, the cost of the bond is determined based on your credit.  I have to tell you there is no such thing as a Handyman license.  You mentioned that most of your projects are small; if they are under $500 (including time and materials) you can do them without a Contractor’s License.

 

You may also consider shopping around for a Bond.  Perhaps you might find one less expensive or even one that allows you to make payments.

 Q:  Last year you helped us with the license holder move between two of our Qualifying individuals. Our license dates show a gap between March 15, 2013 and April 11, 2013 and one of our Prime Contractors is, we believe mistakenly, denying payment of work performed during this period. I do not recall a gap during the transition. Can you help me understand the license rules when you have a Disassociation and Reinstatement? Please advise.

A: Once a Qualifier disassociates from a license, you have 90 days to replace them. The license still remains Active and in good standing during that 90 day period. So unless there were other circumstances associated with the license you have not shared, it’s not an issue to have no Qualifying individual for that month of time. The license stands.

 

Q:  I want to add some of the “C” classifications to my license but it’s currently Inactive. Do I need to re-activate the license first before I can add the classifications?

 

A:  No, as long as the status of license is “Inactive” and not “Expired” you can add classifications to the license. Let us know if we can help speed up the process.

Q:  I had called your company a few months ago regarding my GC license that is expired.  I am ready to get my license back now but it’s currently under my former corporation.  I formed a new corporation and I want to reassign this license to my newly registered California entity.  What is the process to accomplish this?

A:  A license number cannot be transferred from one corporation to another.  You will be required to obtain a new license number.  Assuming it has not been over 5 years since your previous license expired, no exams would be required.

 

Qualifying More Licenses, “D-51” & NV Licensing

Our first contractor is fishing for an answer to unexpected and unnoticed changes in life and law, while our second helps us in ‘opening a can of worms’ with his potential action in Nevada. Finally, our last contractor finds satisfaction in the answer we serve up…

Q:  We have a “C-61”/”D-51” contractor’s license that we’ve held since 1989.  My partner recently passed away and he was the Qualifier on the license.  I’d like to add myself as the new Responsible Managing Officer (RMO), but I have a couple questions.  I noticed that there is no longer a “D-51” classification.  It says they eliminated that classification and it now says “under relevant class”.  Does that mean that we will need to change the classification on our license?  Secondly, will I be required to take the exams?

 

A:  CA licensees who already hold the “C-61”/”D-51” can keep it, even if you change your Qualifying individual.  The “D-51” classification is no longer available for new applicants; “under relevant class” is referring to applying for the classification in relation to what you are waterproofing, ie: roofing, painting, etc.

The “C-61” classification does not have trade exams, and since you have been listed as an Officer on the license for well over 5 years, you can request to waive the law exam.  Be aware that it’s not a guarantee, but the request will likely be granted.

Q:  Your company helped us obtain a Nevada license a few years ago for a large project that we are just about finished with.  Our license is up for renewal, but we only needed a license for this one job and we don’t intend to use it anymore.  What are the ramifications of letting the license expire?  And if our project is not completely finished, can we still finish work already in progress with an expired license?

 

A:  By letting your license expire you can no longer do any contracting work in the State of Nevada.  You cannot finish work already in progress or you would be at risk of being cited for performing contracting work without a license. This is a very serious risk.

Q:  I am an RMO for three of our companies that have active licenses. I also have an Inactive Sole Owner license.  It has always been my understanding that there is a rule that an individual can only be on up to three active licenses at the same time.  But my buddy who is also a contractor with several different companies, is the Qualifier on two corporation licenses, just recently Qualified his new Limited Liability Company (LLC) license, AND he has an active Sole Owner license.  How did he get away with four licenses?

A:  The rule of three licenses applies to corporation/LLC/partnership licenses.  Basically, Sole Owner licenses don’t count!  As long as one of the licenses is a Sole Owner license, you are technically allowed to Qualify four.  So if you aren’t busy enough with your three company licenses and you’d like to do some additional work on the side, go ahead and re-activate that Sole Owner number!