Asbestos Rule, NV Financial Statements, Out-of-State License Transfers and ‘DBA’

Contractors are tough, but ‘growth’ is not without pain, even for these men and women. While ‘misdirection’ works in magic acts, it’s costly and time consuming when a contractor loses focus on ‘facts’. I will wrap up with a ‘memory fail’ that is also a lesson on getting expert advice before the wrecking ball swings into action!..

Q:  Our company is going to be acquiring a business that holds contractor’s licenses in Nevada and Arizona.  Will these existing licenses be transferrable to the new entity we are forming?

A:  No, contractor’s licenses in Nevada and Arizona are not transferrable from one entity to another.  You will be required to obtain a new license in each State for the new entity you are forming.

Q:  We are applying for a Nevada Contractor’s license. I let my boss know about the financial requirement and he is balking at getting a CPA reviewed financial statement.  He said it is pretty expensive to have that done.  Our max job in Nevada would be $100,000.  Would a tax return or a credit report also do the trick?  We have excellent credit.

A:  For a monetary limit of $100,000, a compiled financial statement with full disclosures prepared by a CPA dated within the last 6 months is required. That’s the facts.  A reviewed financial is only required for limits over $250,000.  From what I understand, a compiled financial statement is not quite as pricey as reviewed.  A tax return or credit report will not be accepted in lieu of the compiled financial statement.

Q:  You are helping us with a contractor’s license right now and we decided we want to register our LLC with a ‘dba’ (doing business as) name with the CA Secretary of State.  How do we go about doing that on the forms you sent us?

A:  You can only have a ‘dba’ name with the CA Secretary of State if your business name in your home state is not available.  Since your business name is available, you will only be able to file that ‘dba’ name with the CSLB.  At that point, you can either do business as the entire name listed on the license, or just the ‘doing business as’ (dba) name.

Q:  What are the rules regarding asbestos for General Building contractors?  I remember taking some sort of asbestos exam when I originally obtained my license.  I’m going to be demolishing a project which may require some asbestos abatement.

A: “B” General Building contractors cannot contract for jobs involving asbestos abatement unless one of the following conditions exists: a) they hold a “C-22” Asbestos Abatement specialty license, or b) they hold an Asbestos Certification and are registered with the Department of Industrial Relations Division of Occupational Safety and Health (DASH), or c) they subcontract the work with an appropriately licensed contractor.

The exam you remember taking is likely the Open Book Asbestos exam, which is required for all new contractors.  Taking that open-book exam does not allow you to perform asbestos abatement work.

Rigging, Worker’s Comp rule, RME & RMO and Signing Authority

Need Comp? When you absolutely won’t. Planning a ‘family’ license ‘tree’ and how to grow it into the future as one contractor looks ahead. Like legal ‘superheroes’ a lawyer can save the day, but even a ‘power of attorney’ has it’s limit, and that’s why I’m here!…

Q:  We are going to be filing for a Joint Venture (JV) license with two other entities. Typically, when we file for JV licenses we file the Exemption from Worker’s Comp, however in this case, one of the entities has an RME (Responsible Managing Employee).  Does that create the need for the JV to obtain a Worker Comp policy?

A:  No it does not.  The RME is an employee of one entity, which is part of the JV, but the RME is not a direct employee of the JV itself.  As long as the Joint Venture entity itself will not have direct employees, you can file the Exemption from Workers Comp.

Q:  I currently have a corporate contractor’s license.  My Son has worked for me for over ten years and I’d like my Son take over the business eventually.  If I were to make him an Officer and have him replace me on the license as RMO (Responsible Managing Officer), does that remove me from the license?  I’m not sure I’m ready to remove myself from the license, but at the same time, I want to take care of this in case anything were to happen to me unexpectedly.  Thank you in advance for your advice.

A:  No, you do not have to remove yourself from the license.  You have the option to remain on the license as an Officer when you apply to have your Son replace you as RMO.

Q:  Our license expires at the end of this month and one of our signers is not going to be available to sign until the end of next week.  I know the CSLB needs time to process it so I’m a bit nervous.  Is there a way I can have Power of Attorney executed for someone else to sign?  If not, is it going to be an issue to wait to submit until he is available to sign?

A:  You cannot file a Power of Attorney with the CSLB that would give someone who’s, not officially listed on the license,signing authority for the license.  I looked up your license and you have two CEO/Presidents listed and an RME.  The RME has to sign, and then just one of the Presidents, you don’t need all three signatures.  I would suggest sending it in as soon as possible though because the CSLB is currently taking about three weeks to process Renewals.  As long as you get an acceptable Renewal in before the expiration date, even if they don’t process it by the deadline, they will retroactively renew the license so it will not show a break in licensure.

Q: What type of license is required to do rigging in California?

A:  The “A” General Engineering license is required to perform rigging work.  In 1987, the “C-61”/”D-36” (Rigging and Rig Building) was discontinued and that work was put under the General “A” license.

