Qualifier Exam Waiver Rule, AZ Licenses and Fingerprinting ‘Alien’ Corporate Officers

We help a Vice President ‘waive’ goodbye to the former owner and ‘qualify’ to grab a higher rung in his rise to better things! However, it’s a yes and no answer, like our second question from a contractor ‘moving’ on to a new state. The fingerprint requirement is just the first hurdle a ‘foreign’ contractor must complete, as our expert answer points out another they didn’t anticipate in becoming licensed in CA…

Q:  In 2014 you helped one of our Officers replace the former owner of the company when he retired and he was able to Waive the exam based on his years of experience with the company.  Now he wants to obtain his own license and so I have been designated to be the new Responsible Managing Officer (RMO).  I have been with my company for over 15 years with various positions; Foreman, Supervisor, Project Manager, Estimator, and now hold the title of Vice President.  Can you assist me with process of replacing the current RMO and asking for a Waiver of the Exams like you did for the current Qualifier a couple of years ago?

A:  Yes and no. Let me clarify. We would be happy to assist you with the process of replacing your current Qualifier.  It sounds like you have the requisite experience.  Your current RMO requested a Waiver based on B&P Code Section 7065.1c, which allows for a Waiver of the Exam if you have worked for the company in a supervisory capacity for five out of the last seven years.  Unfortunately, you will not qualify for the same Waiver of the Exams because 7065.1c further states that a company cannot make this request if they have requested a Waiver under that subdivision within the past five years.

Q:  I have had a California Contractor’s license for many years (over 20) and I plan to move to Arizona in the near future.  I read that there is reciprocity so I shouldn’t have to take the trade exam in Arizona.  Is obtaining a Contractor’s license there pretty similar to what I went through to get my California license?

A:  Yes and no. There are many steps to obtaining an Arizona Contractor’s License that differ from California’s licensing process.  For example, in Arizona you take you take your exam(s) first, before submitting the application paperwork.  Additionally, Arizona requires that you complete an online background check as opposed to being formally fingerprinted. There are several other differences between the process of obtaining an Arizona license vs. California.  Capitol Services specializes with assisting you with the entire Arizona licensing procedure so please contact my office and we can further discuss the requirements including limits to reciprocity in some cases.

Q:  I am an attorney and I have a client based in New Zealand.  They are incorporated in Delaware and have also registered as a foreign corporation in California.  They need to obtain either a “C-10” (Electrical) or “C-7” (Low Voltage) license in California.  I understand the President must be named on the application.  Will there be any need for this individual to travel to California during the process?

A:  While there is no need for the President to travel to California, he will be required to be fingerprinted and the fingerprinting process is quicker if he gets fingerprinted in California via live scan.  Hard copy fingerprint cards take longer to process.  Be aware that the President is also required to either have a US Social Security number or an Individual Taxpayer Identification number.

 

Multiple Entity Licensing for Joint Ventures and Qualifying a Fourth License

It’s not ‘smoke and mirrors’ but a General needs to ‘reflect’ on my answer before taking action!  While not a ‘marriage’ breaking up is still hard to do when you’ve got a shared license between you. First, we ‘engineer’ a solution by breaking down this three-part question…

Q:  Can you tell me whether a licensed General Contractor and licensed Professional Engineer may form a legit Joint Venture (JV) for both public and private works in California?

A:  The CSLB will issue a Contractor license to any combination of individuals, corporations, Limited Liability Companies (LLC), Partnerships, or other Joint Venture, each of which holds a current, active Contractor’s license.  Each license must also be active and in good standing.

The Professional Engineer may be able to qualify for an “A” (General Engineering) contractor’s license.  Once that is obtained the two entities can apply for the JV license.

Licensed Joint Ventures are permitted to perform both public and private works in California.

