Bonds & Business Names, Posted Applications and Disabled CA Veteran Contractor Licensing

A ‘salute’ for veterans starts our question and answer parade. Next a contractor changes his mind, and will likely get his wish and we wrap by helping another contractor ‘capitalize’ on his business name…

Q:  I am a disabled veteran who has worked under a licensed contractor for 15 years of my life. I am now ready to venture out into the realm of having my own contractor’s license.  He has a “B” (General Building) license and we do all types of remodels and upgrades. What are the main requirements and how quickly can this happen?

 

A:  To obtain your own license you will need to document at least four years of full time work experience doing that type of work.  You will need to take and pass the Trade and Law exams and you will also need to be fingerprinted.  The process usually takes anywhere from two to three months, however the Military Veterans Application Assistance Program at the CSLB assists those who are transitioning from military service.  They will usually expedite your application to process it ahead of others to issue your license in having served the country. Thanks for your service!

Q:  I am an attorney and my client currently has a corporate license that we are closing down in order for them to do business in California under their Limited Liability Company (LLC).  When we submitted the application for the new LLC, there was a form to fill out about whether we wanted a new license number issued or if we wanted our current license number transferred.  We checked the box stating that we wanted a new license number issued.  My client received the fingerprinting paperwork and now informed me that they now want to keep the same license number.  Is it too late to make the request?

A: Being that fingerprinting paperwork has already been sent out, that tells me the application has been “posted”.  Posted means they have the basic requirements to process the application.  Usually once an application has been posted you can no longer make changes to it because all the original information has been entered in their system.  However, the request for license number re-issuance isn’t processed until they actually issue the license, so they will likely accept your amended request for re-issuance.

 

Q:  You are helping our company obtain a new Contractor’s License in California.  You had mentioned that our Bonds and our Insurance certificates need to reflect the exact business name as the name on the application.  Would this be the Qualifier’s name or the Company name?  And I know this is being picky, but will a comma on the Insurance certificate vs. no comma on the license application be an issue?

A:  To answer your first question, the name on the $15,000 Contractor’s Bond needs to match your business name.  The name on your $12,500 Bond of Qualified Individual needs to match your Qualifying Individual’s name, but it will also reflect your company name which needs to match your business name on the application.  To answer your second question, the CSLB does not use punctuation so commas and periods are not an issue.  They issue licenses with the business names in all caps with no commas or periods.

Swimming Pools, Worker’s Compensation Requirements and Supervisory Waivers

Yes, on this page or in the office, we always hope to ‘answer’ inquiries quickly and correctly!  What’s ‘past’ is prologue in a contractor license change but we start with another transition for a ‘supervisor’…

Q:  We want to change the license holder over to the CEO of the company who is not currently the responsible party and doesn’t have a Sole Owner license. He’s had more than 5 years in the industry working for our company and we want to make him the Responsible Officer due to hardship of the current one leaving. From what I’ve read there’s a supervisory waiver to fill out?

A:  There is no specific “supervisory waiver” form to fill out.  B&P Code Section 7065.1 allows an individual who has either been listed as an Officer on a license for five out of the last seven years, or has been employed by the company working in a supervisory capacity for the license, to replace the existing qualifying individual and request to Waive the exams.  The new Qualifier will need to document his/her experience and the Waiver request must be done in writing.

Q:  My boss is applying to replace our current RME (Responsible Managing Employee) on our license.  If in the past, he has checked the box “YES” that he has plead guilty or been convicted of a felony on the application, but has lost that paperwork entirely, would he have to find that documentation to get this going, even though he’s currently on the license?

A:  He will be required to again answer that question “yes” and attach a Disclosure Statement with as much information as he can.  Most times the CSLB doesn’t require that he provide official court documents from the County.  In fact, they likely have the information on file already if he submitted it in the past.

