Exam Waivers, General “B”, “D-41, “D-63” & “C-61” Licensing

A Sunshine State contractor has a Golden State dream that is a coast-to-coast wakeup call on waivers.  First, a General contractor with another dream wants advice on how to obtain specialty licenses for his children’s future…

Q:  I hold a General Building license.  I know that I can handle most trades with the “B” but would like to do some specialty work by itself.  What I’m thinking about is getting a license to install decks and another to do construction cleanup.  In both instances, my goal is help my kids start up a contracting business and thought this would be a good place.  Will I need to take a test?  What are your thoughts?

A:  Thank you for your email.  You’re correct that a “B” can “handle most trades” – as long as they are a part of an overall General Building project.  If you want to perform only one trade or craft, a specialty license would generally be required.

Both Specialties trades you mentioned fall under the “C-61” (Limited Specialty) classification.  By definition, the CSLB has divided these into “D” subcategories for administrative tracking (there are currently 30 such categories). The definitions for the “D” subcategories were developed by staff and approved by the Board as a matter of policy.

You could apply for the “D-41” (Siding and Decking) and “D-63” (Construction cleanup) license with no further testing.  Since the “C-61” class does not have a trade exam, all you would need to show is 4 or more years of full-time experience in each of these trades.  If you’ve been performing or supervising decking and construction cleanup under your General license you should have little problem in quickly securing these additions.

 

As for the second half of your question, if your goal is to start a new contracting business, you’ll need to apply for a new contractor’s license.  This new entity can be a corporation, LLC or partnership.  You could also put your kids into business as “Sole Owners” but this would require that you inactivate your existing license.  As for the type of business you decide on, I would suggest consulting with an attorney or tax professional.  If you have any additional questions on this or any other licensing matter, please call me at 866-443-0657.  I wish you the best of luck with this venture.

Q:  I am a licensed General Contractor in Florida and I qualify my own business. I’ve had the license for 6 months. I have a 4-year BS degree in Construction Management and over 10 years of construction experience.  Would I qualify for being exempt from the exam in California?

A:  Even with your extensive construction experience and education you will still be required to take the law and trade exams in order to obtain your contractor’s license in California.  There are only a few instances where an individual can qualify for a waiver of the exams and if you’d like to discuss those please feel free to call me.

 

Working for Cash, Application Credit & Changing Officers

Cash ‘under the table’ won’t be a benefit for anyone working in that scenario, whether you are the ‘employee’ or the contractor breaking the law. While most questions have a yes or no, in some cases the answer I give you depends on whether you are ‘domestic’ or ‘foreign’…

Q:  I worked for a licensed contractor for over five years under the table.  I hate to admit that we had this agreement for him to avoid paying Worker’s Compensation.  I recently applied to get my own General Building license.  The contractor I worked for would not sign off on my work experience in fear of getting in trouble for his poor business practices.  The CSLB is requesting W2’s, check stubs, contracts, etc.  Obviously I cannot provide W-2’s or paycheck stubs and I don’t have access to contracts and permits.  Is there anything I can do?

A:  When you apply to obtain a license for a “critical classification”, which includes the General Building classification, and you do not have verifiable experience the CSLB will request further documentation such as the items you stated.  If you cannot provide evidence of your experience there is nothing else you can do but withdraw your application and re-apply at a later date when you have proof of work experience.
There was a time when that was different and a signature of anyone who had knowledge of your experience was all you needed to get licensed.  Those days are gone and the CSLB has been much more diligent about verifying work experience for applicants applying for a critical classification.

Q:  How do I change the Officers on my license?  Can I just do it at the Board level or do I need to it at the State level through the Secretary of State?

A:  It depends. Generally you want the personnel you have listed with the Secretary of State and the CSLB to match.  However that’s not always the case.  The Secretary of State requires that you list President, Secretary, and Treasurer.  Many companies have one or many Vice Presidents listed on the contractor’s license without being listed with the Secretary of State, which is permissible.  As another example, the CSLB only requires foreign corporations to list their President.  So many companies only have a President listed on the license but they have a Secretary and a Treasurer listed with the Secretary of State.

So to better answer your question I would need to know first whether you are a domestic or foreign corporation, and second, which Officer(s) changed.

Regardless, if you have an Officer that is no longer with the company you will definitely want to make both agencies aware.  This can be done at the CSLB level with a Disassociation Notice, and at the Secretary of State level with a Statement of Information.  Any time you are disassociating someone from the CSLB you need be sure that you have a current Officer always on record for signing authority on the license.

