Contractor RMOs for Hire

The CSLB released their Winter 2015-16 newsletter last week. One article discussed contractor RMOs for hire.CSLB Gestapo Tactics

Section 7068.1 of the Business and Professions code states: …”responsible for exercising that direct supervision and control of his or her employer’s or principal’s construction operations to secure compliance with this chapter and the rules and regulations of the board.” And Code 823(b) states: “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.”

823 states “any one or any combination,” so if you are using an RMO that is not directly related to your business you need to ensure that he/she is following these guidelines.

I talk to people almost daily who need to use an RMO who is not directly related to their business. I tell them that the RMO must be involved in the construction activities that will be conducted under the license and the same rules and responsibilities apply as they do to the license they currently hold.

What I think is at issue here is the broad definition of “direct supervision and control.” Does the RMO need to be on the job site to manage or make technical and admin decisions? Not according to the law. Remember, it states “any one or any combination” is allowed, that suggests “direct supervision on construction job sites” does not have to be a mandatory choice.

With this ambiguity I’m left wondering what the CSLB gestapo task force is finding during their “investigations”, what are they citing these contractors with, and what are the criminal cases truly about?

I’m sure any attorney worth his hourly fee would be able to punch holes in any CSLB case that involved 7068.1 and 823. So if you are using an RMO or you are an RMO and you do not have a direct relationship with the business, I suggest you become as active as possible with the work being done. Log all phone calls, keep all emails, review contracts and sign them if possible, review photographs, and yes… even drop by the job site if you can (even though the law cited by the CSLB does not require it).

Last comment…. if this is such a big problem that the CSLB had to create a “task force”, why don’t they just amend or remove B&P Code 7068.1? Get rid of the 20% rule altogether? Or is it easier to create an unregulated task force, pry into the business activities of licensee’s, write citations and criminal cases, and collect 100’s of thousands of dollars? Well…. they even say it themselves… “yielded big dividends”!

Full CSLB article below

RMOs-for-Hire Better Know What They’re Getting Into

CSLB has zeroed in on licensees who rent their services as Responsible Managing Officers (RMOs) for companies over which they have little or no control. Due to the work of a special CSLB task force that targets suspected RMO abuses, those who act as little more than paid license qualifier for companies are being identified and disciplined for violating state contractor law.

Contractors who serve as qualifiers for a company’s construction operations must exercise direct control and supervision, and, by law, maintain at least a 20 percent ownership stake in each firm for which the person acts as a qualifier. Business and Professions Code (BPC) section 7068.1 authorizes CSLB to discipline the licensed entity 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 of up to $5,000, or both.

CSLB’s effort to uncover straw men RMOs has yielded big dividends. There have been a total of 304 complaints filed against those suspected of misusing their qualifier status (many still under investigation), 31 accusations filed to revoke or suspend a license, 12 citations issued for violations of contractor law, 11 criminal cases filed by local district attorney’s offices, and $215,000 in restitution ordered for wronged consumers.

CSLB has strong words of caution for those who would enter these arrangements: If you act as an RMO and do not have active and financial 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.

The task force also is 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 review of BPC section 7065 will provide further explanation of examination waiver laws.

End of article

Very last comment…. do I think the CSLB should be taking action against the extremely small percentage of contractor RMOs for hire? Yes.  Should they create an unregulated task force with no oversight to invade the businesses of California contractors? …. Not just no, but hell no!

Email from a Client

Contractors License Customer SatisfactionI received an email from a client who I have been helping since August of last year.

As with many applications there are twists and turns, and special circumstances. All of which need to be dealt with in a certain way and handled in a particular timeline. This client had been registered on a license as a Salesperson. I gave him advice on how he needed to explain his salesperson registration so that his license experience would be accepted.

He also had questions regarding workers comp, when he needed it, when he should buy it, etc. I am a licensed insurance broker and I answered his questions but suggested he contact my broker, Shilo, for more detail. She is an expert in workers comp for contractors and felt he would be best served by speaking with her.

Here is his email….

“I had spoke to Shilo right before I got your email, she answered every question I had and then some. Man you guys got this system down, I really wish more people could be so easy to work with. I’m a very honest person and I always expect people to treat me the same way but that rarely happens.

If someone told me how easy the test would be if I used your materials I wouldn’t believe them but it was easy and you’ve been spot on since the first time we spoke in August.

