HAZ/ASB Waiver, RMO Ownership, LLC and JV Rules

With texting more often these days life is becoming a hash of acronyms, aka OMG. Contractors are already used to dealing with an ‘alphabet soup’ of them to describe rules and regulations that you may need ‘spelled out’ by an expert. RMO, RME, LLC and HAZ, oh my… 

Q:  I currently am a licensed General Engineering (“A”) contractor.  I also have the HAZ and ASB certifications.  I plan to retire and my son is going to take over the business.  I understand he can ask for a Waiver of the exams.  Am I correct?

A:  Yes, B&P Code Section 7065.1 allows for him to request a Waiver of the “A” exams if he has been actively engaged in the business for at least five out of the last seven years.  However, the HAZ and ABS certifications are not subject to Waivers.  He will need to apply for the certifications separately and take those exams.  

Q:  The President of our corporation is currently the Responsible Managing Officer (RMO) on our license and he is retiring and transferring his shares of the corporation to me.  I’ve always worked in the office side of the company so I won’t qualify to be the RMO.  We currently don’t have any employees and I need to hire someone to replace my partner, but I don’t want to have to start paying for Worker Compensation insurance.  If I decide to elect the new Qualifier as an Officer (RMO), is the RMO required to have a percentage of ownership?  If he doesn’t have any ownership, does that trigger the need for Worker Comp?

A:  No, an RMO is not required to have any ownership in the company.  With zero ownership, he/she can only Qualify one Active license.  Ownership does not play a role in the need for Worker’s Compensation insurance.  Worker’s Comp is only required for companies that have employees.

Q:  We currently have two licensed corporations in California.  We are going to open a third entity, which will operate as a Limited Liability Company (LLC), and we need to form a Joint Venture (JV) between the new LLC and one of the currently licensed corporations.  My question is two parts.  First, can we apply for a Joint Venture license with only one entity being actively licensed, or do we need to obtain a license for the LLC prior to applying for the JV License? 

The two existing corporate licenses share the same RMO.  He is 50% owner of each company, including the new LLC to be formed.  In the case that the LLC needs a license prior to applying for the JV and we use the same RMO, would we need to find a new Qualifying Individual for the Joint Venture license since our RMO will be at his limit of 3 licenses?

A:  To answer the first part of your questions, a Joint Venture license in California is made up of two licensedcontractors, so the new LLC will need to obtain its own license prior to applying for a JV license. 

Regarding your second question, Joint Venture licenses don’t count in the “up to 3 licenses at the same time” rule.  All Qualifying Individuals from each entity of a JV must be listed on and sign the application.