CSLB Sunset Review, Veteran’s Assistance, Worker’s Comp & Compliance Update

Will the California State Contractor’s Board go ‘dark’ next year?  It all depends on the Legislature’s decision based on the ‘highlights’ of accomplishments for contractors and consumers in California…

In November, the CSLB delivered its “Sunset Review Report” to the State Legislature and Governor.  Most Consumer Boards and Commissions have a “sunset” date (currently January 1, 2016 for the CSLB), whereby they would cease to exist (i.e. sunset) unless the State Legislature extends their date of operation.

As part of this process, these Boards go through a periodic review and produce a comprehensive report on where they’ve been, where they are currently and where they hope to be (or anticipate) going in the upcoming years.  Basically, it is a report justifying the continuation of the Contractors Board.

 

Among the Board’s many stated accomplishments highlighted within this 346 page report are:

1) Veterans Assistance where the CSLB offers a Veterans Application Assistance Program for troops transitioning from military service to civilian employment.

 

2) Sponsored legislation requiring Workers’ Compensation Recertification to help prevent under-reporting of employees when securing workers’ compensation insurance.  An active licensee with an exemption from workers’ compensation insurance must either recertify the exemption or provide a current and valid Certificate of Insurance at the time of renewal.

 

3) Established a Complaint Disclosure Program with Partnering Government Agencies whereby the CSLB will disclose on its website any disciplinary action against contractors by partner state agencies.

 

4) Implemented an Underground Economy Program to take timely disciplinary action against contractors found during the mediation process to be participating in the underground economy.

 

5) To increase Building Permit Compliance, the CSLB developed a complaint form with input from building officials, industry groups, and other partner agencies so anyone with knowledge of a construction site that lacks a building permit can use the online form to file a complaint with board.

 

6) The CSLB’s Statewide Investigative Fraud Team (SWIFT) began partnering with state and local government agencies in 19 different counties as part of its District Attorney Office Partnership for License and WC Violations.  For those contractors playing by the rules, these programs should be welcome.

The CSLB report also urges the Legislature and Administration to “support efforts to modernize and streamline laws and regulations related to contracting in California to help ease complicated requirements for contractors and confusing language that prevents consumers from making informed choices.”  This includes a statement regarding how the application of B&P Code Section 7031(b) by the legal profession (including the courts) is overly broad.  As an example, “If there is a break in licensure, even for one day, attorneys representing public agencies, prime contractors, commercial and/or industrial project owners, and consumers use the lapse as the basis to seek recovery of all compensation paid on a project, as though the contractor had been “unlicensed” for the entire term of the contract”. The same “unlicensed” interpretation is being applied to cases where a contractor has maintained a valid license in a classification for which the license was issued but, during the course of construction, performed a small amount of work that may later be deemed to have been “out-of-class”.  Significantly, the terms “duly licensed” (as used in subdivision (a) and “unlicensed” (as used in subdivision (b) are not defined in the Contractors’ State License Law, but are decisive terms under Section 7031.

The Report goes on to say, the application of this statute in this manner may facilitate “unjust enrichment” to public agencies, prime contractors, and/or commercial/industrial project owners, which is an “unacceptable outcome within the spirit of the law.”

SWIFT Justice, Underground Economy, Temporary Licenses & Unlicensed Advertising Rule

To keep consumers safe and squash unfair competition for contractors are two of the missions of the CSLB’s Enforcement Unit, better known as SWIFT.

These agents scour the State of California looking for unlicensed individuals ‘acting’ as contractors to keep the underground economy in check while leveling the playing field for legitimate licensed contractors. As you will discover, some of those ‘playing contractors’ in this drama are often also criminals…

Q:  I recently purchased a painting franchise and I applied for a contractor’s license but haven’t completed the application process yet.  What will happen if I contract without a license?  Is there some sort of temporary license I can be issued while the application is being reviewed?

A:  No, the CSLB does not issue temporary licenses.  As you may already be aware, it is illegal for an unlicensed contractor to contract for work over $500 for labor and materials.  The CSLB has an investigative team that frequently conducts stings and sweeps to apprehend unlicensed contractors and it can result in a misdemeanor, jail time, and fines.  Repeat offenders can face even harsher penalties.