The technician at CSLB was very impressed with my application and he told me it saved him a lot of time because I disclosed the info about my HIS Lic and also sending in proof of employment with a B Lic for 4 years (sent in w-2’s/ last pay sub) and I used my brothers to sign for my experience. (Also send print out of criminal background even if it’s only traffic related, it cost $1)

I think the best thing was to be completely honest with them and send in as much info as I could without going overboard with it. The CSLB phone operator told me “do not send in your proof of employment or we will return your application” LOL !  I trusted you and sent it in anyway.

The only thing that happened to me was that owed $300 for a citation that I had inherited from my parents company and by the time the CSLB found the records (because it was from 2005) my technician went on vacation for 3 weeks so my Lic just sat there in his desk waiting for him to return!

I sent in my app on Sept 10th and they approved it over the phone and set up my test date on December 30th.

So basically without your advice I would have still been in application phase.

This has seriously made a huge impact on my family’s life & this is why I’ve been thankful for everything that you’ve done.

Next time you hear from me is when I hit my million$ mark lol. I do the best work on this side of the Mississippi so I’m sure you’ll hear about me again.

THANKS FROM THE SCOTT FAMILY 2016″

I shared this email with Shilo and this was her response….

“Phil,

Thank you for sharing that! It made my day.

I really appreciate working with you too. I have many guys call & tell me that you were amazing & if you recommended me that I had to be pretty awesome too. So the Kudos really go to you!”

Talk about making someone’s day! They both did!!

If you would like to discuss your specific license application circumstances, please feel free to contact me anytime.


(c) Can Stock Photo

Owner Builder Experience

owner builder experienceIn October of 2010 I wrote an article discussing owner builder experience.

In that article I stated that owner builder experience was a red flag, so to speak.

Well that was then, this is now. With the current processing systems in place at the Contractors State License Board (CSLB), ALL experience, including owner builder experience is good experience.

If you have building experience on property that you own, and you need that experience to build your portfolio that will be submitted with your application, by all means, submit that owner builder experience.

The CSLB will ask you for documentation to back it up, so be prepared to show cancelled checks, copies of receipts for materials purchased, copies of all permits, etc.

You will also need to complete the project sheet that is contained within the CSLB application. Things to be aware of on that project sheet? Do not list that most or all of the work was done by contractors or sub-contractors. The CSLB will only give you credit for the experience that you did yourself. If the project sheet makes it appear that you did some, or little-to-none of the work, they will credit you with very much experience time.

Do they accept supervisory experience? Yes they do, most owner builders are non-journeyman level people and therefore don’t have the skills to have the title of supervisor. So stating that you supervised the owner builder project will most likely not be credited in your favor.

The amount of experience time the CSLB will grant for owner builder experience hasn’t changed. If you submit a project that took you one year, they will most likely grant you 4-6 months credit. That’s because they calculate what it would take a licensed contractor to complete the same project.

If you have experience to submit that was obtained as an employee, and you want to also submit your owner builder experience, you will need to submit a work experience form for each time period and for each separate owner building project.

So owner builder experience isn’t the red flag that it used to be. Now it’s an additional way of proving your experience to the CSLB. Good luck.

Happy Thanksgiving

Happy Thanksgiving to all of my readers. I appreciate your support, kind words, feedback and questions.

Happy Thanksgiving

I hope you have a wonderful holiday with family, friends, food, and football!

C-01 Contractors License Proposed Language

C-01 Contractors License Proposed LanguageThere was a stakeholder meeting at the Contractors State License Board headquarters office today that discussed the C-01 Contractors License Proposed Language.

At this meeting they outlined the proposed language for the new classification. It states:

“Adopt Section 832.01

Non-Structural Remodel and Repair Contractor

(a) A non-structural remodel and repair contractor remodels and repairs existing structures built for the support, shelter, and enclosure of persons, animals, chattels, or movable property of any kind, requiring the use of at least two unrelated building trades or crafts, except as excluded in this section.

(b) This section does not apply to any work or operation on one undertaking or project by one or more contracts, the aggregate contract price which for labor, materials, and all other items is more than $15,000.

(c) This classification shall not include the following:

  (1) altering, adding, or moving any load-bearing portions of the existing structure, including footings, foundations, and weight-bearing member;

  (2) Work requiring specialized engineering knowledge and skill as set forth in Business and Professions Code Section 7056; and

  (3) Work performed pursuant to a C-11 Elevator (Section 832.11), C-16 Fire Protection (Section 832.16), C-21 Building Moving/Demolition (Section 832.21), C-22 Asbestos Abatement (Section 832.22), C-31 Construction Zone Traffic Control (Section 832.31), C-32 Parking and Highway Improvement, C-34 Pipeline (Section 832.34), C-42 Sanitation System (Section 832.42), C-51 Structural Steel (Section 832.51), and C-57 Well Drilling (Section 832.57) classifications.

