Bond Cost, RME Replacement, Business License and Trade Exam Waiver Experience

Yet another reason to keep that credit score up! An Oregon contractor has a ‘5 year’ plan to build on in CA, while another out-of-state contractor has an ‘issue’ with taking the ‘first step’ in applying for his license.

Q:  I need to obtain a Contractor’s License and I know that I am required to be bonded.  How much do the bonds typically cost?

A:  The amount that a Contractor pays out of pocket for bonding varies based on credit.  For a new Contractor, the fee for the $15,000 Contractor’s Bond is typically about $110 – $150.

Q:  We are submitting an application for our Oregon Corporation to get a CA license.  We have an RME (Responsible Managing Employee) who will be Qualifying the license.  How long does the President of the company have to wait before he can replace the RME with a request to Waive the exams?

A:  B&P Code Section 7065.1 allows for an Officer who has been actively engaged in the business to request a Waiver of the exams after a period of five years.  Keep in mind the license has to remain active during the five years.

Q:  We are an out of State company and one of our good customers would like us to do some work for them in California.  I am just wondering if we are required to have a Business License prior to obtaining the Contractor’s License?  We weren’t sure of the steps to take.

A:  While the application paperwork implies that you need to be registered with the CA Secretary of State prior to submitting a Contractor’s License application, your company really just needs to be registered with Secretary of State prior to the CSLB issuing the license.  You can apply with both agencies at the same time, or you can do one step before the other, either way.  If the CSLB gets to your application prior to your registration being filed, be aware that they will send you a rejection letter asking that you register your entity, however, you do not “lose your place in line” with the CSLB.  It only causes a short delay in the process.

Q:  I am a “B” (General Building) Contractor and I want to start up a Concrete business with a Partner under a separate license with a different Business name.    My Partner seems to think that I can request to Waive the trade exam based on my General Building license.  Is that true?

A:  What your Partner is likely referring to is B&P Code Section 7065.3 which allows the CSLB to consider a Waiver of the trade exam for a classification for someone holding a closely related trade.   Among other requirements, you have to prove that the classification is a significant portion of the work you have done with your current license.  However, this is only granted when adding the classification to your existing license, not when applying for a new license.

I would suggest applying to add the Concrete classification to your existing license with a request to Waive the exams (assuming you meet all the requirements), and once obtained, you can apply for a separate Concrete license under your new Business name, in which case no exam would be required.

All that being said, Waiver requests are reviewed on a case-by-case basis and there is no assurance the CSLB will approve the request.

Column 1K, “DBA” descriptions and Original Company Names

For us this is an historic day! What began as a first step to assist contractors with our first column in April 1996 has become 1000 columns down the road and twenty years later! Nearly every week of each year, Capitol Services, Inc. founder and original author David Kalb answered questions from individual contractors who ran into problems with the complex rules and regulations. That ‘capitol connection’ helped many others who read the answer avoid the same pitfall. In 2012, current Capitol Services, Inc. owner and President Shauna Krause carried on the dialogue after Mr. Kalb’s retirement. Thanks for reading the Q/A in this column, co-authored by David and Shauna.  From Column One to Column 1000 that you are reading now, the mission has been to assist contractors across the west save time, money and problems. We hope it’s become part of your history and has been helpful to you in past, present and will be a valued resource in the future!

Q:  We spoke on the phone a few months ago about the CSLB not accepting our business name for the “B” and “C-10” classifications.  You recommended that we write a letter to the Registrar of Contractors asking for a review of this decision. I never wrote to her but just received an official attached letter, which makes no sense.   I’ve located a dozen licensed contractors with the same “non-descriptive” word in their business name, so I don’t understand why the Board’s creating a problem for my business.

I would like to engage legal counsel on this matter. Do you have any opinion to share?

A: After we talked I spoke with Shauna Krause of Capitol Services who deals with the CSLB on a daily basis.  She indicated that generic words are no longer being allowed for new contractors and the CSLB is requiring dba’s with more descriptive words.   Apparently, the Board is even making companies who apply with initials in their business name give an explanation of what the letters stand for (I can tell you they never used to have this requirement).

The likely reason you were able to locate a number of licensed contractors, with the same word in their name, was because the Board will rarely retroactively require businesses to change their name after they’ve been approved (although I have seen it happen).

Back in the day, the CSLB allowed a wide variety of business names with little need to explain what they meant.  There of course were restrictions, such as a contractor wanting to use the word Plumbing when they held an Electrical license or using the word “Incorporated” when they in fact were a Partnership.  Over the years, the Board gradually clamped down on business name styles.  This included allowing only “A” and “B” contractors to use the word “construction” unless there was a descriptive like “electrical construction” for a “C-10” or “Concrete construction” for a “C-8”.  They decided to only allow the word Solar in the business name if the company held a “C-46”, even though a General building (“B”’) can do all aspects of this work.