Solar Rules, Consumer Disclosures and Contractor Requirements

The closer you are the easier to see. As my phone has blown up with inquiries revolving around a new consumer protection regulation on solar energy, let’s break it down direct from CSLB. Since going to the source close by my office in Sacramento is easier for me than all of you, here’s the official word…

The Contractors State License Board is putting the industry on notice that a new Solar Energy System Disclosure document is go!

What does that mean for those contractors installing residential solar systems?

Assembly Bill 1070, Stats of 2017, Ch 662 established Business and Professions Code (BPC) section 7169. This new law requires the CSLB, in collaboration with the California Public Utilities Commission (PUC), to develop and make a solar energy system disclosure document available on its website by July 1, 2018.  The disclosure document must be provided to consumers prior to the completion of a sale, financing or lease of a system. CSLB posted online a proposed one-page Solar Energy System Disclosure Document on June 29, 2018 and indicated the document was pending PUC approval.

At its August 23, 2018 meeting, the PUC approved Final Resolution M-4836 to endorse PUC staff’s collaboration with CSLB to draft consumer disclosures required by AB 1070 and approved the Solar Energy System Disclosure Document posted on the CSLB’s website.

Contractors will be required to comply with this new requirement beginning January 1, 2019. Mark your calendars!

 Here’s the ‘nitty-gritty’ need to know. Some of the requirements of BPC section 7169 include:

·      Solar energy system companies must provide the Solar Energy System Disclosure Document to consumers printed in boldface 16-point font on either the front or cover page of every solar energy contract prior to completing a sale, financing, or lease of a solar energy system to be installed on a residential building.

·      The disclosure document and the contract must be written in the same language principally used in the oral sales presentation or the marketing materials provided to the consumer. English and Spanish versions of the disclosure document are available on CSLB’s website. The contractor must translate the document into other languages, as necessary.

·      If the sale of the solar energy system utilizes Property Assessed Clean Energy (PACE) financing, the PACE Financing Estimate and Disclosure form may be used in place of the new solar energy system disclosure document. The PACE form is available on the California Legislative Information website and State Assembly website.

PACE contractors must still comply with the current home improvement disclosure requirements of the Contractors State License Law.

While it has been long road from AB 1070 to now, stay tuned it’s not over yet. BPC §7169 also contains provisions for the development of further disclosure content for residential solar energy systems contracts. To that end, CSLB hosted a meeting of stakeholders in August to seek industry and consumer input on the development of further disclosure content.

CSLB hopes the requirement to include the Solar Energy System Disclosure Document in the contract for residential solar energy systems will reduce misunderstandings between contractors and consumers and help our licensees improve their relationships with customers. So, don’t ‘shine’ it, and keep your eye on this column for future developments.

Business Names, ‘DBA’ and Advertising on Trucks

A ‘rose by any other name smells as sweet’ may apply to flowers, but not contractor’s business names. A business name; how it applies to trade and structure of the entity all matter in determining what you can legally call yourself and how you advertise contractor services as you will discover in these Q and A that ‘rose’ to the occasion…

Q:  We have been licensed for many years in California as a corporation.  Now that California is licensing Limited Liability Companies (LLC) we recently applied for a license for our LLC, which is how we conduct business in many other States.  We are General Engineering contractors and our business name is our owner’s name, followed by “Construction LLC”.  Our application was rejected because the CSLB is stating that we cannot use the word “Construction” in our name.  They are requiring that we adopt a ‘doing business as’ name (dba).  For obvious reasons we don’t want a different name in California than we have in other States and the President is arguing that there must be some way around this.  Is there a law that you can point me to that I can provide to our President with regards to contracting company companies using “Construction” in their business name?

A:  There is no code section that specifically addresses the use of the word “Construction”. B & P Code Section 7059.1 states that a business name needs to be compatible with the classification that is being performed.  The CSLB has determined that General Building (“B”) contractors are the ONLYlicense holders that can use “Construction” in a business name without giving descriptive or limiting words. Therefore, you can still use the word “Construction” in your name, but it needs to be prefaced with a descriptive word.  As an example, “John Smith Engineering Construction LLC” would likely be acceptable.

Q:  I currently have a Contractor’s license for my Corporation.  I want to start another separate company and obtain a second license.  Is it possible to add a “dba” to the existing license, and also use that same ‘doing business as’ name for the new company?

A:  Yes, the CSLB allows multiple companies to use the same “dba” name.

Q:  We have hundreds of work trucks throughout California and the business name on the trucks is a shortened version of our full business name.  We were recently cited by the CSLB for not having our full business name on one of our trucks.  We have no problem paying the fine, but without having to update our hundreds of trucks, how do we make sure this doesn’t happen in the future?

A:  The business name that you have on your company vehicles is considered “advertising” so yes it must match the business name on your license.  Since you don’t want to change all of your existing trucks, I would suggest adding the shortened version of your company name that you have on your trucks as a DBA on your license.  That would require a name change form with the CSLB.