Solar, ‘DBA’, Sunrooms, Business Names and Subcontractor Pay Rule

I start with a suggestion to help put some ‘shine’ in ‘doing business as’ a “C-46” in this opener. Follow up with advice on ‘truth and consequences’ in your business name and share why excuses won’t ‘pay’ for a ‘general’s’ failure…

Q:  We are a solar energy company, we are applying for a “C-46” (Solar) Contractor’s license.  Our business name is, for the purposes of this article, ABC Energy LLC.  We submitted an application for a new license and they sent us a rejection letter stating we cannot use the word “Energy” in our business name unless we are a “C-10” Electrical contractor.  The two options they gave us is to either a) change our business with the Secretary of State, or b) add a dba to our business name.  Since solar is a form of energy, we aren’t sure what would be acceptable to the CSLB for a dba name.  Do you have any suggestions?

A:  If you’d like, you can come up with a couple of possible choices for a dba name and I can check with the CSLB to see which would be accepted.  Adding the word “Solar” to the dba name would certainly be acceptable because you would be directly referring to your classification, so the dba could be “ABC Solar Energy”.

Q:  If our true business name is not acceptable to the CSLB and we must add a dba, will they focus solely on the dba and that is how we are required to conduct business in CA?

A:  A company with a dba can either do business as the whole entire name (ex. ABC Inc. dba XYZ), or just the dba.

Q:  If I wanted to use the word “Sunroom” in my business name, what classification would be necessary?

A:  The most appropriate classification would be the “B” General Building since they can perform construction of “patio rooms” or “sunrooms”.

Q:  I completed a project as a subcontractor back in January.  It’s been five months and I haven’t received payment from the General Contractor.  He stated he has not obtained a Certificate of Occupancy yet from the county and will not pay me until he gets it.  Is there a law that requires the General to make payments within a certain time frame?

A: Thank you for contacting Capitol Services Inc.  There is a law (B&P Code 7108.5) which states “A prime contractor or subcontractor shall pay to any subcontractor, not later than seven days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor’s interest therein.”

Suspense for JV Members, LLC Officer Reporting and Worker Comp Requirement in Hiring

We start by helping a former contractor make what’s old new again! Are reminded of the Beatles song, ‘Nowhere Man’ with an LLC question and take a ‘cut’ at answering a “C-27”.  Our last contractor learns to his horror that he has no place to ‘stand’ after a license is allowed to die…

Q:  I was licensed from 1990 thru 2003.  I got out of the contracting business and I have been running another business since 2003.  I want to get my license back now, I don’t remember if I cancelled it or just let it expire, but it was always in good standing.  My understanding from reading the CSLB’s website is that I will not need to show recent experience since I have held the license in the past.  Can you please confirm that?  Also, is it possible to get my old license number back?

A:  You will not need to document recent experience if you were licensed in the same category in the past.  You will be required to re-take the law and trade exams since your license has been expired for over five years.  I looked up your license and since it’s a Sole Proprietor license, you can request the old number be re-issued.

Q:  We are applying for a Limited Liability Company (LLC) Contractor’s License.  I can see from the forms that we must list at least one Member or Manager with the Secretary of State and a CEO if one is elected.  If the LLC elects Officers at some point in the future, are they required to notify the Secretary of State and the CSLB?

A:  The LLC is not required to notify the Secretary of State of Officers, and in fact, besides the CEO box you mentioned, there is nowhere to list LLC Officers with the Secretary of State.  The CSLB does allow you to add Officers to an LLC License, so whether you update the Officers with the CSLB is up to you.

Q:  You are currently helping me obtain my “C-27” (Landscape) license.  I have taken on several new accounts recently and I have been leasing employees from a staffing company, but I’m now realizing it would be much cheaper for me to hire employees and get Worker’s Comp.  Do I need to have the policy in place prior to you submitting the license application?

A:  No, you don’t.  We can submit the license application and your proof of Worker’s Compensation Insurance can follow once you are issued an application fee number.

