Bonds, Expired License and Waiver Rule

When it comes to ‘passing the baton’ in a contracting business you want to make sure not to drop it, so I’m glad you called. Another contractor needs expert support in his ongoing license ‘drama’ because some problems have options, others just consequences… 

Q: I am the President and Responsible Managing Officer (RMO) of a closely held California corporation which has a CSLB license.  I have a couple of younger cousins who are interested in obtaining their licenses.  Both have the requisite experience working for this corporation over the past 10+ years as full-time employees/supervisors.  They are both stockholders as well.  However, they have not been listed on the Secretary of State’s records as Officers.  My obvious inquiry relates to what needs to be done to secure their individual licenses in the hope that one day one or both will replace me as the RMO in various classifications.   Is it possible to obtain Waivers? Would it make a difference if I listed them as Officers with the SOS?  Will that require being listed for 5 years prior to being eligible for Waivers?  What do you see as the easiest path toward achieving this goal?

A: If your cousins have worked for your corporation in the Supervisory capacity you describe for over 5 years and they can provide W-2’s to document that (since they haven’t been listed with the SOS) then yes, one of them would be eligible for a Waiver the exams. The Waiver request can only be used once every five years so unfortunately, you’ll have to pick your favorite cousin because it will not work for both at the same time. You can always have one do it first, the other can wait another 5 years and then take advantage of it too. 

It sounds like you aren’t quite ready to make this transition, so the easiest path is always to have them be listed on the license and the SOS as Officers as soon as you can make that happen, but as I said, it can still be done even if they weren’t.

Q: I am a licensed landscape contractor in San Luis Obispo. About 18 months ago I joined another company and while I’m not sure what I will do with my own business, for now I informed the CSLB that I have no employees and thus do not need to have Worker’s Compensation Insurance. My question is on the contractor’s bond; do I always need to have that in effect? Currently my license is suspended because I didn’t renew the bond, but if I’m not using the license, is there a way to inform them to “inactivate” the bond the same way they did the Worker’s Comp? My attorney suggested I could let the bond expire with “no negative consequences”, however the license being in a suspended status seems like a negative consequence to me!

A: Rarely do ‘suspense’ dramas have a happy ending. There is no way to be exempt from the bond requirement on an active license. I can see why you wouldn’t want the suspended status reflected on the license. The license is set to expire at the end of August, so you have a couple of options. When the license is up for Renewal which will be at the end of this month, you can renew the license “inactive”. The fee is less than an Active renewal and doesn’t require the bond to be active. You can also proactively inactivate the license if you don’t want to wait for the renewal to be due. Lastly, if you decide to shut down the company altogether, you can just let it expire. If you choose the last option, the status will show “expired” instead of suspended.