Reciprocity, Paying for License Qualifiers and NV HIS

Now you need it, now you don’t! Moving from one state to another contractor law changes as our first couple questions illustrate. However, our last inquiry offers the ‘exception’ to the rule in CA…

Q:  I am a registered HIS (Home Improvement Salesperson) in California.  I sell Solar products to Homeowners.  I am moving to Nevada and was wondering how I would go about registering as a HIS there?

A:  I am not aware of any HIS registration for the State of Nevada.

Q:  We have a Delaware LLC that we need to get licensed in California.  We are negotiating with a Contractor who is already licensed under his own corporation.  He is not currently doing any work and he has agreed to let us use his license.  How does that work?  Is there a way to transfer the license from his corporation to our LLC?  Do we have to give him a certain amount of ownership in our company?

A:  First, you cannot “use” someone else’s contractor’s license.  If the LLC will be doing contracting work in California, they are required to have their own license issued in the name of the LLC.  Licenses are also not transferrable from one entity to another. You can however use the individual as your Qualifying Individual.  It is not required that you give him any ownership. If he will not have any ownership in your LLC, he will either need to Disassociate from his corporate license, or he can Inactivate it.  If he will have at least 20% ownership in both your LLC and the corporation, he can Qualify both Active licenses at the same time.

Q:  My company’s RMO (Responsible Managing Officer) is leaving the company for a better opportunity.  Apparently, companies in CA seeking to get a contractor’s license are paying individuals who already have licenses a large fee to act as their RMO.  I happen to know the individual leaving our company will have no involvement in the new company operations.  They are strictly paying him for his qualification.  Is this legal?  By the way, we are going to need your help with adding a new RME/RMO to our license.

A:  The short answer is no, that is not legal.  Contractors who serve as Qualifier’s must exercise direct control and supervision of the company’s construction operations.  The CSLB has a task force which specifically investigates cases where Responsible Managing Officers (RMO’s) are suspected of acting as paid figureheads for a company, but exercise little to no control over operations.

B&P Code Section 7068.1 authorizes the CSLB to discipline a Qualifier, and the licensed entity they are qualifying, when the Qualifier is not actively involved in the contract activities of the license.  In addition to the administrative penalties, the individual can be charged with a misdemeanor and be sentenced to serve up to 6 months in jail, and required to pay a fine, or both, if convicted.

Q:  I am an out of State Contractor.  Does California have Reciprocity with any other States?A:  Yes, California has Reciprocity with Nevada, Arizona, and Utah.  The reciprocal agreement allows you to Waive the trade exam in CA if you have been actively licensed in NV, AZ, or UT for five out of the last seven years.

Unlicensed Offenders, Handy People Limit, Business Purchases and Licensing

Everything. Our homes, communities, State and Nation all come from the labor of hard working men and women. As we celebrate Labor Day to honor those who build America, we honor licensed contractors as the foundation of our world!  You can honor them when you check they are licensed with CSLB and refuse to do business with the criminals…

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.

Build your world, but buyer beware. Check with CSLB for the good guys!

Joint Venture Bids, Experience Rejection and RMO Qualifiers

Our last inquiry is the longest as questions ‘multiply’ when contractors combine their ‘ventures.’ Rejection is always hard to take, especially when they are right. Another contractor must seek an ‘advantage’ and balance ‘risk vs reward’ as more is never less!…

Q:  I recently applied for a “B” (General Building) Contractor license.  My work experience page was rejected with several items highlighted, one of them being “managed/oversight of sub-contractors”.  The rejection letter states the highlighted items do not apply.  I can make the corrections, but just for my own curiosity, why would managing sub-contractors not be considered relevant experience to obtain a contractor’s license?  It seems to me that several of the other highlighted items would be relevant as well.

A:  First they, the CSLB, do not consider “managing sub-contractors” as experience because sub-contractors should be licensed as well, meaning they have been deemed to qualified contractors who do not need supervision.  After reviewing your Work Experience page, I agree some of the items are “relevant” however the CSLB is only concerned with your trade duties.  They do not want you to include tasks such as estimating, hiring, contracts, pulling permits, etc.  Don’t forget as well, when applying for a “B” license, you are required to show experience in Framing and two unrelated trades.

Q:  You are helping my new company obtain a Contractor’s License for HVAC (“C-20”).  I tried to apply to qualify the license early last year and the CSLB wanted me to have an EPA Certificate, which I didn’t have at the time, so now we are using an RMO (Responsible Managing Officer) who already has an Inactive “C-20” license.  He also has several other classifications on his license (General Building, Refrigeration, Concrete, and Masonry).  Even though we are an HVAC company, is there any disadvantage (i.e. additional bonding) to attaching his other classifications to our license as well?

