Fingerprint Rejection, Qualifier Retirement in NV & CA and RMO/RME

Simple. No, this is contractor law in two states just to start with! I ‘employ’ expertise for another question and share the ‘manual’ on fingerprinting when you apply for a CA contractor license…

Q:  Our Qualifier is retiring and wants to disassociate but still retain his own license. I have been an Officer on the license since 2012 so I don’t see a problem with me keeping the Company license. As far as getting him off the Corporation, would that be just filing a new Statement of Information with the state? I know it can’t be that simple, please let me know where we start.  We need to do the same in Nevada as well so let me know how that works.

A:  You are correct, it is not that simple.  You do need to file a new Statement of Information with the CA and NV Secretary of State to update the Officers. You will then have someone replace him on the license in each State.  For CA, since you have been listed as Officer on the license for over five years, you can apply to replace him and request to Waive the exams based on B&P Code 7065.1.  You will still need to document your Trade experience.  Nevada doesn’t have a rule that allows you to request a Waiver based on your experience or the fact that you’ve been an Officer, so if the new Qualifier has never been licensed in Nevada, he/she will need to take the Law and Trade exams.   Once your current Qualifier disassociates from the licenses, he will keep his qualification for a period of five years.  So, he’ll want to then apply for his own license within that time frame in order to avoid re-testing. So, not simple.

Q:   I’ve been reading your articles and I know that an RME/RMO needs to have four years of experience in the Trade.  Is there any requirement that he/she be employed by our company for a certain amount of time?

A:  No, there is no certain amount of time required, just that the individual be employed by the company when you file the application.

Q:  We have a pending application with the CSLB.  We received the fingerprint packet and sent all of our guys to a live scan facility here in Southern California, they all went to the same facility.  We received a letter from CSLB asking that one of our officers get re-fingerprinted “due to errors in completing the original live scan form and/or technical difficulties with the original prints submitted”.  Have you seen this come up before?

A:  Yes, we have seen fingerprints be rejected before.  Sometimes fingerprints are illegible for various possible reasons.  If they are still illegible on the second and third try, the CSLB will send him the hard copy fingerprint cards to be done manually.  I hope that doesn’t happen in your case because the hard copy fingerprints take much longer to process.

Foreign Company Licensing, ‘S’ Corps and Contractor Referral Companies

I assist contractors with licensing in CA, NV and AZ, including those with ‘foreign’ accents unfamiliar with the American way. And all it takes to provide contractors help on some questions is a little bit of ‘sole’…

Q:  We are an out-of-country contractor and we have a California ‘B’ (General Building) contractor’s license but we are unfamiliar with all of the rules or limitations the State has in place.  If certain Construction work, such as Roofing, is carried out, is it considered unauthorized and can be punished?

A: Oh yeah.  General Building contractors are required to perform at least two unrelated trades on any given job.  They cannot perform a project involved only one trade such as Roofing as you suggested.  And yes, they can get punished for doing so.  Specialty single-trade work must be performed by the appropriate C-class contractors.

Q:  We recently changed our status from a Sole Proprietorship to a ‘S’-Corp and need to make the necessary changes with the CSLB and other entities.  I was referred to you by my attorney and told that you are able to assist with this process.  My husband was the Sole Proprietor and has the CSLB license. Now, I am the majority shareholder (51%) and he is the minority shareholder (49%).  I’m not sure if the ownership even comes into play but I thought I would mention the change, in case it’s incidental to the process?

A:  Yes, we can help and would be happy to assist you!  With regards to the licensing perspective, the change in ownership will grant you a new license number. In this case your mentioning ‘ownership’ was important. In order to transfer a license number from a Sole Proprietor to a Corporation/LLC, the licensee (Sole Owner), needs to own at least 51% of the new entity.

Contractor’s Note:

While there has always been a marketplace for contractor referral companies, it seems there are now more than ever offering different services.  The CSLB has been addressing emerging issues regarding online marketplace and contractor referral websites. Basically, many referral websites charge a contractor for leads, and they link consumers to the appropriate contractor(s) in their database who match the consumer’s needs.

There is no doubt the contractor performing the home improvement work (over $500) is required to have a Contractor’s License, however there has been a question as to whether the online marketplace or referral website is also required to have a contractor’s license.

While contractor referral services are legal in California, contractors should beware of referral services who offer to solicit or negotiate contracts on behalf of the contractor.  Referral services may act as a facilitator for licensed contractors and provide consumers with contractors’ contact information, however the licensed contractor and consumer should enter into the contractor directlywith one another, and all payment made by the consumer should be made directly to the licensed contractor.