Additionally, contractors performing work without a license have no legal right to enforce contracts, so consumers are not legally required to pay contractors operating illegally.

So-called ‘handy’ people are helpful, but when time and materials exceed $500 for the job a license is required to do the work. A recent CSLB sting in the Sacramento area discovered that among the suspects cited by SWIFT agents for unlicensed activity was a man convicted of rape. That conviction makes him ineligible for a license, but he was still contracting without a license and illegally advertising his services to consumers.

Another unlicensed individual who responded to the ‘sting’ requesting bids for work was wanted for failing to complete a sentence for DUI conviction. Ten were cited in this ‘round-up’ by SWIFT that located the suspects advertising online.

According to the Sacramento Bee, “All but one of the suspects also faces an additional misdemeanor charge of illegal advertising. State law requires contractors to place their license number in all print, broadcast and online advertisements. Those without a license can advertise to perform jobs valued at less than $500, but the advertisement must state that they are not licensed contractors.”

The Contractors State License Board encourages consumers to check the license status before hiring a contractor by visiting the agency’s website at www.cslb.ca.gov or by calling the toll-free automated line, (800) 321-2757. The board’s website also offers tips about how to hire a contractor and the opportunity to sign up for email alerts.

Generals, College Credits, NV Reciprocity & “B-2” Rule

It might have been ‘either/or’ for our first contractor who will learn it’s really ‘neither/nor’ in his ‘General’ answer. An aspiring contractor discovers if his degree is experience enough for a license. We ‘renew’ the hopes of a contractor leaving the state that his license will ‘travel’ with him…

Q:  I currently have a “B” General Building license and I just hired a new employee that has an “A” General Engineering license.  We want to form a new entity, in which I will be the majority owner.  We specialize in concrete work, mainly driveways.  Would you suggest that we use my “B” qualification for the new license or his “A” qualification?

A:  Actually neither.  If you are only doing driveways you would want to apply for a “C-8” Concrete license.  There are a few classifications in which you can request a Waiver of the Trade exam based on the current classification that you hold, and the “C-8” is closely related to both the General licenses, so either of you could apply to add that to your license and once added, apply for the new entity’s license.  Let me know if you’d like assistance with this two-step process.

Q:  My son recently graduated from college with a degree in Construction Management and he eventually wants to take over my construction company.  He worked for me while attending school but not full time.  How much credit does the CSLB give him for his degree?

A:  The CSLB may grant up to three years of work experience toward the four years that are required.  How much time they credit your son will depend on the course work he took, so he will be required to submit official sealed transcripts.

Since his degree is in the construction field, I would suggest that your son be prepared to show at least two years of practical experience in addition to his four year degree.

Q:  I am moving to Nevada at the beginning of the year and I plan on applying to get my contractor’s license.  I have been licensed in California for over twenty years but the license expires on November 30th.  I want to use my CA license to apply for Reciprocity but I don’t want to pay the renewal fee since I won’t be using it any longer.  Will the couple month lapse disqualify me for Reciprocity?  Also, I noticed that Nevada has a “B” and a “B-2” license; what’s the difference?

A:  The rule between California and Nevada with regards to Reciprocity is that you have to have been actively licensed for five out of the last seven years and you have to have passed the equivalent trade exam.  So no, a couple month lapse shouldn’t affect your ability to qualify.

Regarding your second question, the “B” classification in Nevada is equivalent to California’s General Building classification.  The only difference in the “B-2” is that it limits you to structures under three stories.  In order to qualify for the full “B” you have to have experience doing work on structures over three stories in height.

 

DBA, Business Names, RME/RMO & Qualifier Disassociation Suspensions

Shakespeare offered good advice about names. While a rose may smell as sweet by any other name, for contractors the same may not be true of the description in your business name. When a license Qualifier leaves, going thru the exit door starts the clock on your ability to legally bid or continue working projects in process…

Q:  I got my General Contractors license back in the 90’s and have since obtained “C-20” (HVAC) and “C-36” (Plumbing) licenses.  It has been many years since I’ve done any building work.  I exclusively do plumbing and heating.  My business name includes the term “General Contracting” but I want it to reflect my specialty trades.  Do I need to add a ‘doing business as’ (dba), or what is the best way to go about this?