A:   The only “disadvantage” is the State fee will be higher.  The initial License/Application fee is $530, and each additional classification is $75.00. If you don’t mind the additional fee, you may as well apply for all of his classifications as it will allow your company to provide a wider variety of services.

Q:  We are going to be forming a Joint Venture in California.  Our company is already licensed.  The company who we are Joint Venturing with is almost done with the license process.  Their Qualifier has already passed the exams and they are just waiting for it to be issued.  I have several questions.  First, is the Joint Venture required to be licensed upon entering a contract, or upon performing the work?  Second, is the Joint Venture required to be registered with the Secretary of State?  Last, since we have several projects in San Francisco just waiting for the JV to get a license, can we submit the application prior to our partner company actually having a license number?

A:  While Joint Ventures are permitted to bid on projects prior to being licensed, they cannot enter in to any contracts or perform any work until the JV is properly licensed.  Joint Ventures are not required to be registered with the Secretary of State.  Lastly, as the JV application requires that you list both entity’s license numbers, you cannot submit an application, prior to your Partner company obtaining their license.

More Concrete Generals, When to Get Fingerprinted and Electrical

We all know what we know, think we know more and often have no clue what we don’t know! In the cases of these contractor questions for our expert, the unfortunate answer was no how, no way…

Q:  I currently have a Sole Proprietor General Building (“B”) license that’s been Inactive for about three years now.  I want to add the “C-8” (Concrete) classification to my license in order to obtain a separate Concrete license for a Partnership that I am starting with my business associate.

My attorney said I may be able to Waive the Trade exam based on my General Building license if I can show that concrete has been a significant portion of my work for five out of the last seven years.  What does the CSLB consider acceptable documentation to prove my concrete experience?

A:   Your attorney is referring to B&P Code Section 7065.3, which allows for a Waiver of the Trade exam when adding a classification to your license if you meet the requirements.  As your attorney stated, one of the requirements is the classification needs to be closely related to your current classification and it must have been a significant portion of the work you performed for five out of the last seven years.  Since your license has been inactive for three years now, there is no way for you to document using your General Building license for performing Concrete work as required.

Q:  Our corporation is going to be applying for a new license and our Officers all live in Michigan.  I read that if they get fingerprinted outside of CA the process can take months longer than if they do it in California.  They will be out in CA next week to meet with the client that they will be doing a project for (once they are licensed of course).  Can they get fingerprinted at that time?  Do they just save the receipts and submit them with the application?

A:  No one can be fingerprinted until you apply for the license and get the notification from the CSLB to get fingerprinted.  The CSLB will send out Live Scan Request forms, which they will be required to take with them to get printed.

Q:  Our Company currently has a “C-10” (Electrical) license however over the past several years we have strictly been doing low voltage work.  As I’m sure you’re aware, the “C-10” license requires that our employees obtain an Electrical Certification to perform any work.  If we wanted to obtain a separate “C-7” Low Voltage license to avoid the electrical certifications, would our Qualifying Individual need to take an exam, or would he be eligible for a waiver based on the fact that he passed the full electrical exam for our current license?

A: If your company is applying for a separate “C-7” license and your Qualifier has never held the license before then he will not qualify for a waiver of the trade exam.

Under certain circumstances, B&P Code section 7065.3 allows an individual to request a waiver of an exam when adding the classification to an existing license. To request this, you have to be able to show that the classification being added is closely related to the classification currently listed on the license.  Additionally, you will need to show that low voltage work has been a significant part of the work you have done with your “C-10”.  The CSLB will want to see that you have at least four years of experience within the last ten performing “C-7” work at a journeyman level or above.

Since your work is strictly low voltage, once you add that classification, you may want request to have the “C-10” classification removed from the license in order to avoid the need for electrical certifications for your employees.

As these questions and answers show clearly what you don’t know is why you call the experts!

NV Contract Bid Limits, HVAC, Qualifying More Than One License and Concrete Generals

Unlike Johnny Cash, Nevada contractors can’t ‘walk the line’ outside of an original contract limit. Further ‘study’ is required for an aspiring applicant and I find a ‘concrete’ way another licensed contractor can likely double his business opportunities…

Q:  We have a NV Contractor’s license and our bid limit is $200,000.  We are currently doing a Home Improvement/Remodel project that started at $185,000, but the project keeps expanding.  The home owners have been very happy with our work and have requested that we do additional improvements.  What is the rule for changes/additions along the way?  Are we permitted to perform additional work outside of the original contract?