Family Waiver, Independent Qualifiers, AZ Reciprocity and General HVAC

Some of the time it’s an easy contractor licensing answer, some are complex and others just take longer to develop the ‘full-time’ picture. Help arrives for a contractor planning for his road trip to AZ but, first, we start with a General looking for some ‘cool’ new business.

Q:  I am a “B” General Building contractor.  The HVAC business is huge right now and I’d like to expand my business so that I can advertise for and perform specifically HVAC work.  Is it just a matter of paying a fee to add it to my license or is a new license required?

A:  A new license is not required.  In order to add the “C-20” (HVAC) classification to your license, you will be required to document at least four years of full time work experience doing that specific work.  You will need to take and pass the Trade exam and in addition, “C-20” contractors are required to have an EPA CFC Certificate; either Universal or Type II.  The fee to add a classification is $150.00.

Q:  We are trying to obtain our Arizona Contractors License and I don’t know if I should bother with the Reciprocity Waiver Request.  We just obtained our California license, we had our Responsible Managing Employee (RME) take the exams at the end of last year.  Should we just have him take the exams for the Arizona license?  I was under the impression you had to have had an Active license for five years in order to qualify for Reciprocity but I’ve heard conflicting information.

A:  Arizona allows for a Waiver of the Trade exam if the qualifying party has taken the equivalent Trade exam in another State and has been Actively licensed within the previous five years. So, yes go for it!

Q:  I understand that an RME (Responsible Managing Employee) is required to be a direct employee of the licensee they are qualifying and therefore they must receive W-2’s.  Does an RMO (Responsible Managing Officer) have the same requirement, or can an RMO act as a consultant and be 1099’d?

A:  Yes, while I am not a tax advisor, I can tell you RMO’s are held to the same requirement.  Whether an RME or RMO, a Qualifying Individual cannot be an Independent Contractor.

Q:  I have had a Contractor’s license since the 70’s.  I would like my son to be able to take over the license in the future if he wants the option.  I’m a General Building contractor and he is a Design Engineer.  I read that we can do a family transfer so he can retain the license number.  He wouldn’t be doing any active business, but I just want him to have it in case he branches in to the building side of things.  I would still want to be involved in the business though as he doesn’t have any hands-on experience doing building work.  Can you help with this?

A:  Thank you for contacting Capitol Services Inc.  That is a loaded question that would be best to discuss over the phone, but on the surface, it doesn’t sound like he would qualify.  Please call our office when you have time and we can chat further about your potential options.

DIR Number Feedback, Public Works, RME & RMO and Siding/Decks License

Always gratified to get feedback from readers, and I just got a bunch from public works contractors. Let me clarify and improve the answer on DIR’s with input from contractors on the job. A good day is learning something new and yes even experts sometimes get ‘schooled’…

We start this week’s volume of the Q&A with a shout out to all our Public Works contractors who were right on top of my DIR (Department of Industrial Relations) answer from our last column.  I had many Contractors contact me with clarification: Public Works contractors do in fact need to register with the DIR in addition to obtaining a CSLB contractor’s license number.  They are in fact, not the same.  Increased last year, the DIR registration costs $400 per year and there are other additional requirements associated with DIR registration including providing Certified Payroll Records using DIR’s electronic certified payroll reporting system.

Q:  We are purchasing a Construction company (NewCo), it will be an asset sale.  The current company has two licenses, one in the name of the business entity (OldCo), and one in the name of the business entity with a DBA (doing business as) attached.  The Qualifier, who is an RME (Responsible Managing Employee) is coming along with the purchase.  What are the steps, and in what order, would you suggest to 1) change the RME’s title on OldCo’s licenses to an RMO, so that 2) he can be listed as RMO on the new applications for NewCo?  Can these all be filed simultaneously?

A:  It is not necessary to change the title on the existing licenses from RME to RMO.  Assuming OldCo’s license number will no longer be active with the sale, instead you would just apply for the new licenses with the seller’s Qualifier (as either RME or RMO, your choice), and file a Disassociation from OldCo’s licenses.  If NewCo also intends on obtaining two licenses, one with and one without a dba, they cannot be filed simultaneously.  Each individual can only have one application in process at a time.

Q:  I have a “C-61”/”D-41” (Siding and Decking) Contractor’s License.  I have been asked to re-construct a deck that has extensive dry rot in the joists.  The dry rot is so close to the structure so the joists cannot be repaired via “sistering”.  When I replace the decking and railing, the structural support joists, which are 10 feet in to the building (between the ceiling of one room and the floor of an upper room) also need to be replaced.  Am I permitted to do this work with the “C-61”/”D-41” license?