Q:  I have a quick question and was hoping you could answer it correctly. I want to start a general construction business and file as a corporation. I am trying to avoid paying Worker’s Comp on myself if I can do it legally. I will not be the Qualifying individual for the license, my friend will. He is trying to help me out because I was an unlucky applicant that got audited for work experience and they would not except my W-2’s from being a plumber and electrician as any credit towards a “B” license. Is there any way to avoid Workers Comp? I have the freedom to structure this any way I can as I am going into business with a friend who trusts me.

 

A:  As long as the corporation does not have employees, you are not required to carry Workers Comp.  That being said, if the corporation will just be made up of you and your friend/business partner, you would just need to make both of you Officers as opposed to employees. Worker’s Compensation Insurance is required for some contractor licenses (Roofers, as example), and for all of us; contractor, consumer and employee it is just the right thing to do in providing insurance for workplace injury.

Q:  I would like to get my “C-53” (Swimming Pool Contractor) License ASAP. I have been in the industry for 15+ years as Project Manager and Sales. Do I still need to take the exams?

A:  Yes, you will need to take the exams for a new license. You cannot Waive the exams based on experience alone.

‘S’ Corporate Entity Change, Listing Officers and Cash Bonds

Bonds, license bonds that is, employee ownership and help for a ‘foreigner’ are introduced in this edition.  I start with some important differences as an applicant gets his business organized along some ‘easy’ lines…

Q:  I am going to be buying an HVAC company and obtaining a new Contractor’s License.  I am trying to decide whether I should apply as a corporation or an LLC. What is the difference and is one easier than the other when it comes to getting licensed?

A:  There are several differences between corporations and LLC’s (Limited Liability Company), the biggest difference being how each are taxed.  You should consult with an attorney or tax advisor to discuss the tax differences and advantages/disadvantages of each.

Choosing one type of entity is not necessarily “easier” than the other when it comes to getting licensed, there are several additional requirements for Contractors applying as an LLC.  In addition to the $15,000 Contractors Bond that is required of all licensees, LLC’s are required to also have a $100,000 LLC/Worker Bond.  Limited Liability Companies are also required to show proof of at least $1 million in General Liability coverage, which is not required for other entities.

Q:  We are in the process of replacing our RME (Responsible Managing Employee) who recently left the company.  When we originally obtained the license, we posted $12,500 cash in lieu of the $12,500 Bond of Qualified Individual.  Is that money transferrable to the new RME?  If it’s not transferrable, how do we go about getting the money back so that we can use it for the new Qualifier?

A:  Bonds, including cash bonds, are not transferrable.  You will either need to post a $12,500 Bond of Qualified Individual or post another $12,500 cash.  The CSLB will not release the cash bond until three years after the period for which it provided coverage.  Cash deposits are held in case a claim is filed against the deposit.

Q:  When applying for a license as a corporation, are we required to list our shareholder (which is another corporation) on the application, or are Directors sufficient?

A:  If you are applying as a Foreign corporation (entity formed outside of California) you are required to at a minimum list your President on the application. If you are applying as a Domestic Corporation, you are required to list your President, Secretary, and Treasurer on the application.  The CSLB does not require that corporations list their shareholders.

Q:  Our corporation is a licensed contractor in Nevada.  We are in the process of changing from a standard ‘S’ Corporation to an Employee Stock Ownership Plan (ESOP).  Do we need to do anything to update our Contractor’s License?

A:  A change in ownership does not require that you update your Nevada Contractors License. However, I am not a tax advisor or attorney so suggest you research changing from an ‘S’ Corporation to an ESOP and if it would warrant a new Federal Identification number. That change may trigger a new application be submitted as your ‘business entity’ is now a different structure.

If your entity changes or if your Officers change, you are required to report it to the Nevada Contractors Board to update your license.