 

A:  You have a couple options.  You can either change the business name with the Secretary of State and then the CSLB to a new company name of your choice, or as you suggested, add a dba to your business name.  The second option will allow you to keep your original business name, if that’s important to you, while still using the dba name.  If you choose that option keep in mind that you must either do business using the entire name, i.e. ABC General Contracting Inc. dba ABC Plumbing and Heating, or just using the dba name.

 

Q:  We are forming a new corporation that will basically be a shell company for our current contracting company.  The shell company will sign the contracts and then sub-contract the work to our current licensed corporation.  My first question is whether the shell company needs a license if they will not be performing the work?  Secondly, the new entity will not have employees, only Officers.  Are Officers considered employees?  I’m wondering if we will need to get a new Worker’s Comp policy.

A:  Both the company signing the contract and the company performing the work will need to be licensed.   If you will only have Officers and no additional employees then you can file an exemption from Worker’s Compensation.  Keep in mind that the Qualifier will also need to be an Officer and not an RME (Responsible Managing Employee) if you are filing the exemption.

Q:  Our Qualifier left the company back in July and we haven’t notified the CSLB.  We have an application in process with a new Qualifier but he hasn’t taken the exam yet or completed the fingerprint requirement.  Our current Qualifier sent us a copy of the Disassociation Notice that he plans to submit to the CSLB noting the date that he resigned from the company.  Is there anything that we can do to prevent a lapse in our license?

A:  I would suggest filing a 90-day extension immediately.  You have 90 days to replace the Qualifying individual, but the CSLB will usually grant a one-time 90-day extension to complete the process if you have a current application in process to replace the Qualifier.  Since you have already submitted an application, you should be eligible to receive the extension.  If you do not submit the extension then as soon as the CSLB is made aware of your Qualifier’s disassociation in July, your license will automatically be suspended until the new Qualifier is approved.  Contact our office if you’d like assistance with any of this

Revoked & Joint Venture Licensing, “C-61” and Self-Employed Experience Credit

One thing often leads to another, and in some cases automatic cancellation of your license! We ‘C’ ‘two’ another contractor’s problem with adding a class without testing, while a contractor who lost his license learns how to ‘build’ a case for getting it back…

Q:  I currently have both a Sole Owner license and a Joint Venture (JV) license with another company.  I want to create a corporation and transfer my Sole Owner license to the corporation, but before I do that I need to know how and if that would affect the JV license?  We have current projects in process.

A:  Yes, that is going to affect the Joint Venture license.  If you were to transfer your Sole Owner license to the corporation, the JV license would automatically be cancelled.  You would be required to re-apply with the new corporate entity and be issued a new license number for the Joint Venture.

Q:  We are a subcontractor that installs acoustical ceilings, wood ceilings, metal ceilings, etc. and we hold a “C-2” (Insulation & Acoustical) license.  We do work for different school districts and recently we’ve seen a requirement that we have a “C-61”/”D-50” (Suspended Ceilings) license.  Is there a way to qualify for a “D-50” without testing for it?  We have been in business for almost 15 years if that makes a difference.

 

A:  If you use the same licensed individual who currently Qualifies the

“C-2”classification then no testing will be required.  He/she passed the law exam already, and none of the “C-61” classifications have trade exams.  The Qualifier would need to show at least four years of experience but it sounds like that’s covered with the type of work you perform.

Q:  I have been self-employed for over 5 years and I do all types of construction work.  I want to get a General license and need to know how I go about doing that.

A:  You are required to document at least four years of experience doing General Building work.  Self-employment is probably the most difficult type of work experience for the CSLB to assess.  You need to have someone sign on your behalf to certify your experience and in addition, provide some supplementary evidence such as invoices, income tax reports, 1099s, and copies of contracts.  If you cannot produce those then it is unlikely that you would qualify for a contractor’s license. Space is limited here, so if you have further questions about paperwork or proof-of-experience give us a call.

Q:  Several years ago my license was revoked for reasons that I won’t get into and since then I’ve been working for another licensed company.  I’d like to get my license back, is that possible?

A:  It’s possible.  You need to re-apply for the license and as long as it’s been under 5 years since the revocation you would not need to re-test.  To re-instate the license you would have to show proof that you have fully complied with the terms and conditions of the revocation.   In addition, you will likely need to post a Disciplinary Bond in addition to the Contractor’s Bond.  If you are applying under the same entity with the same personnel, and the entity is in good standing with the Secretary of State, you can request that the license number be re-issued.  Feel free to contact me if you’d like assistance with this process.