Q:  I am currently the RMO (Responsible Managing Officer) on three licenses with several classifications, which are three different entities.  We want to open a separate division of one of our current entities, which will only handle electrical work.  We intend on doing business under a different name (DBA name), but it will be the same company.  Will I be able to qualify all four licenses assuming the fourth one is the same entity as one of the current licenses, only with a ‘dba’ name?

A:  In order to qualify the fourth license, you would need to make sure that all of the personnel (Officers, Members, Partners, etc) are a mirror image of the personnel listed on the current license.  Meet that requirement then you will be able to be the Qualifier on all four licenses.

Q:  We have a Joint Venture license made up of three entities.  We need to remove one of those entities and change the name on the license.  What paperwork is required to get this done?

A:  Joint Ventures are considered a Partnership and you cannot make any changes to a Partnership license.  Therefore, you would need to cancel the existing license and apply for a new license for the remaining two entities.

 

 

HVAC, Plumbing & Cooling Towers and a Warning on Unlicensed Contractors in Disaster Areas

While it sometimes feels like a disaster movie living here, people in the Golden State aren’t shaken easily, and are often rebuilding after fire, flood or earthquake. This opens the door for scammers and they have been warned! First, we ‘plumb’ the depths of license rules for a business buyer…

Q:  I am in the process of purchasing a business that has a Contractor’s license with a “C-20” (HVAC) and “C-36” (Plumbing) classifications.  My experience is with hydronic piping and cooling towers.  What type of license would be required to perform this work?  I want to make sure I’m covered with the seller’s license.

A:  The “C-20” classification would be most appropriate classification for the type of work you are describing.  A Plumbing Contractor (“C-36”) can do the piping aspect of the project but not the cooling tower. You need to show at least 4 years of full time work experience in the trade you are applying for in order to qualify for the license. We can assist you if you need help.

The Board has sent a strong warning in a recent news release. It’s been a destructive fire season in many areas of the Golden State and the CSLB is warning unlicensed scammers that victimizing property owners a second time is a crime. Consumers are advised to check out anyone preparing to bid work.  The Contractors State License Board (CSLB) is warning consumers about the dangers of hiring unlicensed contractors following a disaster, whether it is earthquake, fire, flood or mudslide. Unscrupulous, unlicensed contractors often prey on victims of natural disasters.

It is a felony to contract without a license in a declared disaster area.

Consumers can protect themselves by using CSLB’s resources. “Although it’s understandable that property owners want to begin rebuilding quickly, it’s important not to rush the process and hire the first contractor who comes along,” said CSLB Registrar Cindi Christenson. “Take your time and protect yourself against con artists who will take your money and run—or incompetent contractors who will perform shoddy work. Hire only licensed contractors and check their qualifications.”

You can call CSLB, toll-free: (800) 321-CSLB (2752). For more tips online visit

http://cslb.ca.gov/Media_Room/Disaster_Help_Center/Disaster_Information.aspx

Contractors working on a job—from debris removal to rebuilding—totaling $500 or more for labor and materials must be licensed by CSLB. To become licensed, a contractor must pass a licensing examination, verify at least four years of journey-level experience, carry a license bond, and pass a criminal background check.

When To Begin Work, Retail Licensing, Solar and Inactive Licenses

Starting, stopping and starting again is part of many projects so the ‘suspense’ of being a licensed contractor is always intense. You can’t get a license ‘wholesale’, especially if you don’t need one. Unfortunately, another contractor learns what he thought was his isn’t…

Q:  I am a licensed contractor and I was recently going to start a project for a homeowner, and they halted the project because they checked my license and found it was expired.  I never received my renewal.  I called the CSLB and they sent me a new one, which I sent in with the delinquent fee.  I confirmed they received it and the website states that the renewal has been received and is in process.  Am I permitted to start working knowing that the renewal is being processed?

A:  No, your license is not valid until the renewal has been processed and your license is listed as “Active”.

Q:  Are retailers of construction materials required to have a Contractor’s License if they aren’t actually installing the products that they sell?