RMO Officers, NV Licensing Process & ‘Borrowing’ Licenses

There are a ‘number’ of things that just can’t be borrowed in life or contractor licensing. An out-of-state contractor gets help in getting a license in Nevada ‘step by step’. Wrap up with a ‘salute’ to those Officers who are ‘responsible’ as license qualifiers…

Q:  We are looking for guidance as we recently obtained a well drilling company that doesn’t have a Contractor’s License.  I have been drilling wells for over 5 years but don’t have my own license.  The company we purchased had a couple of unfinished wells that we need to complete.  One of our customer’s needs his well completed right away and I’m worried that the process of obtaining the license will not meet his time frame.  Can I hire someone who holds a “C-57” license and use their license to complete the project?

A:  No, you cannot “use” someone else’s license for contracting work.  The individual/entity signing the contract as well as the individual/entity doing the work need to have their own license.  However, the good news for you is, due to the recent droughts California has been experiencing, the CSLB has been expediting “C-57” (Well Drilling) applications, so the licensing process may not take as long as you thought.  Contact our office if you’d like assistance with the process.

Q:  We are an industrial gas turbine maintenance, parts, repair and field service company out of Texas (Corporation) seeking a contractor license in NV.  I have been communicating with another company similar to yours but I don’t feel like I’m receiving the details that I need.  First, they said I just need to submit an application with a $300 fee.  When I download the application online, I come to find out we also need a business license in Nevada and it references a $600 fee.  I just need someone to clarify this for me.

A:  We can help you with the process if you’d like, but to clarify, yes you do need a business license in Nevada before you apply for the Contractor’s License.  You obtain a business license by registering your company with the Nevada Secretary of State as a foreign Corporation.  You also have the option of forming a separate company.  I recommend consulting a CPA or an Attorney to discuss these options.  As far as fees, you are required to submit a $300 fee with your application, and then an additional $600 biannual license fee is due once your application is approved.

Q:  Can a Responsible Managing Officer (RMO) be an Officer other than President, Secretary, or Treasurer, such as Vice President or Director?  Also, does the Certification of Work Experience need to be filled out if the RMO already has an Inactive license with the same classification?

A:  Yes, an Officer can have several titles other than President, Secretary, or Treasurer.  Vice President and Director will both be acceptable.  “Assistant” Secretary/Treasurer, etc. is usually also acceptable.  Other acceptable titles are CEO and COO.

RME Qualifier, Down Payments, “C-53”, Garage Storage and Reciprocal License States

While estimates, design and plans need to add up in building, the rules of addition don’t always apply to contractor licensing. Limits, exceptions and interpretation in contractor regulations can change results. We take a trip to Oregon, take a ‘dip’ on swimming pools and help another contractor ‘hang around’ the garage…

Q:  We have an employee who holds an Inactive “A” and “B” license.  He currently is the Responsible Managing Employee (RME) for another company’s General Building (“B”) license.  Can we then use his “A” qualification and add that classification to our license?

A:  Even though he is qualified for two separate classifications, RME’s can only qualify for one Active license at a time.

Q:  I understand the law reads that a Home Improvement Contractor can only ask for 10% of the total home improvement contract or $1000 down payment.  Is it legal for me to accept more than that if the Homeowner offers without me asking?  Is there an exception to this law for special orders?

A:  The way the law reads is it is illegal to ask for or accept a down payment of more than 10% of the total home improvement contract price, or $1000, whichever is less.  There are no exceptions for special order materials.  The only down payment exception is for the few contractors who carry special blanket and performance bonds to protect consumers.

Q:  I would like to get my “C-53” (Swimming Pool) License ASAP. I have been in the industry for 15 years as Project Manager and Sales. With my many years of experience, will I be required to take the exams?

A:  Yes, you will be required to take the law and trade exams.  Having many years of experience in the trade does not qualify as one of the reasons the CSLB will grant a Waiver of the exams.

Q:  Does California have a reciprocal agreement with Oregon?

A:  No, California has a limited reciprocal agreement, or reciprocity only with Nevada, Arizona, and Utah.

Q:  What type of Contractor’s License is needed for installing garage storage systems?  We will be doing cabinets and shelving for organizational purposes.  Thanks, in advance.

