Contractor, Corporate and LLC Rule Change

You personally may read here what you consider most important to your trade, license status or particular situation. This time a major change in the rules requires your full attention. When the CSLB speaks, listen! …

Q: I read that a Responsible Managing Employee (RME) can only be on one license, but a Responsible Managing Officer (RMO) can be on up to three licenses. Can an RME be on two licenses if the license holders meet the requirements of B&P Code Section 7068.1(3) which allows for a Qualifier to be on multiple licenses if the majority of the Partners, Officers, Members/Managers are the same. We can add one of our Officers to the new license in order to make the majority line up.  Will that work?

A:  First, see the new requirements below.  I would have to look into the structure of each entity in order to give you a definitive answer, but from what you described, it sounds like a GO!

Latest update from the CSLB:

“Heads up regarding a change in the law/requirements from the California Contractor’s State License Board (CSLB).  As of July 1, 2021, all Officers of foreign corporations and LLCs must be listed on California Contractor’s licenses, so you may need to update/change your registration.  

As of July 1, 2020, “[e]very person who is an Officer, Member, Responsible Manager, or Director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record,” and they must match those Officers listed on California Secretary of State’s (SOS) records. (Cal. Bus. & Prof. Code § 7065 (b)(1)). This is a change from the Contractors State License Board’s (CSLB) past practice, in which foreign corporations only had to associate their President.  Domestic corporations previously had to associate their President, Secretary, and Treasurer.   (Note the statute shows an effective date of January 1, 2020, but we understand the CSLB is seeking compliance as of July 1st).  

Licensees should ensure:  

  • Corporations:  All corporate officers, including Presidents, Secretaries, Directors, and Treasurers, must be listed, whether the corporation is foreign or domestic.  
  • LLCs:  Every Member, Responsible Manager, Director, and Officer must be listed, whether the LLC is foreign or domestic.

This raises the question for companies which have many Vice Presidents and Officers whether all are required to be listed.  The answer under the statute appears to be “yes.”  As a practical matter, the CSLB is most likely to identify any discrepancy between the Officers you have listed in your filings with the Secretary of State and those you have listed on the license.   

Each Officer must be fingerprinted, unless their fingerprints are already on file with the CLSB, before the application will be approved. The new Officers will be associated effective on the date that the application is determined to be acceptable and all requirements are met, so it would be a good idea to get going on this now, in advance of the deadline”.

And as always, contact us if you need our help with any updates!