A:  No, retailers are not required to have a Contractor’s License if they are not contracting for the installation of the products they sell.

Q:  My company has a “B” (General Building) license for which I am the RMO (Responsible Managing Officer).  Even though we are permitted to perform solar work with our General Building license, some of our customers look specifically for the “C-46” (Solar) classification to be on the license.  Since we have been performing solar construction with our General Building license now for about ten years, would I be able to Waive the trade exam based on my experience?

A:  B & P Code Section 7065.3 allows for the possibility of an Exam Waiver for a specialty classification under certain circumstances. The CSLB will need to see that the specialty classification is “closely related” to your current class.  In addition, you will need to show that the “C-46” is “a significant component of the licensed contractors construction business”.  If the majority of your work has been solar, in my opinion you would likely have a good chance of being approved for a waiver of the exam.  Keep in mind that the CSLB determines these requests on a case-by-case basis so it’s not guaranteed.  It’s always at the discretion of the Registrar.

Q:  I have my own personal license currently on Inactive status.  For the past few years I’ve been the RME for the company I’ve been working for.  They recently terminated me but I happen to know that they are still operating with my license and have many projects in progress right now that they have employees working on.  Is it legal for them to keep operating without an RME?  Also, how do I get my license back?

A:  First, the company is technically not operating with your license.  I looked up the license and since it’s a corporation the license belongs to the corporation.  You are still listed as the RME, so you will want to file a Disassociation Notice with the CSLB to let them know you are no longer with the company.  The company will then have 90 days to replace you on the license.  During that 90-day window they are permitted to continue working.

In order to reinstate your individual contractor’s license you will need to order a reactivation form from the CSLB and submit it along with the $360 reactivation fee.  Contact our office if you’d like our assistance with this.  We can pick it up for you in person which is quicker than ordering it from the CSLB.

Loopholes

Why the ‘buddy’ system doesn’t work for contractor’s licensing! Another ‘unlicensed’ inquiry that includes a ‘kickback’ in the answer…

 Q:  For many years I have been doing unlicensed construction, most of the work under $500.  I have a corporation already set up.  I have an opportunity to take a large home improvement contract but it would require me to get my license within two weeks which I know is next to impossible since I will need to take the exams and get fingerprinted.  I have a buddy who has a Sole Owner license that he is not currently using. He said that I could use his license in order to take the job.  Can I do that if I change the name on his license to reflect the name of my corporation?

A:  We frequently talk with contractors who come up with all sorts of different scenarios in order to use someone else’s license. There is no loophole here. No matter how clever you are, there is no way for an unlicensed contractor to “share” a license and still be in compliance with the CSLB’s regulations.  First of all, changing a business from a Sole Owner to a corporation is not as simple as changing the business name on the license; you are required to re-apply for the license.  Secondly, it is still his license and you cannot do any work with that license number unless you are a bona fide employee of his company, in which case the work is still done under his company and not your corporation.

 Q:  We are a service company with a “B” (General Building) license.  We contract with homeowners but we don’t actually perform the work; we sub-contract it out to licensed specialty contractors.  We are planning to form a separate company that would act in a similar capacity and we are wondering if this new company will need a license.  The new company will not actually sign contracts, but we would act as a construction manager, producing the plans, designing, and coordinating the project, and then set the homeowner up with our various subcontractors and they would contract with the homeowner directly.  Our new company would in turn receive a percentage.  Are we required to be licensed?

A:  There are a couple things improper with the scenario you described.  First of all, yes, you would be required to be licensed.  B&P Code Section 7026.1 defines “Contractors” to include consultants who provide or oversee a bid for a construction project, arrange and set up work schedules for contractors, and maintain oversight of the construction project.   Since the new company would be maintaining oversight of the projects, you will be required to obtain a license.  Of course, an exception would be if the home improvement project is under $500.

Secondly, in our opinion, receiving a percentage of the contract essentially sounds like a referral fee or an inducement, which is prohibited by Section 7157 of the B&P Code.