For many years, a corporation with a person’s name (i.e. Smith Construction”) was sold to someone named “Jones”, the Board would allow use of the old name if the new contractor wrote a letter explaining why it was important to keep the original name intact (usually because the old name was well known which was why it was purchased in the first place).  Today, I’m not sure what the CSLB would decide. Please contact Shauna Krause at Capitol Services if you need added assistance.

In my opinion, I don’t believe hiring a lawyer will help resolve your problem.  Again, my best recommendation is to write to the Registrar asking for a review of your specific situation and general explanation regarding the Boards current business name policy.

As we celebrate this 1000th column, it’s important to remember history, to forget is to repeat the same mistakes! Visit www.cutredtape.com for all our past column Q/A.  Thanks again for reading.

 

Using Solar in a Name, Out of State Qualifiers and Family Waiver Limits

What’s in a name? We hold ‘class’ for this ‘general’ answer on contractor regulation.  Another Lone Star contractor hopes to ‘address’ a question on long-distance ‘supervision’. We find it unfortunate to inform a daughter that despite the loss her worthy ambition is not experience in applying for a license number…

Q:  Our business name has the word “Solar” as part of it.  We currently have the “B” (General Building), the “C-10” (Electrical), and the “C-46” (Solar) classifications.  We need to replace our Qualifier but our new employee has only taken the exams for the “B” and the “C-10”.  We don’t really need the “C-46” classification so we are going to let it drop off of our license.  When I called the CSLB to inform them of our situation, the person I spoke with said we would need to change our name to eliminate “Solar” since we are no longer a “C-46” contractor.  Is there any way around this?  We’ve been in business for over 20 years and don’t want to lose our company name.

A:  It depends. A company can only use the word “Solar” in the generic term if they hold the “C-46” classification.  For example, if your business name is “ABC Solar”, you would be required to have a “C-46” classification on your license.  However, you are allowed to use the word “Solar” in your business name if you have either the “A” (General Engineering), “B” (General Building), or “C-10” (Electrical) as long as it is descriptive to your classification.  Such as, “ABC Solar Electrical” (“C-10”), or “ABC Solar Construction” (“B”).

 

Q:  We are applying for a new license for our Texas Limited Liability Company (LLC) and we have an employee who has been with us for over 20 years and is involved in all of our projects.  He sometimes works 60 hours a week.  We are wanting to obtain a California license, but reading the regulations, we are wondering if he should use a California address based on the need to “supervise”, or is it okay to use his actual address on the application, which is in Texas?  Will he still meet the requirements of an RME if he doesn’t have a California address?

A:  It is perfectly acceptable for an Responsible Managing Employee or Responsible Managing Officer to reside out of State and still fulfill their duties as RME/RMO.  There is no requirement for a Qualifier to be on every job site.  Your RME is required, per Board rule 823, to be working at least 32 hours per week or 80% of the company’s operating time.

Q:  My Dad recently passed away and I want to take over his Contractor’s license.  I haven’t technically been an employee but I’ve been involved in his business doing estimating, design, coordinating meetings with other contractors, etc.  This is all while holding my full time job as a real estate agent.  How do I get his license number under my name?  I don’t want to have to take any tests.

A:  Unfortunately you will not qualify for the license unless you have four years of full time work experience (within the last ten).  Further, you will need to document at least one year of practical experience, meaning hands-on.  The CSLB does not consider estimating, design, or coordinating meetings with other contractors, as relevant work experience for qualifying for a Contractor’s License.  They need to see that you’ve performed and/or supervised the work in the trade you are applying for. I’m sorry to hear of your loss.

 

Multiple Applications, Qualifier Limit, Add An Officer, RMO and Son-in Law Family Waiver

An ‘unlimited’ answer in assisting our first contractor has one limitation! The second answer takes a different ‘form’ as a Qualifier replaces himself. While we take ‘time’ for one more RMO, we are also always happy to help a contractor’s family work through the regulations…

Q:  We have a corporation that is licensed with an RMO (Responsible Managing Officer).  We want to obtain several new license numbers under different ‘dba’ (doing business as) names.  So same corporation, but with multiple dba’s. Is there a limit as to how many licenses we can qualify for under the same entity with the same RMO?  Can they be done all at the same time?

A:  No, there is no limit to how many licenses an entity can have under different dba names.  Keep in mind that in order for the RMO to qualify all the licenses, you must list the exact same personnel on each license.

An individual cannot have multiple applications in process with the CSLB at the same time, so you will be required to apply for each one separately.