A:  No you cannot.  Your bid limit is the maximum contract you may undertake on one or more construction contracts on a single construction site or subdivision site for a single client.

Q:  I am currently in the study process to obtain my “C-20” (HVAC) license and hope to be able to take the test within the next 60 days. However, I am in a position at this time to get funding to get the business set up and operating as a corporation and have potential projects that are ready to be contracted to me. My current employer, who holds a “C-20” license, has informed me that he would sign on now as the license holder (RMO) in order for me to get the company going and conducting business while I continue studying and wait for a test date through the CSLB. I want to confirm that it’s possible to have a current license holder who is conducting business with his license also be the holder with my firm? I find the CSLB website is not all that user friendly on this topic and I am struggling to find an answer. Please Help!

A:  Your question is quite possibly the most common question we hear. Short answer to your questions is no. These are the conditions that must prevail.  There are very few instances where an individual can Qualify more than one license.  An RMO (Responsible Managing Officer) can only Qualify an additional license if one of the following conditions exist: a) The individual owns at least 20 percent of each firm for which he/she is Qualifying, b) the additional firm is a subsidiary or a Joint Venture with the first, meaning one firm owns at least 20 percent of the other, or c) the majority of the Officers/Partners are the same.

Q:  I currently have an “A” (General Engineering) and a “C-8” (Concrete) license.  I want to separate the classifications and have the Concrete be on a different license under a different business name.  How do I go about this?

A:  You would need to apply for a new license in the new entity’s name with only the “C-8” (Concrete) classification listed.  You will be issued a new license number.  You would also want to file an Application to Remove the Classification from your current license.  I would recommend filing the Application to Remove only after the new license is issued so there is no lapse in the “C-8” classification.

Deterring Theft of Tools & Equipment on and off Construction Sites

They don’t just grow legs and walk away so the Contractor’s Board is warning contractors to watch their tools as we report in this issue. Technology has raised the ‘ante’ and the ‘stakes’ are high as thieves know how to ‘cash’ them in. What can you do? Read this first!…

The CSLB says construction tools and equipment become more advanced and valuable each year making them easy targets for thieves looking to make a quick buck off your property. The Board reminds contractors that taking precautionary measures can help alleviate thefts.

Tool boxes affixed to vehicles and storage containers housing equipment are magnets for lawbreakers. Bolt cutters can remove security locks. These thieves target the darkest hours of the night through early morning. At Capitol Services we have heard of entire trailers disappearing in the night!

Spend a little save a lot? A small investment in security cameras and parking in well-lit areas can help protect vehicles and worksites. Video also helps catch crooks. With the use of surveillance footage as evidence criminals convict themselves.

To further protect equipment, contractors might consider permanently labeling their items. One method includes engraving tools and equipment with a personal name, business name, or CSLB License Number. The engraved information could ultimately lead to the tool’s recovery or could deter thieves since they may have a difficult time grinding off the information.

Here’s a great suggestion for both contractors and consumers. Every power tool should be immediately logged by photo and serial number. By taking the time to inventory tools, you will have a record if something were to go missing, which may help when filing insurance claims. This also gives law enforcement the true owner’s information if tools are evidence or recovered.

For taking more action in deterring thieves, local authorities provide services, such as conducting field interviews of suspicious individuals even if a crime has not been committed. Contact your local non-emergency dispatch office to report questionable behavior. Capitol Connection reminds us, contractors and the public are ‘extra’ eyes for law enforcement and reporting suspicious behavior is better safe than sorry!

 

Update on Demolishing Mold, Plumbing Sinks and Installation of Synthetic Turf

Law can cut a very fine line. That’s why experts discuss interpretation of the rules which can change as written law meets the real world.  This distinction in regulation ‘sinks’ in for a Masonry contractor. Some ‘grass roots’ advice for a General before ‘tearing down’ a previous answer after further research with the CSLB. We’ll update a response on water and mold remediation in CA for a CO contractor…

Q:  We currently have a “C-29” (Masonry) license.  Sometimes we install sink and faucet along with the countertop in bathroom and kitchens.  Do we need to have an additional classification to do this, or are we permitted to do it since it’s part of the countertop job?