(d) An examination waiver for this classification as a closely related classification pursuant to Business and Professions Code Section 7065.3 shall be considered only for licensees who hold the B-General Building classification pursuant to Section 7057 of the code.

(e) The C-1 Non-Structural Remodel and Repair classification shall be available upon development of a trade examination.”

There was talk at the meeting that the maximum contract limit of $15,000 should be raised. Potentially to match the Utah license classification that the C-1 emulates. I believe the current limit was set to match the upcoming license bond increase which will be $15,000 at the first of the year. And it seems they’ve dropped the 3-story limit that was in place in previous wording of the legislation.

Bottom line, this should have a huge beneficial impact on the construction industry. Stay tuned for more information.

Do I have to submit an experience outline?

CSLB ExperienceI received an email today from a reader who was looking for an answer to this question:

Do I have to submit an experience outline with my application if I held the same classification over five years ago? The email stated:

Dear Mr. Cocciante:

Your Blog is a wonderful resource and I am happy I discovered it. I have a question I hope you can answer. Here is the scenario: Contractor fails to renew license, license expires, five years pass. Contractor must now apply for new a.k.a. Original License. Does Contractor need to complete and have Certification of Experience form signed? Per Bus. & Prof. Code 825(b) applicant “may compute experience without regard to the ten-year limitation.” So, essentially, Contractor may use the exact work experience used to obtain original license, and given that Contractor held license, clearly he has met the four-year minimum requirement … which leads me to the question of does Contractor need to include a Certification of Work Experience form?

I have read conflicting answers in another blog. One time they said the form was not required, another time they said it was. When I called the CSLB, a tech told me all Contractor needs to do is write “See License No. XXXX” on the Experience form; another tech had a different answer.

I’m hoping you have some insight for me. I very sincerely appreciate your time. Perhaps this topic may be a good one to blog about. I imagine I’m not the only one trying to figure this out. Plus, with the fires in Northern California, seems like a lot of guys are getting back into construction after having let their licenses expire.

Kind regards,
Jessica T.

My reply:

Hello Jessica,

Thank you for the kind words.

I can tell you as a former cslb application technician, and a service provider that deals with current application techs, that he would not need to submit his experience with a new application.

On the first page of the app it will ask him to provide any license he is/was associated with. The app tech will look up that license number to verify that he held the same classification previously that is being applied for now and will post the application to the exams.

Having said that, there is always a slim chance that they may ask for an experience outline and verifying documents (depending on the classification being applied for) for this type of application.

~End

Thank you Jessica for your email and allowing me to post it here. Questions from my readers are always welcomed.

California CSLB Contractors Bond Increase

A post by Jon Gottschalk regarding the California CSLB Contractors Bond Increase coming in 2016California CSLB Contractors Bond Increase

As published in our blog last month, the Contractors State License Board (CSLB) is requiring all California contractors to purchase a $15,000 bond by January 1, 2016— a $2,500 increase from the $12,500 amount that was previously required. The additional $2,500 was previously accounted for by an additional requirement to obtain a contractor’s license. Those applying for the license had to post the $12,500 surety bond and proof of financial solvency in the amount of $2,500. Essentially, contractors were required to show that their current assets were greater than their liabilities by no less than $2,500. By increasing the bond amount to include that additional $2,500, the CSLB has removed the burden of proving financial solvency from those who wish to obtain their license.

What does the increased bond amount do to the cost?

Due to the increase, applicants should expect to pay a slightly higher premium for their bond than they would have for the $12,500 amount. California contractor bonds for general contractors with great credit, as well as new applicants start at around $140 for a one-year term. However, rates are slightly discounted when the bond is written for multiple years. Something else to consider is that the premium will also vary depending upon the type of work in which the contractor is engaged. For example, roofing or swimming contractors will most likely pay slightly more than general contractors due to greater risk of a claim being filed against the bond. As has been the case for California bonds, the premium owed is based upon the applicant’s personal credit, so the quote will be subject to underwriting.

What if a $12,500 bond is already in place?

The CSLB is aware that there are thousands of contractors in California and that the majority of their bonds likely do not expire on December 31, 2015. In order to make the increase as simple as possible, they will provide an endorsement authorizing the increase that must be signed by an attorney-in-fact for the surety company.  Although the bond requirement is not increasing by much, contractors that are increasing their bond amount to $15,000 should be prepared to pay a small additional premium to account for the increase before it is approved by the surety company.  Once the increase has been approved by the surety, the endorsement will then need to be filed with the CSLB. Also of note, the endorsement has no bearing upon the bond’s effective dates, so contractors will want to remain aware of the day that their bond expires, at which point the bond will need to be renewed and  electronically filed with the CSLB by the surety company.