 

Worker Comp Exemption Changes, SoS Matching, NV Financial Statements and Reciprocity

Let’s play ‘match game’! We’ll take ‘multiple choice’ in answering this contractor. Worker’s compensation insurance is just the first step for those previously ‘exempt’ from the need. Taking work outside CA often requires a little ‘two step’ to cross the ‘gaap’ in taking advantage of reciprocity while getting a NV license application right ‘on the money’…

Q:  Does the Officer list with CSLB need to match the Officer’s list the Secretary of State of CA has for the entity?  We just recently updated our list with the Secretary of State.

A:  It depends.  The CSLB has different requirements depending on the type of entity.  With regards to Officers listed on a license, foreign corporations (corporation’s formed outside the State of California) are only required to list their President on their Contractor’s License, which should match the President on file with the Secretary of State.  Domestic corporations are required to list their President, Secretary, and Treasurer on their license, which also should match what’s on file with the Secretary of State. For Limited Liability Companies (LLC’s), the CSLB requires that all personnel listed with the CA Secretary of State match exactly with the personnel listed on the Contractor’s License.

If your Officers have changed, you have 90 days to notify the CSLB.  There is currently no fee for updating Officers with the CSLB.

Q:  When I originally got my license I had no employees and I remember filling out a form that stated I was Exempt from Workers Comp.  I’ve been getting a lot of work this summer so I hired a couple of employees and added a Worker’s Compensation policy through my insurance company.  How do I get the “exempt from Workers Comp” notation taken off my license?

A:  You will need to send the CSLB a Certificate of Worker’s Compensation Insurance and they will remove the notation and replace it with your updated insurance information.

Q:  We are in the process of applying for a Nevada Contractor’s license.  I have a couple of questions about the required Financial Statement and references.  Does the Financial Statement need to be on the GAAP basis of accounting, or can cash basis or tax basis be utilized?  Secondly, do the financial statements need to be comparative showing 2-years side by side?  with regards to the references, does our Qualifier need to get those if he’s applying for Reciprocity?

A:  The Financial Statement can be on the GAAP basis, cash basis, or tax basis.  Any of those methods are acceptable.  Keep in mind that while they are still acceptable, the cash basis and tax basis financial statements don’t always present the best picture for the NV Board.

To ‘step up’ and answer your second question, it is not necessary to show 2-years side by side.  Compiled financial statements are required to be dated within the last six months, and reviewed and audited financial statements need to be dated within the last year.

Lastly, references are not required when applying with the Reciprocity agreement.  Just FYI, Electrical, Plumbing, and Fire Protection classifications are not included in the Reciprocal agreement. Help is always available for CA, NV and AZ applications and questions when you need it, give us a call or email.

Operating Agreements, Qualifying Three Licenses, LLC Bonds and Name Rules

First, if you’re going to be an ‘operator’ you have to have ‘agreement’ on licensing.  While we have had this question before it’s a new area for CA contracting that likely needs reinforcing with stronger ‘bonds’ and wrap up with what’s in a ‘business’ name…

Q:  We are going to be forming a new Limited Liability Company (LLC) and we will need a Contractor’s License.  Our attorney is in the process of putting together the Operating Agreement and a couple of the Partners do not want their name associated with the Contractor’s License.  Will the Secretary of State or CSLB require that we furnish them with our agreement?

A:  No, the Operating Agreement does not need to be filed with either the Secretary of State or the CSLB.  The Operating Agreement should be maintained in the office where the company’s records are kept.  The documents the CSLB requires that you file with the Secretary of State are the Articles of Organization followed by a Statement of Information with the Secretary of State prior to issuing a Contractor’s License.

Q:  I have a Sole Owner license and I have two other entities that I would like to get licensed.  I have 70% ownership in one entity, and 45% ownership on the other.  Actually, ownership belongs to my Trust.  Will I be able to Qualify all three licenses?