Q:  I was hired as an RME (Responsible Managing Employee) for my company about 7 years ago and I am now an Officer.  We recently received our renewal application which still has me as the RME and I know we need to notify them of the change, but it doesn’t seem correct to complete an “Application to Report Change of Corporate Title for Current Officer” of a Corporation, because I’m not technically a “current officer”.  Should I complete the “Application to Add a New Officer to a Corporation”?

A:  Actually you’ll need to submit a “Replacing the Qualifying Individual” application.  It sounds a bit funny but you are replacing yourself as the RME in order to become the RMO (Responsible Managing Officer).

Q:  As an RMO for my company, is there a specified amount of time that I’m required to be on each job location?

A:  There is no specified amount of time that a Qualifying Individual is required to be on a specific job site.  However, the CSLB does have rules for the amount of time RME’s are required to work, however that is not the case for RMO’s.  As is the case for all Qualifiers (both RME’s and RMO’s), the “R” stands for “Responsible”.  According to rule 823 of the California Code of Regulations, the responsibilities of a Qualifier is to provide direct supervision and control in any one of the following: supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or direct supervision on construction job sites.

Q:  I’ve heard of family businesses where a son inherits his father’s contractor’s license when the father retires.  Would this apply for a son-in-law as well?  I wasn’t sure if the different last name would raise a red flag.  Would he be required to take the exams?

A:  Yes, in the eyes of the Contractors State License Board, a son-in-law is considered an immediate family member.  If your son-in-law has been an employee and actively engaged in your business for at least five years out of the previous seven, then he can request to take over your Sole Owner license and Waive the exams.

Worker’s Comp Exemption Verification, Bid Requirement, Pools Maintenance & License Scam Calls

While it’s not written in stone a contractor’s business is ‘history’ as we discover! I will put on my ‘thinking cap’ to just say ‘no’ to a question, and we also offer   sympathy and assistance to a contractor’s family in their time of loss…

Q:  I had a homeowner contact me wanting me to repair some drywall and tile work that she had another contractor do last year.  She tried to contact him but has been unable to reach him at the number listed on his license.  In speaking with the customer, she stated that he had several employees come out and do the work and they didn’t really seem like they knew what they were doing.  When I look up his license I see that he has an Exemption from Worker’s Comp on file, which means he shouldn’t have employees at all!  How would we go about verifying whether he had Worker’s Comp insurance on file with the CSLB at the time the work was done?

A:  You would want to order a Certified License History from the CSLB which documents the history of the license including Bonds, Worker’s Comp, etc.  Contact our office if you’d like us to order this for you which may speed up the turnaround time a bit.

Q:  I have a quick question that you may know the answer to off the top of your head. Can company X, that does not have a California’s contractor’s license, contract with an owner to perform construction work for the owner, so long as company X hires a licensed contractor to do the work?  What code section of the law addresses this issue?

 

A:  No.  The company/individual signing the contract, as well as the company/individual performing the work, both need to hold a Contractor’s License.  You can refer to B & P Code section 7026 which defines a “Contractor” as “any person, consultant to an owner-builder, firm, association, organization, partnership, business trust, corporation, or company, who or which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to construct any building or home improvement project, or part thereof.”

Q:  My Dad recently passed away and I need to take over his Contractor’s license.  I’ve worked for him since I was 14.  He has a General Building (“B”) license, however we specialize in lake and fountain maintenance and repair, which includes water balancing, cleaning filters, water testing, using pool chemical, and minor repairs to pumps and other water equipment.  Even though my Dad always did this work with his “B” License, I know I really need some sort of specialty license.  Do you know what type of license I would need?

A:  First of all, sorry for your loss.  The scope of work you described can be performed by the “C-61”/”D-35” Pool and Spa Maintenance Classification.  Contact us if you’d like our assistance with the process.

Contractor’s Note!  The CSLB is warning Contractors to beware of anyone calling and stating they are with the CSLB and claiming that you are “qualified” for additional license classifications if you pay an extra fee.  This offer is false and the CSLB never calls licensees to ask for money over the phone, nor do they solicit credit card information.  If you have received such a call, please report the incident to the CSLB by email at social@cslb.ca.gov.  The solicitors are thought to be targeting new licensees so beware!

“C-33” Painting, “C-46” Solar and License Qualifiers

If you are a longtime reader thanks! You may know, but others new to this resource may not, that all our column history is online at cutredtape.com. However, we still get new questions, new situations, new interpretations and new rules from the Legislature to add when we’re done here. It’s always good to know your ‘options’ so looking online is a first step and calling an expert is a good second step…

Q:  I looked on your Q & A archives on your website and couldn’t find what I was looking for and was hoping you could help me out.  I am interested in purchasing a Painting corporation (“C-33”) which has the owner as the Responsible Managing Officer (RMO).  The way I understand it, I can buy the stock of the corporation and take over the license that way.  The question I have is, who can be the RMO?  Do they have to be a Licensed contractor in that field (Painting “C-33”), or can it be me (although I may not have the requisite experience)?  If I have a General Builder (“B”) friend, can he be the RMO?  I’m just trying to review all my options.