Q:  Our company license recently expired, and we don’t have any current jobs in progress so we weren’t too worried about it.  However, we also have a Joint Venture license with another company and we have ongoing projects under the JV license.  We are listed on the contract however our JV partner is doing all the work.  Is the Joint Venture still active?

A:  No, the Joint Venture license goes Suspended when either entity’s license is not in “good standing.”

Corporate License Changes, Single Member LLC, Misdemeanor Convictions and Pole Inspections

We start this helping of contractor Q and A by serving up a ‘pole-ish’ answer. With all the work on the ‘table’ now is exactly the right time to start to get a license application cooking! For another there is ‘conviction’ in my response but hope in this answer…

Q:  I am a Texas company and we inspect telephone poles.  I have a customer who wants us to come to California and do work for them, and they have requested that we obtain a “C-6”1/”D-64” (Non-Specialized) contractor’s license.  I just want to make sure that is the proper classification for what we are doing.  We design the project, put the plans together, and then inspect the final product when the installation company is finished.

A: If you aren’t contracting for any installation of the poles, no contractor’s license is required.  You can design, even supply the poles, and do a final inspection without the need for a Contractor’s license.  The classification most closely related to what you do though would be the “C-61”/”D-31”(Pole Installation and Maintenance) contractor. However, in order to qualify for that, you would have to document experience installing and maintaining telephone poles.

Q: I have worked for a HVAC company for many years and I want to get my own license. A couple of years ago I was convicted of a construction related violation which resulted in a misdemeanor. I paid all the necessary fines and did community service.  In your opinion, do you think I can still qualify for a license?

A: After we discussed the details of your conviction over the phone, I would suggest you wait three years from the date of the conviction to apply for a license.  However, as we discussed there is no way to know the answer to your question for sure.  The CSLB reviews applicants backgrounds on a case-by-case basis.  The only way to find out whether you are eligible for a license is to submit an application, disclose your conviction on a Background Disclosure statement, and let the CSLB review it.  I hope it works out for you.

Q: We have an LLC whose single member is a Corporation.  I understand on the contractor’s license application we are required to have one of the Corporation’s Officers or Directors sign on behalf of this company.  Will this individual be required to get fingerprinted?

A: No, only direct personnel of the applying entity are required to be fingerprinted.

Q: One of the individuals who is listed on our license was bought out so he is no longer a Member.  Do we need to notify the Board?  He is still with the company and is an Officer.

A: Yes, you will want to notify the CSLB of this change.    First, you will need to update the CA Secretary of State by filing a new Statement of Information.  Then with the CSLB, you need to file an “Application to Report Change of Title for Current Officer or Personnel of Existing Corporate or Limited Liability Company License”.  Contact our office if you’d assistance with these forms.  We hand deliver documents to the Secretary of State and the licensing board.

 

Unlicensed Enforcement, NV LLC’s & Applications and AZ Open Book Testing

Some state’s contractor exams are hard while others can be an ‘open book’. However, our first contractor gets a ‘pass’ on one exam and ‘cracks’ the book on another. A NV question has a ‘foreign’ accent, while I demonstrate how to ‘cut red tape’ for a multi-state contractor…

Q:  I am going to be taking the Arizona Construction Business exam.  I don’t believe I have to take the “CR-39” (Air Conditioning & Refrigeration) trade exam, although I’d like you to check on that for me if you could.  I read in PSI’s informational packet it is permitted to bring a book in the Business exam with me.  Do you have the book and am I allowed to take notes within the book?

A:   With regards to the trade exam, I checked your CA license and you just recently took the exams to get your “C-20” (HVAC) license, which is considered the equivalent to Arizona’s “CR-39” exam.  Your CA license is also currently Active, so based on those two factors you should not have to take the trade exam in Arizona.  Just be aware Arizona ROC (Registrar of Contractors) does not do their own research so you will need to get verification of your CA license to submit to Arizona.  Contact our office if you’d like assistance with obtaining the verification.

As you stated, Arizona’s Business Management is open book.  They do not allow you to make notes in the books, however you can tab the book with PSI’s pre-made tabs. We have the book we can send out to you, or you can order it online.

