CSLB Summer Newsletter Part II

CSLB Summer Newsletter Part II, the analysis continues.

Direct Supervision and ControlThe CSLB summer newsletter contained an article about RMO abuses. While the law does allow a qualifier to be an RMO on up to three corporate licenses at the same time, the qualifier needs to ensure that they are involved in every project done under those licenses.

Here’s the article:

After a sharp rise in consumer complaints against license qualifiers who have been granted a test waiver, the Enforcement division has established a task force to investigate cases where Responsible Managing Officers (RMOs) are suspected of acting as paid figureheads for a company, but exercise little to no control over its operations.

Contractors who serve as qualifiers for a company’s construction operations must exercise direct control and supervision. If you are an RMO and do not have active involvement in the construction and business operations, you risk CSLB administrative penalties against your license(s) as well as criminal prosecution, regardless of whether you’re aware of substandard work being performed by unqualified individuals.

In a sample group investigated earlier this year, consumer complaints were filed against 40 percent of the RMOs who qualify licenses. A similar review in October 2012 identified complaints against 23 percent of the sample RMO group. By comparison, only about 3 percent of CSLB’s almost 300,000 licensed contractors are the subject of a consumer complaint each year.

The task force will be watching for exam waiver requests from applicants suspected of only seeking to rent their name for a fee. CSLB also will seek to revoke qualifier status previously granted to anyone whose actions demonstrate they do not have an ownership stake or are not active decision makers listed on a license.

A new law that took effect in January 2014, Business and Professions Code section 7068.1, now authorizes CSLB to discipline a qualifier, and the licensed entity they are qualifying, when the qualifier is not actively involved in the construction activities of the license they are representing. In addition to administrative penalties, the individual falsely serving as a qualifier on the license can be charged with a misdemeanor and be sentenced to serve up to six months in jail, and required to pay a fine from $3,000-$5,000, or both, if convicted.

A review of Business and Professions Code section 7065 will provide further explanation of examination waiver laws.

End of Article

Here are the interesting parts of this article.

1) What is the CSLB’s definition of “direct” control and supervision?

823. Definitions: Bona Fide Employee; Direct Supervision and Control:

(b) For purposes of Section 7068.1 of the Code, “direct supervision and control” includes any one or any combination of the following activities: supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or direct supervision on construction job sites.

According to the law as written, you do not have to perform direct supervision on-site. The law states “any one or any combination of…” You could receive mailed or emailed updates, photographs, video conference. With today’s technology, you could review workmanship via skype, for example. I’m sure an attorney or judge would say… “The intent of the law is…” But if the CSLB is going to pursue qualifiers based on direct supervision and control, they better not penalize RMO’s for not setting foot on the job site. Again, the law states… “any one or combination of…”

2) Complaints filed against 40 percent of the RMOs who qualify licenses? Where did they get this stat from? And were those RMOs active owners in the business and how many of them qualify more than one license. They throw out a stat like that without detailing how many of those RMOs qualify more than one license.

Here is the most interesting part of this article.

“The task force will be watching for exam waiver requests from applicants suspected of only seeking to rent their name for a fee.”

“Suspected” of only seeking to rent their name… What guidelines will the CSLB be using to determine who is “suspected”? Are they suggesting that they will investigate, harass, go after any and all RMOs they feel are suspects? How would like to be running your above board business, following all applicable laws, only to receive a letter, phone call, or in person visit from a CSLB investigator that is arbitrarily throwing out an accusation that you may be in violation of 7068.1? If and when that happens, you’ll have to spend time and money to provide the CSLB with evidence that you are following the law. To me… it reeks of government overstepping. In other words… par for the CSLB course.

Are there people out their “renting” their name to qualify a license? Without a doubt! Should this practice be stopped? Without a doubt! But should a State agency have the power to put an entire class of people in the category of “suspect”? I think not.

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