A:  If the cabinets and shelving are prefabricated and you are just hanging them, the “C-61”/”D-34” (Prefabricated Equipment) would be sufficient.  However, if you are fabricating and installing the cabinets you would need to hold the “C-6” (Cabinet, Millwork and Finish Carpentry) classification.

CSLB Fees, “C-10”, Trail-building License and NV Qualifiers

Yes, no and sometimes a maybe. Answering questions about the complex law and interpretations of it in the real world is why it’s often hard for contractors to know what’s what; yes, no or maybe! Getting it wrong can be costly, and why we always welcome your questions…

Q:  We are replacing our Qualifying Individual in Nevada.  He only qualifies the Business portion of the license.  Does he still need to get the four references completed?

A:  No, only Trade Qualifiers are required to obtain references and complete a resume.

Q:  We are a non-profit organization that builds dirt trails.  Are we required to have a Contractor’s License and is the process any different for nonprofits?  Would a “C-27” (Landscaping) license work for this?

A:  Yes, you are required to have a Contractor’s License to build dirt trails.  The most appropriate license would be either the “A” (General Engineering) classification, or the “C-12” (Earthwork and Paving) classification.  The “C-27” classification would not cover you for the engineering involved in building the trails.

Q:  I completed an application in mid-July of last year and then we got busy and I never did anything with it.  I still have it with original signatures.  Can I submit this with dates from last year or will I need to get a new Certification page and everything?  I noticed the CSLB released new applications late last year.

A: Maybe, before deadlines. You may want to update the dates on the application, but the CSLB will currently still accept the old forms.  However, effective May 1, 2017, the CSLB will no longer accept older forms.  All applications submitted after May 1st are required to have a revision date of October 2016 (or later) reflected in the bottom left corner.

Also, the sooner you get it submitted the better, because effective July 1, 2017, the CSLB’s fees are going to increase.  For example, the current license/application fee will be increased from $480 to $530.

Q:  I have a “C-10” (Electrical) Contractor who wants to work with my corporation. He wants to still work with his licensed Sole Proprietorship while he works with me as a Responsible Managing Officer (RMO). Is this possible?  How can we structure it so he can Qualify my corporation for a “C-10” license while he still has an Active Sole Proprietor?

A: Yes.”  The “C-10” Contractor would be required to have at least 20% ownership in your corporation in order for your scenario to work out. Also recommend checking with a tax and legal advisor in this choice.

Unlicensed Scams in Diaster Zones, Officer Replacement and Stock or Asset Sale?

A ‘caveat emptor’ warning for contractors and consumers! However, we begin with ‘distinction’ in our first answer, and give another contractor some extra ‘time’…

Q:  I have a “C-9” (Drywall) license and I’m selling my business (Corporation) to a person who doesn’t have a Contractor’s License and cannot document the four years of experience to Qualify.  Can he just continue operating with my license number if he’s the owner?

A:  Is it an asset sale or a stock sale?  There is a distinct difference. If you are doing a stock sale, the Corporation can use the same license number.  If it will be an asset sale, the company would need to apply for a new license number.  Keep in mind that either way, the license needs to have a Qualifying Individual who is either qualified for the “C-9” classification based on prior licensure or by documenting the required experience and passing the exam.

Q:  Our President disassociated from our license in November of last year and we have yet to replace him.  Is there a certain time frame to elect a President and notify the CSLB?  I know when a Qualifier disassociates we are given 90 days to replace him/her on the license.

A:  No, there is no specific time frame the CSLB has for replacing an Officer on a Contractor’s License.

CSLB Issues Statewide Consumer Alert:

This Winter’s heavy rains and storms have left many asphalt roads and driveways throughout the State crumbling.  The CSLB urges consumers to beware of long-standing construction scam, in which unlicensed paving and seal coating contractors from out of state come in and take advantage of unsuspecting homeowners. 