What if a $15,000 bond or increase endorsement is not filed?

Failure to have a bond filed with the CSLB in the correct amount may lead to a suspension or even revocation of current licenses, as well as denials for new applicants. Those contractors that have not yet submitted the $15,000 bond to the CSLB should keep the following in mind:

  1. License and bond renewals often do not fall on the same date, so it is important to be aware of both renewal dates and act accordingly.
  2. Many surety companies will notify the bondholder in advance that the bond is coming up for renewal, but it is ultimately the bondholder’s responsibility to ensure that the bond is renewed on time.
  3. The amount of time that it takes for the CSLB to process bonds varies, so contractors will need to allow plenty of time in order to guarantee their bond is filed and that there is no lapse in coverage.

In the event that a lapse in coverage occurs, the contractor’s license may be suspended, and any work that occurs during the suspension may result in further disciplinary action. Further information on suspended and revoked licenses may be found here.

There is also plenty of additional information regarding these bonds available by visiting our California Contractor Bond page or the CSLB website.

New C1 Non Structural Remodel Repair Contractor

C1 Non Structural Remodel Repair ContractorThe CSLB is proposing legislation to create a New C1 Non Structural Remodel Repair Contractor.

It’s about time!!

After years of forcing B General Contractor applicants to withdraw their applications because they couldn’t meet the unrealistic proof of experience requirements, the Contractors State License Board is actually doing something to help the industry! Shocker!!

Friday October 30th, the CSLB Licensing Committee will be holding a meeting to discuss the new C1 non structural remodel repair contractor classification.

It appears they realized that their creation of a list of critical classifications has actually been harming the consuming public, those who strive to become licensed contractors and business owners, the economy, and the construction industry as a whole. They even acknowledged, in writing, that their actions have created an “underground economy.” Can you believe it?!? The almighty, all knowing, all powerful Contractors State License Board admitted they screwed up and failed to fulfill their consumer protection mandate. These are historic times my friends!

C1 Non Structural Remodel Repair Contractor Details

This new C1 classification will allow the license holder to perform work that “provided that no load bearing portion of the existing structure is altered, added or moved; this includes footings, foundations, and weight bearing members.” Basically, it should allow the C1 contractor to bid, contract, and perform work that includes at least two unrelated trades that do not include framing.

Framing has been the nail in the coffin for many B General applicants. A very large percentage of B General applicants over the last 3 yrs have little to no framing experience, and many of those that did, did not have the paper documents to prove that experience. This new C1 classification will change all of that.

Here is the proposed language for the definition of a C1 Non Structural Remodel Repair Contractor:

832.01 Non-Structural Remodel/Repair Contractor A non-structural remodeling and repair contractor remodels and repairs existing structures of three (3) stories or less, built for support, shelter and enclosure of persons, animals, chattels or movable property of any kind; provided that no load bearing portion of the existing structure is altered, added or moved; this includes footings, foundations, and weight bearing members.

If you would like to read the entire committee agenda item, click here.

Looking forward, I see nothing that would stop this new C1 classification from becoming law. When it does become law, their will be a flood of new applicants who will have questions, and as always, I will be here to help them! I will also have C1 contractors exams study kits to prepare those who will be taking the exam.

Stay tuned, I’ll keep you updated on the new C1 Non Structural Remodel Repair Contractor as it unfolds.

 

CSLB Home Improvement Salesperson Registration

The CSLB home improvement salesperson registration law will change on January 1, 2016.

Of all the laws and rules and regulations the CSLB could be working to change, they decided to do something about HIS registrations. What about the myriad of underground regulations the CSLB has created regarding the licensure of targeted classifications?

Press releases like the one below always appear (to me) to be more of a smoke screen than anything else. As if to say “Look at us and what we’re doing to fix a problem very few were aware of… but don’t worry about how we’re profiling a majority of license applications.”

A 1000 applications a month? Seriously? That prompted legislative action? It’s a one page app for goodness sake!

What it really comes down to is … what can the CSLB do to make it easier on themselves. It has nothing to do with any inconvenience on the part of the applicant. The CSLB makes it very clear to almost every applicant who contacts them that they (applicant) are not the priority. For example, emails unanswered, phone calls not returned, ambiguous answers to serious questions, etc.