A:  As was my inclination, I double checked with the CSLB, and it would not be appropriate for a Siding and Decking contractor to replace the cantilevered structural supports of the deck you described.  This type of work requires specialized engineering skills and would likely require an “A” (General Engineering) license.

License Renewal, Criminal Records and Posting Changes

Getting ‘straight’ to the point, it’s not how you start but how you finish in our first contractor’s question. A helping hand is extended in an answer, while another contractor’s application is sent back to ‘square one’…

Q:  Many years ago, when I was young and stupid, I got in some trouble and have a couple of convictions.  The Contractor’s license application instructs me to complete a disclosure statement for each conviction.  I don’t remember the details of each incident so how do I fill these out?  Should I go request documents from the County in order to get case numbers and such?

A:  No, most of the time it is not necessary to provide official court records.  We always recommend you complete them as well/much as you can.  Case numbers and specific dates are not required, just general information, whatever you can remember, for each conviction is required.  The CSLB will contact you if they need any further information.

Q:  Our Contractor’s license expires at the end of August.  Is it up to us to chase down the renewal form to make sure it doesn’t expire, or is it as simple as paying a fee online?

A:  Unfortunately, it’s not as simple as paying a fee online.  Don’t panic, the CSLB will send you a renewal application by mail approximately 60 days prior to your expiration date so you will likely receive it any time now.  If you don’t, contact our office and we can assist you.

Q:  Our company applied for a contractor’s license a year ago and due to our Qualifying Individual’s busy schedule, he has had to re-schedule the exam several times.  He is now leaving the company.  Our application is going to go “void” as of February 2019. Can we amend our application to designate a different Qualifier?

A:  Your application has already been “posted” and the CSLB does not allow for changes to your application once it’s been posted.  Your company will need to withdraw the current application and re-apply with your new Qualifier.

Q:  We are licensed contracting company in Southern California and we are going to be working a project in Arizona in the Fall.  Do we have to have been licensed in California for five years in order to qualify for the Reciprocal agreement?

A:  No, you do not!  The rule in Arizona is actually, if your qualifying party took the equivalent trade exams in another State (any State!) and has had a license in good standing at any point within the preceding five years, they may qualify for the Reciprocal agreement and qualify for a Waiver of the Trade exam.  The Construction Management exam is still required.

CSLB Exam Sites, “B” Generals and Joint Venture Suspension

Do you know the way to San Jose? Just one place to ‘test’ contractors. It’s a less direct ‘route’ to a solution for a complex ‘prefab’ question, and I help another contractor fill a ‘gap’ in his understanding…

Q:  I am an out of State contractor and one of my customers has requested that I perform some work for them in CA.  I know I will have to travel to CA to take the exams.  Where in CA do I take the exam? Is it possible to request a certain location?

A:  The exams are given in San Diego, San Bernardino, Norwalk, Oxnard, Oakland, Sacramento, San Jose, and Fresno.  The CSLB schedules your exam based on your zip code, but you can make a request when you submit your application to test in a certain location and the majority of the time the CSLB will allow you to test in your requested location.

Q:  I’m a CA General Contractor since 1991 with two classifications, a “B” General Building and a “C-61”/”D34” (Prefabricated Equipment).  My question is: can I incorporate only the Prefabrication Equipment classification under a different business name to separate the two classifications? If so, can both classifications still use the same contractor’s license? I have only one license with original number from 1991.

A:  Yes and no.  Yes, you can incorporate only the “C-61”/”D34” classification under a different business in order to separate the two classifications.  No, both licenses would not be able to use the same contractor’s license number.  The new company would be issued a new license number, and each entity would need to operate under their own license.

Q:  We received a notice that our Joint Venture license was Suspended effective 5/31/18 due our JV Partner’s license being expired.  Unfortunately, it went to the inbox of an employee who was out of the office on vacation and we just saw it.  When I look up the licenses, both companies as well as the JV show current and Active so that tells me our partner corrected the issue.  How do we see if there were any “gaps” in our JV license?

A:  You would need to order a Certified License History from the CSLB to see if there were any gaps in licensure.  We can make this request for you, they are currently taking about a week to get it back to us.

DIR, Public Works, Small Project Exemption and Find My Licensed Contractor Resource

School’s out for summer, but the lessons never end for contractors. New law, changes in interpretation and important deadlines require an ongoing ‘learning curve.’ Here’s an expert tutorial and a reminder to turn those ‘papers’ in on time!