A:  If you are only disconnecting and re-connecting the sink for the purpose of the countertop installation, then you do not need to have an additional classification.  However, if you are installing new connections or fixtures, then you should obtain a “C-36” (Plumbing) classification.  Your Plumbing Qualifier will need to show four years of full time work experience doing plumbing work and take the exam(s).

Q:  I am a General Building contractor and one of my customers who I am doing some work for wants me to install synthetic turf in his back yard.  Am I permitted to do that as I’m doing other unrelated trades on the same job?

A:  A “B” (General Building) contractor cannot install synthetic turf.  You can include it in your contract as long as you subcontract the work to a licensed “C-27” (Landscaping) contractor or a “C-61”/”D12” (Synthetic Products) contractor.

Q:  We are a Colorado company looking to get licensed in California.  I saw a recent post you published in reference to the classification of licensure required for a contractor doing similar work to what we perform.  Our business is engaged in water and mold remediation. In the course of our work, we remove surface-level materials such as drywall, baseboards, flooring, countertops, and cabinets. We also detach sinks, toilets, dishwashers, washer/dryers, and other such appliances. We test for lead and asbestos when appropriate and allow licensed specialists to do that work when testing comes back positive. We do not touch anything electrical other than unplugging (from a socket…we do not touch anything hard-wired) a washer, dryer, dishwasher, or other appliance in order to move the appliance. We do not re-attach any plumbing fixtures. We do not install any materials such as drywall, paint, baseboards, cabinets, countertops, flooring, etc. We do not remove anything structural such as framing or shear wall. We allow licensed contractors to do all work involving re-attaching appliances or re-building the home.  You referenced the “B” General Building classification, however we cannot document actual building experience.  What is your recommendation?

A: I’ve been asked this question frequently lately and after further discussing it with the Classification Deputy at the CSLB, to modify what I said previously, the “B” (General Building) classification would not be required to perform the work you described.  The “C-61”/”D-64” (Non-Specialized) classification would cover you for this work.  Bonus! The “C-61” classifications do not require a trade exam.

Reciprocity Waivers, Corporate Licensing and Demolishing Mold

He is likely a gentleman, but isn’t an ‘Officer’! I ‘break down’ the issues on ‘General’ mold removal, while correcting another contractor that reaches an incorrect conclusion about having your cake and eating it too. I will ‘waive’ off his mistaken notions about reciprocity…

Q:  My company does mold restoration, we tear out moldy wet drywall, cabinets, flooring, etc.  We do not “restore” or install anything.  My company has a “B” (General Contracting) license.  I want to get my own license and I’m wondering if I need to also have the “B” license, or would a Demolition license be more appropriate?

A: You would also need to have a General Building contractor’s license.  A “C-21” (Building Moving/Demolition) contractor demolishes or removes structures, but does not include the alterations, additions, repairs or rehabilitation of the permanently retained portions of such structures.

Q:  My son has been working for me for years.  He’s not an Officer of the company.  Is there any way to add him to the license?

A:  There are only two capacities in which an individual can be listed on a corporate license: either as an Officer, or as the Qualifying Individual. So, the only way to add him to the license currently would be to replace you as the Qualifying Individual.

Q:  You recently helped me obtain a new CA license after my prior license was revoked.  I now need to get a contractor’s license in Arizona.  I read that, as long as I have had an Active license at some point within the past five years, and if I took an equivalent exam in another State, I can get a Waiver of the Trade exam in Arizona.  I took the law and trade exams in CA back in the 90’s and my new license is Active.  So I waive the exams in Arizona, correct?

A:  Actually,in your case, you will not be able to Waive the exams.  While you do meet the requirement of having an Active license within the past five years, the Arizona Registrar of Contractors will review all of your license history to see that you passed an equivalent exam, and because you took the exam for a license that is now “revoked,” you cannot qualify for reciprocity.   You will be required to take both the Trade and Management exams.

Corporate Surrender, Worker’s Comp Exemption, Pipeline & Plumbing

We ‘leak’ real news! However, this answer also has ‘alternate’ choices for this contractor. Another contractor ‘rocks’ my world. We help an Oregon contractor get ‘out of town’, but it’s not going to be easy to leave California…

Q:  We are a leak detection contractor and we locate and repair leaking components, including valves, pumps, connectors, compressors, and agitators, in order to minimize the emission of fugitive volatile organic compounds and hazardous air pollutants.  We are responsible for maintaining and using the proper equipment and seeing to it that calibration parameters are within the allowable limits.  We are also responsible for monitoring components which fall under applicable monitoring requirements.  I have reviewed the CSLB’s classifications list and nothing seems to fit.  Do you have any suggestions?