Q:  I have a Limited Liability Company (LLC) Registered in Nevada related to my Nevada contractor’s license; can I use the same LLC I have there to apply for a California license, or do I need to form a separate LLC?

A:  Yes, you can.  You can apply as a “foreign” LLC in CA.  That will allow you to use your existing NV LLC to do business in CA.  We can help you with the licensing process in CA. You may qualify for Reciprocity as well, so contact me to look into this option in particular.

Q:  We are currently licensed in California and Utah as a General Building contractor.  Will this speed up the process of obtaining a license in Nevada?

A:  It will not necessarily “speed up” the process in Nevada, however there may be less paperwork involved based on your CA or UT license.  If your Qualifying Individual has been licensed (Actively) for five out of the last seven years and passed the trade exam when they were originally licensed in CA or UT, they will qualify for Reciprocity in Nevada.  While it doesn’t speed up the process of obtaining the license (since the Business/Management exam is still required), it does eliminate the need for references and a resume, therefore reducing the amount of paperwork involved.

CSLB ‘Strikes’ Scammers Out- According to news from the Board, unlicensed contractors were busted in an April ‘sting’ operation by SWIFT and local law enforcement in Napa County. Fourteen suspects busted for (Strike One) contracting without a license, twelve also cited (Strike Two) for unlawful advertising and (Strike Three) six bidders required excessive down payments. A first-time conviction could result in a fine up to $5000 and/or up to six months jailtime for unlicensed contracting.

Updated Entity Types including LLC’s and Business Names

As the experts, we often have quick answers from more than 30 years of experience assisting contractors with licensing at Capitol Services, Inc. However, there is nothing quick or easy in some cases when dealing with contractor’s law which can include changes in form, interpretation and new legislation.  This time it’s a complex issue that will require set-up in providing the background story as I answer this question. It’s also a caution for all contractors to proceed with caution in filling out and filing for a license!

Q:  We have a somewhat complicated situation we have found ourselves in.  When we originally applied for our license, we listed our business name as we are in our home State of Michigan, “ABC LLC”.  In the section for business type, we marked “Partnership” and our Employer Identification Number.  We received a Rejection letter from the CSLB stating that we were required to change our business name to “ABC, a Limited Partnership”.  We thought it was odd as we are a Limited Liability Company, but since the CSLB said it was required, we made the correction and submitted it, figuring we would change it later.  Finally, after a year of back and forth with the CSLB, our license was finally issued.

I contacted my attorney and explained our name situation, so he advised us to register our Michigan LLC with the CA Secretary of State, which we did, and then file a name change with the CSLB changing our name from “ABC, a Limited Partnership” to “ABC LLC” as we are now with the Secretary of State.  You can imagine my frustration when I received another Rejection letter regarding our name change form stating we need to submit new license application for a new license number because we have formed a new entity…but we didn’t!  It’s the same company with the same EIN!  The CSLB is the one who said it was required for us to change our name to the Partnership name.  When I spoke with someone at the CSLB regarding this issue, she said in the section for “business entity type”, we should have marked LLC instead of Partnership.  I looked back at the application and there is no option for LLC…only Sole Proprietor, Partnership, or Corporation.  This is so confusing to me so I’m hoping you can help.

A:  Ahhh, I see where the confusion occurred.  You applied for this license back in 2016.  In 2016, they had one application specific to LLC’s, and another application for all other types of entities (Sole Proprietor, Partnership, and Corporation).  As I’m sure you weren’t aware of the application specific to LLC’s, you marked the box most closely relevant to your business type, which was Partnership.  The fact that you applied with the corporate ending of “LLC”, instead of sending you a Rejection letter stating you were required to change your business ending to “A Limited Partnership”, the CSLB should have noticed the discrepancy, and instead given you the option to either change your ending as they requested, OR submit the correct LLC application if that’s how you intended to do business.  Unfortunately, you will be required to submit a new application for a new LLC license.  I see the thought process on the CSLB’s end, but I also see how you were confused with their request and just did as suggested. If it doesn’t ‘feel’ right, that’s nature’s way of telling you something needs an expert opinion!  The CSLB has since updated their application and all entity types use the same application now, so situations such as these should no longer occur!