A:  It does sound like you have several options.  The RMO/RME can be someone who is currently qualified for the “C-33”, meaning someone who is currently a Licensed Painting contractor, or has been within the previous five years.  If you can document the requisite experience to qualify for the license (four years of full time experience in the “C-33” classification within the last ten), then you can act as the RMO providing that you pass the Law and Trade exams.  Your General Builder (“B”) friend can act as your RMO if he can show that the painting trade has been a significant part of his General Building work, to the tune of four full time years within the last ten.  He would be required to pass the “C-33” exam.

FYI, there are also stipulations regarding RMO’s Qualifying more than one license at the same time, so you will want to discuss this with whomever you choose to act as your RMO/RME.

Q:  I was referred to you by our Attorney to answer a question about a new opportunity that we have in the State of California.  I’ll use generic names to describe the scenario. Company B (that’s us) is an equipment supplier for Company A and we supply equipment for solar plants.  Company A (who holds an “A” General Engineering license) wants Company B (us) to now arrange for the installation as well.  Company B plans to sub-contract the installation to Company C, who has a “C-46” license.  Does Company B need to have an “A” license, will a “C-46”’ license suffice, or no license at all?  If a license is needed we have employees who would qualify for the “C-46”, but we don’t employ engineers.

A:  Company B will need a license for whatever they will be contracting the installation for.  It sounds like you are arranging installation for only solar systems, in which case the “C-46” (Solar) classification is sufficient to subcontract to Company C.

Solar Complaints, Predatory Repair Practices & License Number Display Law

Speaking ‘fluent’ regulations is one part of it and keeping an ear to the ground is another when you are providing expert ‘guidance’ to contractors. Listening closely to what is said is always important…

I hear that CSLB would like to make contractor’s aware of several things.

First, with the solar industry booming, the number of complaints the CSLB receives about deceptive solar practices continues to rise.  In fact, while the Board received a mere 59 solar-related complaints in 2010, they received 535 complaints related to solar projects from January 2015 through May of 2016!

There are several areas in which the CSLB recommends that solar licensees pay attention to. Number one, the financing and contract/lease terms.  Given the array of new and significant differences between the types of solar financing, it is extremely important that solar contractors provide their potential customer with a detailed breakdown of how much they can expect to pay by converting to a solar power system.  The increased special financing programs to pay for energy efficiency projects has led to a rapid rise of misunderstandings.  It is important for licensees to fully explain all the terms of these special financing options, which are sometimes attached to their property tax, often at a higher rate than could be obtained through a traditional lending institution.

The Contractor’s Board also warns licensees to refrain from high-pressure sales tactics when contracting for solar installation.

Another source of complaints is solar contractors/salespeople making unrealistic claims regarding energy/money savings. Licensees should avoid overselling cost savings or solar energy system capabilities.

Lastly, be sure to follow the permit process.  According to the Board’s newsletter, “contractors with solar projects must submit design plans that comply with particular city, county, and/or utility standards, obtain the required building permits, and follow through with a safe, quality installation.”

While most licensed solar contractors are honest and do their jobs well resulting in satisfied customers, it’s good for consumers and contractors to be aware of what’s out there.

Another item on the agenda in the Summer 2016 newsletter which contractors should be aware of is the CSLB is cracking down on up-selling. CSLB writes, “These predatory practices have been most prevalent in the warm-air, heating, ventilating, and air conditioning (HVAC) trade, but abuses can occur with almost any repair where a consumer only needing a relatively minor fix is talking into a major – and unnecessary – remedy.”

The CSLB has trained their investigative staff to be on the lookout for these unscrupulous activities that cheat unsuspecting customers, particularly elderly persons.  Investigators are watching for contractors who are called out to do simple inspections or modest repair which then somehow turn into unnecessary complete replacements.  They are also on the lookout for contractors who are dishonestly claiming safety hazards needing immediate repair on products which are in fact in working condition.

The CSLB further warns, “although technically not considered a service and repair scam, CSLB is on the lookout for contractors that cut corners by sidestepping the permit and inspection process.”

I will leave you with one final warning addressed in the Newsletter.  The CSLB is aware that there are still a significant number of licensees who are not disclosing their license number when advertising.  Whether your advertising online, on TV, radio, in print, or even your decal on the side of your truck, you must include your license number (B&P Code section 7030.5).