A:  My first thought was a “C-61”/”D-64” which is “unclassified”.  The CSLB will give the class a title based on the type of work done, i.e. “C-61”/”D-64” (Leak Detection).  However just to confirm, I discussed it with the Licensing Deputy and they determined you can review the definitions of each and choose either the “C-34” (Pipeline) or, “C-36” (Plumbing) classification. There is a trade exam for either one you choose.

Q:  I’ve recently bought a stone business that also does fabrication and installation of cabinets in California.   I’ve been reading your articles and thank you for all the great information.  I haven’t seen my current question anywhere.  I created my corporation with myself as President, Secretary, and Treasurer, with my original intent to be the only owner. My RMO has a current General “B” license, so I gave him 20% ownership in my company for him to keep his license Active.  My question now lies with Worker’s Compensation insurance.  Does RMO status qualify him to be an Officer according to CA Worker’s Comp law, thus I am exempt from Worker’s Comp?

A:  I appreciate you reading the column and thank you for contacting me. RMO stands for “Responsible Managing Officer”.  As long as your company does not have employees, and only has Officers, you are exempt from Worker Comp.

Q:  We are an Oregon company and we got a CA Contractor’s License several years ago to do a couple of projects.  We no longer do business so we need to shut down the company.  I found out we are Suspended with the Secretary of State and was informed that we needed to file and pay our back taxes, even though we haven’t done business there for several years.  The Franchise Tax Board sent me the filing requirements and they included a Certificate of Revivor form.  Why would we need to submit a Revivor form if our intent is to close down the corporation?

A:  To close a corporation in CA, foreign corporations are required to file a Certificate of Surrender with the Secretary of State.  One of the requirements to surrender is to file and pay all taxes owed.  Also, for the Secretary of State to process the surrender, your corporation must be active and in good standing.  You will need to file the Certificate of Revivor with the Franchise Tax Board for the Secretary of State to lift your “suspended” status and put you back to Active/Good Standing.

NV/CA Generals, License Fee Increases and Construction Management

We all have a ‘definite’ idea of how a rule works, but what really counts is who originally ‘defines’ it, especially contractor regulations. Another question prompts an answer on the ‘bond’ between corporations and LLC’s. While Shakespeare asked about ‘to be or not to be’ I can tell you there is no direct translation of a CA “B” for a NV “B-2”…

Q:  We are a Texas company and we do Construction Management.  We never actually perform any construction work, we just coordinate the plans, consult with sub-contractors and the homeowner, and contract administration.  Are we required to have a Contractor’s License?

A :  Assuming the projects will be over $500, 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 your company will be maintaining oversight of the projects, you will be required to obtain a license.

Q:  What are the bonding requirements for Corporations versus LLC’s?

A:  All licensees (both corporations and LLC’s) are required to have a $15,000 Contractor’s Bond.  In addition. LLC’s are required to have a $100,000 LLC/Worker bond which is not required of corporations.  If the qualifying individual owns less than 10% of the company, he/she is required to have a $12,500 Bond of Qualified Individual.

Q:  Can I renew my license if it is currently Suspended?  I submitted my Worker’s Comp certificate but the CSLB hasn’t processed it yet so my license shows Suspended.

A:  The CSLB will not renew your license as Active until the Suspension is cleared.  Unfortunately, the unit which processes insurance certificates is quite backlogged right now so you are definitely not the only Contractor experiencing this issue.  You can still send in the renewal on time with the appropriate fee to avoid the delinquent fee.

REMINDER To REMEMBER!

Don’t forget CSLB fees go up on July 1st (2017).  The fee for an Active timely renewal is now $400.

Q:  I have had a Nevada “B-2” license for about a year.  Since CA doesn’t have a “B-2 license”, I applied to obtain a “B” (General Building) license.  I do residential remodels.  The CSLB sent me a Rejection letter stating that I need to show proof that I’ve done framing, which I have not.  I do all aspects of General Building besides framing and roofing.  Do you have any suggestions?

A:  In order to qualify for a General Building license in California, you absolutely have to show that you have experience doing framing and at least two unrelated trades.  There is no way around this requirement.  Your options are to either have someone else qualify the license who can show the appropriate experience, or you can obtain several Specialty “C” classifications to cover the work you do.  Keep in mind you are required to show at least four years of full-time work experience within the last ten in each trade you apply for.