I am frequently reminded from readers that Public Works Contractors are a big portion of my readers.  So here is a reminder from the CSLB for some of my loyal followers:

“Public works contractors who are registered with the Department of Industrial Relations (DIR) for the current fiscal year ending June 30 are urged to renew their registration for the next fiscal year using DIR’s online public works contractor registration system. Registered contractors who fail to renew by July 1 but continue working on public works projects will be subject to late fees and potential penalties. The annual registration fee is $400.

Contractors not currently registered must wait until the fiscal year begins on July 1 to register for the 2018/2019 fiscal year.

Contractors must be registered with DIR before bidding, being awarded, or performing work on public works projects in California.

The Labor Commissioner can assess penalties to public works contractors of up to $10,000, in addition to the registration fee, for failure to register. Awarding agencies are also subject to penalties of $100 a day, up to a maximum of $10,000, for hiring an unregistered contractor to perform work on a public works project. A contractor that hires an unregistered subcontractor is also subject to penalties of up to $10,000.

Small Project Exemption

Contractors who work exclusively on small projects are not required to register as public works contractors, or file electronic certified payroll reports for those projects.

The small project exemption is applied based on the amount of the entire project, not a contractor’s subcontracted amount of the project. Small project exemptions apply for all public works projects that do not exceed:

$25,000 for new construction, alteration, installation, demolition or repair

$15,000 for maintenance

On projects that qualify for the small project exemption, contractors are still required to pay prevailing wages, maintain certified payroll records on a continuous basis, and provide those records to the Labor Commissioner’s Office upon request.

DIR has extensive information regarding public works requirements on its public works website, including instructions for contractors on how to renew their public works registration.”

As a reminder for Home Owners and Project Owners, the CSLB has a new website feature to help consumers find a licensed contractor.  It’s labeled “Find My Licensed Contractor”.  Consumers can find all contractors, sorted by classification, in their area. Super convenient! Class dismissed.

Corp License Family Transfer, Work Comp, Fingerprinting and Signing Authority

DNA isn’t required yet, but fingerprints still are. You may still have ink on your fingers from that unfortunate traffic stop, or another occasion that doesn’t count here. We ‘single’ out who can sign for an LLC contractor and share a ‘bittersweet’ answer for a son ‘liable’ to follow his father’s footsteps…

Q:  If our Corporate officers are all fingerprinted (not as part of the contractor license application process, but for our liquor licenses), will that accelerate the speed of the application process?  If so, how much time with it save us?

A: Everyone listed on the license application will be required to fingerprint for the CSLB if they haven’t done so in the past, regardless of whether they’ve been fingerprinted for other agencies or occasions.

Q:  We have a pending application in process and we received a request from the CSLB to provide either a Certificate of Worker’s Comp or an Exemption from Workers Comp form.  We will hire employees, but I don’t want to pay the high rates of the insurance yet.  We will not be officially hiring any employees for at least another six weeks. What do you suggest we do?

A:  I would recommend filing the Exemption form for now, and then once your company hires employees, you can submit the Certificate of Worker’s Compensation Insurance and they will update your license to reflect the policy.

Q:  We are in receipt of our contractor’s license Renewal.  We are a single Member managed LLC with the single Member being a Corporation.  We have two Responsible Managing Employees (RME) that will be signing the Renewal.  For the “Officer” signature, can we have any of the Corporation Officers sign or does it need to be a particular one?

A:  For the “Officer” signature, you will need to have the individual who the CSLB has on record as signing authority sign the Renewal application.

Q:  My Dad who has been a contractor for over 20 years is going to retire.  He started out as a Sole proprietor but changed to a Corporation about ten years ago.  I am going to take over the business, but I want to start a new company so that I don’t assume any of his possible liabilities. Can we request the license number, which is a very low number, be transferred to my new corporation?

A:  Unfortunately, no.  A license number cannot be transferred from one Corporation to another.  Under certain circumstances, a contractor’s license number can be transferred from a Corporation to an LLC, and from a Sole Proprietor to a Corporation/LLC, but not from one Corporation to another.

 

 

Expired License, Multiple Applications and AZ “C-9” Reciprocity

Now you see it, now you don’t! Making license expert ‘magic’ to get us going for our first contractor and not a day too soon. I bring ‘order’ to the growth of a corporate licensee and ‘skate’ over the answer for an AZ concrete contractor…

Q: Our license is set to Expire tomorrow.  We submitted the Renewal Application last week, but the CSLB informed us it will take them several weeks to process it so the license will go Expired until they process the Renewal.  Will that expiration period always be reflected on our license?