 

Joint Ventures, Family Waiver for Corporate Licensees, Parent Company Changes & Partnerships

We help ‘unite’ a contractor’s venture, take time to help a son discover a possible way to follow his father’s footsteps and share a lesson ‘re-uniting’ corporate ‘partners’ on a license renewal…

Q: Can a Joint Venture be one of the entities that makes up another Joint Venture?

A:  According to B&P Code 7029, “a joint venture license is a license issued to any combination of individuals, corporations, limited liability companies, partnerships, or other joint ventures, each of which holds a current, active license in good standing.”

Q:  My Dad is the RMO (Responsible Managing Officer) for a company he started with his business Partner over 20 years ago.  They both plan on retiring soon and they want my younger Brother and I to take over the business (his Partner doesn’t have any kids).  I read in one of your articles that one of us can replace our Father on the license as an RMO without having to take the tests because we are family.  Is this still applicable?

A:  Possibly.  The B&P Code Section 7065.1(b) “family waiver” you are referring to only allows for a Sole Proprietorlicense to be transferred to a family member for the purpose of continuing the family business.  However, since your Dad and his Partner’s license is a corporate license, it belongs to the corporation, so the family waiver does not apply.  However, if either you or your brother has worked for the company in a supervisory capacity for at least five out of the last seven years, you can request to Waive the Exams based on B&P Code Section 7065.1(c).  Keep in mind that a Waiver request is only a request, and is not guaranteed.  Please contact our office if you’d like assistance with this.

Q:  Hi, hope all is well.  Quick question for you: As you know, we have a Class “B” license in the name of our Corporation.  Our Corporation is a 100% wholly owned subsidiary of another Corporation.  If the Parent company is sold to another company (but it continues to be the 100% owner of licensed entity), is there anything we had to do in terms of the license?

A: Thanks, got it! While you should notify the CSLB of any changes to your license within 90 days, I don’t believe there would be any reason to notify the CSLB of such a transfer as you’ve described it.

Q:  We have a Partnership license which is made up of two Corporations.  We received our renewal application and we are unsure as to who should sign it since it only lists the two entities and no individual’s names.  Can you help?

A:  When you originally obtained the license, you would have had individuals sign the application on behalf of each entity.  Assuming you have not made any changes to the license since then, you will need to have each of those individualssign the renewal on behalf of each entity in order to renew.

Gardening License, Contract Signers and SOS Corporate Recording

I ‘cultivate’ a correct answer for our first contractor, offer a ‘bon voyage’ for the next and ‘take stock’ in solving a third’s corporate license issue…

Q:  I am a pool maintenance contractor and I wanted to expand and start offering gardening services as well.  What license would I need to add to my “C-61”/”D-35” (Pool and Spa Maintenance) in order to perform these services?

A:  A contractor’s license is not required to perform gardening services.  Good luck with your new endeavor.

Q:  Together my wife and I have a corporate contractor’s license.  I am the RMO (Responsible Managing Officer) and my wife is the Secretary and Treasurer.  We are going on vacation and are concerned about not being available to sign contracts.  Can only people listed on the license sign contracts, or can we authorize one of our employees to sign contracts in our absence?

A:  To the best of my knowledge, the CSLB does not have a rule or law which regulates who can or can’t sign contracts.   Therefore, yes, you can authorize one of your employees to sign contracts while you’re gone.  Enjoy! Bon Voyage!

Q:  My partner and I are starting a new construction business.  He has an existing corporation which we will be using to obtain the contractor’s license.  I will be the RMO on the license and he is transferring 20% of the shares to me in order for me to keep my own license active as well.   Will I need to be listed on the Secretary of State’s records?  How will the CSLB verify that the shares have been transferred?