But hey…. If the CSLB can reduce their workload by processing fewer HIS applications, then WOW… good for them!!

Governor Brown Signs Bill Changing CSLB’s Home Improvement Salesperson Registration Requirements

SACRAMENTO — Home improvement salespersons (HIS) that represent licensed contractors when selling goods and services soon will only have to register once with the Contractors State License Board (CSLB). Governor Edmund G. Brown Jr. signed Senate Bill 561 into law yesterday, simplifying the HIS registration process to a single registration while still allowing salespeople to represent multiple employers.

Anyone who solicits, sells, negotiates, or executes home improvement contracts for a licensed contractor outside of the contractor’s normal place of business must be registered with CSLB as an HIS (Business and Professions Code section 7153).

The law takes effect January 1, 2016, and removes the current requirement that an HIS register separately with CSLB for each contractor that employs them.

The bill, authored by Sen. Bill Monning (D-Carmel) and sponsored by CSLB, will simplify and quicken the registration process in response to the rapid growth in the number of HIS applications, particularly for employees who work in the solar industry. CSLB received more than 1,000 HIS applications per month in fiscal year 2014-15, a 40 percent jump compared to the average for the previous three years.

In addition to the single registration provision, SB 561 will:
·         Require a contractor to notify CSLB in writing prior to employing a registered HIS, and when employment ceases;
·         Allow CSLB to accept an electronic application and signature from an HIS applicant;
·         Require an HIS to have a current and valid registration with CSLB before making sales calls and transactions on behalf of a contractor; and
·         Provide that registrations will be valid for two years from the month of issue.

CSLB staff is already at work putting systems in place for the new registration process. More information will be available in the weeks to come on CSLB’s website.

End press release

I would provide a link to this press release on the CSLB website, but apparently they send out press releases before updating their public website and there is no link for me to provide.

Who should certify your CSLB experience

Who should certify your CSLB experienceSo who should certify your CSLB experience and who shouldn’t?

And how should your trade experience be outlined on the license application.

Other questions are:

  • How many certifiers do I need?
  • Can my dad, mom, uncle, or brother be my certifier?

These are common questions that I’m asked all the time. And although it seems like this aspect of the license application is somewhat of a daunting task, it’s really not that bad.

Who should certify your CSLB experience?

  • If you are submitting experience as an employee, do not check the “self-employed” box in Line two. Enter the employer’s business name, license number, and business address. The certifier in this case could be the license holder, officer on the license, foreman or supervisor, fellow employee, or anyone who has first-hand knowledge of that experience.
  • If you are submitting experience as self-employed, do check the “self-employed” box in Line two, and leave the employer name, license number, address boxes blank. The certifier in this case could be a business associate, another journeyman, or a contractor listed in the same classification or above. I would avoid checking the “client” box because most people are not working for the same client 40 hours a week for four years. If you are, you should probably be on the payroll.

How many certifiers do I need?

You only need one unless your certifier is not certifying a full four year period. If you have one certifier that has first-hand knowledge of only two years of experience, then you would need a second certifier to cover the remaining two years. Submitting more than one work experience page for the same time period with different certifiers is not a benefit to you. It does not increase your chances of the application being accepted (aka “posted”).

Can your dad, mom, uncle, or brother be your certifier?

Yes. As long as they have first-hand knowledge of your experience and are qualified to know if your experience is at the journeyman level. The title they would select would most likely be “Business Associate” unless they are licensed. Then you would select the Contractor box and enter their license number.

What if you can’t use your employer as your certifier because it might put your employment status in jeopardy?

You could use a fellow employee or foreman/supervisor as your certifier. Submit a letter with your application stating that you do not want the CSLB contacting the employer directly because it could jeopardize your employment. The CSLB isn’t in the business of getting people fired from their jobs.

How should your trade experience be outlined on the license application?

The application states: “In the space below, list all specific trade duties applicant performed or supervised in the classification for which he/she is applying.”

This implies that the certifier has to fill out the experience outline. Although the implication is there, it is acceptable for you to complete the experience outline and have your certifier sign-off on it.

The outline should be generic, straight forward, and trade specific. Begin the outline with “Experience includes….” Then describe the trade duties you perform/supervise on a daily basis. Do not list administrative duties. These include, reading plans, getting permits, contacting clients, etc.

So who should certify your CSLB experience and who shouldn’t?

Hopefully I’ve laid it out in a way that explains it in a clearer, more understandable way. If you have questions regarding this topic, feel free to contact me. And remember, I do offer an application review service for only $50.