A  Not necessarily.  As long as the CSLB has an acceptable Renewal Application in their hands priorto the expiration date, once they process it, it will be retroactively renewed, and the ‘Expired’ period will not be reflected if anyone were to pull a license history.

Q:  We have a Corporation with six separate licenses for our six different dba’s.  We are going to be applying for two new licenses for our Corporation with two new dba’s.  All individuals on the application (Responsible Managing Officer and two additional Officers) have been fingerprinted for the CSLB for our previous licenses.  How long (approximately) will it take for the CSLB to issue the new licenses?  Is it likely they will be issued on the same day?  We are trying to anticipate a closing date for the transactions.

A:  The process at the current time will take about 3-4 weeks for each Application.  The licenses will definitely not be issued on the same daybecause you will need to submit the applications one after the other.  An individual (whether RMO/RME or Officer) cannot have multiple license applications in process at the same time.  The fact that both applications list the same people, one license will need to be issued in ‘order’ to submit that second application.

Q:  We are an Arizona company that constructs skate parks.  In AZ, we have a “C-9” (Concrete) Contractor’s license.  We are looking to expand in to California. Is the Concrete license the appropriate classification for us to hold in California?  Is there Reciprocity?

A:  If you are strictly pouring/forming the concrete for the skate parks, yes, the “C-8” (Concrete Contractor in CA) would be the most appropriate.  However, if you are also constructing other aspects of the park such as railings, parking lot, landscaping, etc. you may want to obtain the CA “A” (General Engineering) classification.  There is Reciprocity for the Concrete classification, so if your Qualifier has been actively licensedin Arizona for five out of the last seven years, he/she would qualify for a Waiver of the trade exam.  The Law exam would still be required.

 

License Conversions, Owning Multiple Companies, “C-20” / “C-43” and CSLB Field Office Payments

Yes, and Yes again gets the Q&A started. Since making the business structure a legal option in CA, contractor interest has been ‘building’ in Limited Liability Company or LLC transfers. Finish with a ‘No’ and a ‘walk-in’ solution…

Q:  I have been advised by my attorney to transfer my Sole Proprietorship business to either a Corporation or an LLC.  Does your company assist with this, and do I have a choice of transferring my license number to the corporation/LLC, or will the new company get a new license number?

A:  Yes, we can assist you the process of obtaining a license for your new company.  If you own at least 51% of the new corporation or LLC, you have the option to transfer the license number.  Just be aware that if you choose this option, you can never get the license number back as a Sole Proprietor in the future.  You can also opt to have a new license number issued.

Q:  If I convert my Sole Proprietorship to an LLC and I elect to have the LLC have its own license number, can I still be a Partner or owner of another separate company?  Will I need get separate bonds and insurance, essentially paying double for bonds and insurance?

A:  The CSLB does not have a limit as to how many contracting companies you can be an owner or partner of. However, you can only qualify up to three Active licenses at the same, as long as one of the following conditions exists: a) you own at least 20% of each company you’re qualifying; b) one licensee directly owns at least 20% of the other; or, c) the majority of the personnel on the license are the same.

With regards to the Bonds and insurance, yes, the LLC will be required to have its own Bonds and insurance.  In addition to the $15,000 Contractor’s bond required for all contractors, LLC’s are also required to have a $100,000 LLC/Worker Bond.  Additionally, LLC’s are required to have at least $1 million in General Liability insurance coverage.

Q:  We have a Contractor’s license with multiple classifications on it.  I currently hold the “C-43” classification.  Our “C-20” (HVAC) Qualifier left and my company wants me to replace him. I know I will need to take an exam, but what are the other requirements?  Do I need to take the Law exam for the “C-20”?

A:  Besides the Trade exam, you are required to document at least four years of full time work experience in the “C-20” trade.  HVAC and Refrigeration (“C-38”) contractors are also required to have a CFC certificate.  You do not need to take the Law exam since you already passed it when you obtained the “C-43” (Sheet Metal) classification.

Q:  Our license is set to expire at the end of the month.  I called the CSLB and was told they are taking a couple weeks to process renewals.  If I were to walk the renewal in to one of their field offices, will they process it same day?

A:  No, they would not.  They also only accept fees at the Sacramento office.  Contact us if you’d like us to deliver the renewal for you and get a date stamped copy. A true benefit of my Capitol Service’s office being a stone throw away from the Capitol, so to speak!