A:  Whether or not you are listed on the Secretary of State’s records all depends on your title.  I looked up the company and it is a Domestic California Corporation.  Therefore, you will be required to list the President, Secretary, and Treasurer on the license application.  If you hold one of those titles, you will need to be on the Secretary of State’s records because the CSLB does check to make sure the personnel matches.  If you will have any other Officer title, such as Vice President, you will not need to be listed with the Secretary of State.

With regards to verifying shares issued, the CSLB does not require any supporting documentation showing shares have officially been issued. There is a question on the application asking what percentage of ownership the Qualifying party has.  Because you are signing the application under penalty of perjury, the State accepts the amount you fill in.

 

 

 

HIS Registration Exceptions, “C-10” and RMO Waivers

It’s one for the money, two for the show but five years for this Waiver. Another contractor gets a second opinion, but we really ‘dig’ the first question…

Q:  We currently have a “C-10” (Electrical) Contractors license in CA.  We had some issues with our license come up recently, and in speaking with our attorney he informed us that we shouldn’t be doing trenching with our “C-10” license.  I am surprised by this as we have always done trenching when doing our electrical projects.

A:  “C-10”electrical contractors can perform incidental trenching for the placement of conduit and wiring on their projects.

Q:  We are going to be adding several HIS (Home Improvement Salespeople) to our license.  I was curious as to whether our Officers also need to be registered HIS (and myself as the owner).  I called the CSLB and the person I spoke with said that everyone who works for the company regardless of whether you are an Officer or an Employee, needs to be a registered HIS.  That doesn’t make sense to me, it seems as if an Officer should be able to promote and sell their product withoutregistering as a HIS, can you confirm please?

A:  Unfortunately, the information you received from the CSLB is not right.  Based upon BPC section 7152(c), the following are the only exceptionswhere a HIS registration is not required:

1 An Officer of record of a licensed corporation, or a Manager, Member, or Officer of record of a Licensed Limited Liability company.

2 A General Partner listed on the license record of a Partnership.

3 A Qualifying person, as defined in BPC section 7025

4 A salesperson whose sales are all made after negotiations between the parties if the negotiations are initiated by the prospective buyer at or with a general merchandise retail establishment that operates from a fixed location where goods or services are offered for sale.

5  A person who contacts the prospective buyer for the exclusive purpose of scheduling appointments for a registered Home Improvement Salesperson.

6  A bona fide service repairperson who is employed by a licensed contractor and whose repair or service call is limited to the service, repair, or emergency repair initially requested by the buyer of the service.

Q:  Can you confirm how many years an individual must have been an Officer of a company in order to qualify for a Waiver of the exams to become an Responsible Managing Officer (RMO)? Also, how many years an Employee must have been with the company in order to qualify for a Waiver of the exams to become an Responsible Managing Employer (RME)?

A:  Five years in both cases.  In either scenario, the individual must have worked in a supervisory capacity, whether Officer or Employee,for five out of the last seven years, with at least one of those years being hands-on practical experience.  Keep in mind the Waiver is only a request, not a guarantee, so they always have the option to deny it.  Contact our office if you’d like assistance with the Waiver request process.

 

EBB Seismic Retrofits, Parent Companies and RMO & RME Time On Requirement

What’s ‘shaking’ on seismic retrofits? We ‘nail’ down an update on the Earthquake Brace & Bolt opportunity for contractors. How much time does an RMO/RME need to clock-in for? We begin with the role a ‘parent’ plays on a Nevada application question…

Q:  You are helping us with our Nevada license and in your instruction letter you advised us to provide a financial statement.  Our company doesn’t have financial statements prepared, only our Parent Company does.  Our parent company is based in the UK so it’s not in US dollars either.  Will it be acceptable?

A:  If your company does not have a financial statement, you can provide your Parent company’s financial statement.  The Parent company will be required to complete indemnification paperwork.  In addition, your company will need to provide an internally prepared balance sheet for the same time period as the Parent Company’s financial statement.

Q:  Are both RMOs and RMEs required to be actively engaged in the operation of the applicant’s contracting business for at least 32 hours or 80 percent of the total hours per week such business is in operation, whichever is less?  Thanks so much for your time; this is an urgent matter for my family business, and this publication has been a truly invaluable service for us.