 

A:  Unfortunately, this would not meet the specific requirement of direct ownership pursuant to BPC section 7068.1 (a) and (b). Here’s why. An Responsible Managing Officer (RMO) can Qualify up to three licenses at the same time as long as one of the following conditions exists: 1) The Qualifying Individual has at least 20% direct ownership in each business; 2) One entity owns at least 20% of the other (again, direct ownership); OR 3) The majority of the Officers/Members/Partners are the same.  Your scenario does not meet options 1 or 2, but perhaps if you meet the requirement of option number 3 you can achieve your goal. Call for further assistance.

 

Q:  We currently have a license for our LLC and our bonds are up for renewal.  Why is the premium for the LLC/Worker Bond so much higher than the others?  Who/what is this bond protecting?

A:  The premium on the LLC/Worker Bond is much higher because the bond amount itself is higher.  The LLC/Worker Bond amount is $100,000 compared to the Contractor’s Bond, which is $15,000.  The Bond of Qualified Individual amount is $12,500.

The LLC Worker Bond is for the benefit of any employee or worker damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions.

Q:  I have a Sole Proprietor plumbing license in my name and recently I started advertising and printed cards as “Dave’s Plumbing”.  I was told that as a Sole Proprietor I could do business under any name I choose.  I just want to make sure that’s correct.  Do you have any advice?

A:  Sole Proprietors can choose any business name they’d like, however you will need to advertise, bid, contract, etc. exactly as it appears in the CSLB’s records.  So before you do business as Dave’s Plumbing, you will need to file a name change with the CSLB.  Name style variations are not allowed!

LLC Bonds, Corp to LLC Transfer and Certified License History

While a contractor can build almost anything time machines remain fiction and you don’t have a ‘license’ to go back to ‘when’ you used to be. Anyone can claim almost anything in our social media world, but the ‘truth’ is out there on file at CSLB for contractors who want to learn it…

Q:  We are an Oregon Limited Liability Company (LLC) and when we originally obtained our California Contractor’s License (in 1995) we had to form a corporation because California didn’t allow LLC’s to have a license.  In 2012 when the CSLB started licensing LLC’s, we registered our Oregon LLC in California and transferred our license number over to the LLC.  For tax purposes, our CPA has recommended that we convert back to a corporation.  I assume we can just transfer the number back to the corporation?

 

A:  Actually, while a corporation (under certain circumstances) can transfer their license number to an LLC, an LLC cannot transfer a license number to a corporation.  I believe the statute that allows for a corporation to transfer a license number to an LLC was only established due to the fact that the CSLB didn’t previously license LLC’s.  Your corporation will be required to obtain a new license number.  Contact our office if you’d like assistance with the process.

Q:  We have a competitor that is “claiming” that our license was suspended for a period of time when we were working.  We have been in good standing since inception, and I’m wondering if there is anything we can get from the CSLB to prove this.  Is there anything we can get from them, some kind of certification stating that we are, and always have been, in good standing with the Contractor’s State License Board?

A:  You can request a Certified License History from the CSLB that will show your current status, classification, issuance date, expiration date, personnel listed on the license, and all history including suspension dates and the reason(s) for suspension.  Contact us if you’d like us to order a license history for you, or any of our contractor readers who might like to have one for your own files.

Q:  We recently applied for a Contractor’s License for our LLC.  The CSLB is requesting a “$100,000 LLC/Worker Bond”.  Our bonding company is requesting all kinds of financial information in order to obtain this Bond.  Is there any way around this requirement?  And if not, what is this Bond for?

A:  There is no way around this, all LLC’s are required to have a $100,000 surety bond (in addition to the $15,000 contractor bond).  According to B&P Code Section 7071.6.5, the $100,00 LLC/Worker bond is for the benefit of employees or workers who are damaged by the LLC’s failure to pay wages, interest on wages, or fringe benefits, as well as other contributions.