“With heavy rain around the state this winter, it’s especially likely other groups of transient criminals are out there,” said CSLB Registrar Cindi Christenson. “Always be wary when someone shows up uninvited at your front door and says they’ve got a ‘great deal’ with leftover materials.”

The CSLB urges consumers and licensed contractors to watch for these red flags:

  1. No CSLB issued Contractor’s License
  2. Unsolicited offers to do seal coating, paving, roofing, or painting
  3. Claims of leftover materials
  4. High pressure sales or scare tactics;
  5. Reluctance to sign and written contract;
  6. Demand for payment in cash or checks written to individuals or their spouses, rather than to the business;
  7. Brand new vehicles, large pickup trucks with a large tank on the bed or pulling a trailer, dump trucks, or other heavy road construction equipment with out-of-State license plates, no plates at all, or obscured license plates
  8. Toll-free or out-of-State telephone number, instead of a local contact number

As stated in their March News Release, the “CSLB and DA investigators urge anyone in California who believes they were victimized by the group, operating with the company name “Blacktop Seal Coating” or “D & C Paving,” to immediately contact CSLB investigators at (916) 255-2924, or by email. You should also contact CSLB if you’ve been victimized, or even approached by others with a similar sales pitch, as transient criminals often travel in groups and operate under different personal or business names.”

A buyer beware world, our law enforcement depends on the public; consumers and contractors to be their eyes and ears on the streets of our communities.

License Transfer, “C-53” and Earthquake Brace & Bolt Program

While CA occasionally ‘shakes, rattles and roll’ as Earth adjusts itself, contractors can now play a role in preventing injury or worse in the event of an earthquake!

First, we go forward with some quick answers to complex questions on license transfers, Qualifiers and ‘diving into’ swimming pools…

Q:  My Dad and I have a Corporate contractor’s license, which he is the Qualifier of and I am the Secretary/Treasurer.  My Dad is retiring and is planning to shut down the corporation, so we cancelled our Worker’s Compensation insurance and now our license shows Suspended.  Is it possible for me to transfer that license to a Sole Proprietorship?  I can get a Bond and I wouldn’t have employees so I wouldn’t need Worker’s Comp.

A:  No, you cannot transfer a license from a Corporation to a Sole Proprietorship.  You would need to apply for a new license number.

Q:  I am a licensed contractor in Florida and I am hoping you can offer some advice as to which classification of contractor’s license I will be required to have in California.  What I do is locate leaks in concrete swimming pools and spas and repair them.  This can involve removing and replacing tile and/or coping, repairing large structural cracks using carbon-fiber stables and injecting, removing and replacing skimmers, main drains, and pool light niches.  I also sometimes cut or hammer through decking surface to repair broken plumbing lines and then backfill and repair deck material.

A: ”C-53” (Swimming Pool) license would be required for the work you described.

Q:  Can you please let me know if the Qualifying individual with the contractor’s license has to be an employee of the Limited Liability Company (LLC) obtaining the license?  Or would it work if the Qualifying individual is an employee of the Parent Company?

A:  Your license Qualifer is required to be employed by the entity obtaining the license number.

Contractors Note! Attention contractors experienced in seismic retrofitting:  Earthquake Brace + Bolt (EBB) is an earthquake retrofit program developed to offer homeowners financial incentive for seismic retrofits that will lessen the potential for damage to their homes during an temblor.  The program is offered to consumers owning homes built prior to 1979, and it has expanded to over 30 cities throughout California.  This program presents additional work opportunities for contractors!

More than 95 percent of homeowners participating in EBB rely on the program’s directory of licensed contractors to do their retrofit project.  Licensed contractors can register to be listed on the directory at no charge by completing the online Federal Emergency Management Agency (FEMA) education training. In addition to being added to the directory, participants will be eligible to receive free EBB marketing materials, including brochures, job site checklists, yard signs, and phone support if questions arise about the program.  If you want to participate, go register and take the free online FEMA training as soon as possible!

Check EBB’s website for a list of zip codes where the program is offered.