A:  Thank you for reading/following The Capitol Connection.  RMO’s do not have a time/hour requirement.  While both RMO’s and RME’s are required to be actively involved in the running of the business, only RME’s have the requirement that it be 32 hours per week or 80% of the company’s operating time.

Contractor’s Note: The CSLB is alerting contractors eager to grow their business and receive free specialized training that they can participate in Earthquake Brace + Bolt (EBB), a California program offering homeowners up to $3,000 toward a code-compliant seismic retrofit. This year, EBB expanded across the state into new cities and additional ZIP Codes, creating a need for more trained contractors.

“We encourage contractors to sign up for EBB and complete the free training so they are ready to do this critical retrofit work in our communities,” said Janiele Maffei, Chief Mitigation Officer of California Earthquake Authority (CEA) and Executive Director of EBB. “This type of work is profitable for contractors and it protects families by strengthening their homes to lessen the potential for devastating earthquake damage.”

According to the Board’s bulletin, benefits include after training is completed- contractors are automatically listed in the EBB Contractor Directory where they can promote their business by adding their logo and information about themselves. Nearly all participating homeowners – 95 percent – go directly to this list to hire a contractor for their EBB retrofit project.

EBB hopes to register and train even more contractors in 2018, as the program expands and more homeowners set out to complete earthquake retrofits on their homes.

For detailed program information, including a complete list of 2018 cities and ZIP Codes, and to register for EBB, licensed contractors are encouraged to visit www.EarthquakeBraceBolt.com.

CSLB Test Dates, Application Processing and AZ Application Update

Timing is comedy. Life, comedy and contracting are no different as all are full of deadlines. Like a comedian, miss your mark on timing and no one is laughing.  Exams, renewals, applications and so much more in being a licensed contractor depends on good timing…

Q:  You are helping me apply for my own “B” (General Building) Contractor’s License.  I work for a company who holds an “A” (General Engineering) license.  My intention is to add the “B” classification to my company’s license once my personal license is issued.  My company is offering to give me time off to study for the exam so we are trying to anticipate when my test date will be.  Is there any way to know ahead of time when I can go take the exams?

A:  There is no way to know when your exact test date will be, however currently due to their processing times you can anticipate your test date will be approximately 5-6 weeks from the time your application is submitted.  The 5-6 weeks estimate is assuming the CSLB accepts your work experience with no additional documentation. Also, just FYI, the CSLB will work with you if your test date doesn’t work with your schedule.  Once you receive the testing notification, just let us know if you need to re-schedule.

Q:  Our Contractor’s license expires at the end of May and I still have not received any renewal paperwork.  Do you think that this is normal or should I have received it by now?  Are you guys able to handle the renewal or is there something I should be doing to move this process along?

A:  The CSLB usually sends out renewal applications about 60 days prior to the expiration date so it’s not unusual you haven’t received the application yet.  If you don’t see it in the next week or two, we can absolutely pick one up for you in person.  The Contractor’s Board is currently taking about 3 weeks to process a renewal so I would recommend you get the renewal submitted in early May.

Q:  We are in a hurry to obtain our Contractor’s license.  Once we submit an application, how long does it take for the CSLB to process it?  Do they acknowledge receipt of the application?

A:  Processing times vary depending on the CSLB’s workload.  Once you submit the application, the CSLB will send you an acknowledgement letter in approximately ten days.  The letter will include an application number and pin number so that you can track it.

Q:  I submitted an application for an Arizona Contractor’s License back in November of 2017.  It was rejected for several reasons and they sent the entire application back including a refund for the State fee.  Our Qualifying Individual took months getting the project forms completed and notarized.  Do we need to start from scratch and have these completed and notarized again?

A:  Even though your application was rejected, there is good news!  Arizona has updated their forms and requirements, so the projects forms are no longer required. The Arizona Registrar of Contractors updated their forms in December 2017 so the requirements are much different.  Contact us for assistance if needed!