What You Need to Know About Enforcement Actions by the Contractors State License Board

What You Need to Know About Enforcement Actions by the Contractors State License Board

I questioned whether to even write this post.

Because, of course, YOU would never find yourself hightailing it out of town  with the California Contractor’s State License Board (“CSLB”) sniffing down your tail pipes.

Then again, mistaken identities occur all the time. So, here’s what you need to know if the CSLB mistakes you for one of “those” contractors.

What violations are subject to CSLB enforcement actions?

The CSLB can take enforcement actions based on any one of numerous violations set forth under the California Business and Professions Code (“B&P Code”), including:

  1. B&P Code §7107: Abandonment of a construction project or operation without legal excuse.
  2. B&P Code §7108: Diversion or misapplication of funds or property received for prosecution or completion of a construction project or operation.
  3. B&P Code §7108.5: Failure to pay a subcontractor not later than 7 days after receipt of each progress payment, unless otherwise agreed to in writing or in the absence of a good faith dispute over the amount due.
  4. B&P Code §7108.6: Failure to pay transportation charged submitted by a dump truck carrier, unless otherwise agreed to in writing or in the absence of a good faith dispute over the charges claimed.
  5. B&P Code §7109: Willful departure from or disregard of accepted trade standards or plans and specifications.
  6. B&P Code §7109.5: Violation of a safety provision under the California Labor Code (Labor Code section 6300 et seq.) resulting in death or serious injury to an employee.
  7.  B&P Code §7110: Willful or deliberate disregard of building, safety, labor, workers compensation, unemployment, the Subletting and Subcontracting Fair Practices Act, or violation of the California Health and Safety Code or California Water Code relating to digging, boring, or drilling of water wells.
  8. B&P Code §7110.1: Requiring a release from an unpaid laborer in violation of the California Labor Code (Labor Code section 206.5).
  9. B&P Code §7110.5: Being found by the California Labor Commissioner to have willful or deliberately violated the Labor Code.
  10. B&P Code §7111: Failure to make and keep records showing all contracts, documents, records, receipts and disbursements for a period of 5 years after completion of a construction project or operation.
  11. B&P Code §7111.1: Failure or refusal to respond to a written request by the CSLB to cooperate in the investigation of a complaint against the licensee.
  12. B&P Code §§7112 and 7112.1: Omitting or misrepresenting a material fact when obtaining or renewing a license or adding a classification to an existing license.
  13. B&P Code §7113: Failing to complete a construction project or operation for the price stated in the contract or in any modification to the contract.
  14. B&P Code §7113.5: Avoiding or settling of an obligation for less than the full amount through: (a) composition, arrangement, or reorganization with creditors under state law; (b) composition, arrangement, or reorganization with creditors under any agreement or understanding; (c) receivership; (d) assignment for the benefit of creditors; (e) trusteeship; or (f) dissolution, unless discharged or settled in bankruptcy under federal law.
  15. B&P Code §7114: Aiding or abetting an unlicensed person with an intent to evade the License Law.
  16. B&P Code §7114.1: Signing a falsified certificate of experience or certifying false or misleading experience.
  17. B&P Code §7114.2: Displaying a canceled, revoked, suspended, or fraudulently altered license, using a fictitious license or document simulating a license, lending a license to another person, or knowingly permitting the unlawful use of a license.
  18. B&P Code §7115: Failure to comply with the License Law or engaging in collusion under California Public Contracts Code section 7106.
  19. B&P Code §7116: Willfully or fraudulently injuring another.
  20. B&P Code §7116.5: Engaging in conduct that subverts or attempts to subvert an investigation by the CSLB.
  21. B&P Code §7117: Acting in the capacity of a contractor under a license that is not his or hers or with personnel not identified under the license.
  22. B&P Code §7117.5: Acting in the capacity of a contractor under an inactive, suspended, or expired license.
  23. B&P Code §7117.6: Acting in the capacity of a contractor in a classification other than a classification currently held.
  24. B&P Code §7118: Entering into a contract with an unlicensed contractor.
  25. B&P Code §7118.4: Failure, by a contractor who has made an inspection to determine the presence of asbestos, to disclose orally and in writing that there is an ownership or financial relationship with a contractor performing corrective work.
  26. B&P Code §7118.5: Knowingly or negligently entering into a contract with a person who is not certified to engage in asbestos-related work.
  27. B&P Code §7118.6: Knowingly or negligently entering into a contract with a person who is not certified to engage in hazardous waste remediation.
  28. B&P Code §7119: Willful failure or refusal to to diligently prosecute a construction project or operation without legal excuse.
  29. B&P Code §7120: Willful or deliberate failure to pay money when due for materials or services rendered or false denial of any amount due or the validity of a claim with intent to secure a discount or delay.
  30. B&P Code §7121: Employing or associating as an officer, director, partner, manager, qualifier or one of the personnel of record of a licensee, a person whose license was previously denied, suspended, or revoked, or who had knowledge of or participate in acts of an organization which had its license previously denied, suspended, or revoked.
  31. B&P Code §7121.5: Employing or associating as an officer, director, partner, manager, or qualifier, a qualifier of an organization which has had its license revoked or suspended, regardless of whether he or she had knowledge of or participated in any acts of the  organization which led to its license being revoked or suspended.
  32. B&P Code §7123: Being convicted of a crime substantially related to the qualifications, functions and duties of a contractor.
  33. B&P Code §7123.5: Overpricing work following an emergency or major disaster.

What happens when a complaint is filed or enforcement action initiated against my license?

The CSLB may initiate enforcement action on its own. However, more typically, a complaint is filed against a license. The License Law states that “any person” may file a complaint against a license. Usually, however, a complaint is filed by an owner or another contractor, subcontractor, material supplier or employee.

Complaints based on patent defects must be filed within 4 years after the act or omission. Complaints based on latent defects must be filed within 10 years after the act or omission. And complaints based on misrepresentations of material facts, or based on criminal conduct, must be filed within 2 years of discovery.

When a complaint is filed it is processed at the CSLB Intake and Mediation Center nearest the location where the alleged violation occurred. If the complaint is found to fall within the CSLB’s jurisdiction the CSLB will send confirmation of receipt of the complaint to the complainant and a notice to the contractor.

  1. Notice of Possible Violation: The notice to the contractor will usually request information as to whether a settlement has been reached, whether a settlement was offered but not accepted, whether the contractor contends that no violation exists, or if there is further information the contractor would like to share with the CSLB.
  2. Investigation: If a complaint is not resolved, a CSLB consumer services representative (CSR) will contact the complainant and the contractor to request additional information and documentation and attempt to mediate the dispute. If the CSR determines that further investigation is necessary, he or she can assign the case to an enforcement representative (ER) who will conduct an investigation by requesting further information and documents, and conducting interviews, to determine whether there is clear and convincing evidence of a violation of the License Law.
  3. CSLB-Sponsored Arbitration: In certain cases, the CSLB can refer the parties to the CSLB-sponsored arbitration program. The CSLB-sponsored arbitration program is only available if: (a) the dispute involves damages greater than $12,500 but less than $50,000; (b) the contractor has a license in good standing; (c) the contractor does not have a history of repeated or similar violations; (d)  the contractor does not currently have a disciplinary action pending against him or her; and (e) the parties have not previously agreed to arbitrate or are willing to waive a contractual agreement to arbitrate. The CSLB-sponsored arbitration program is voluntary, unless the damages are equal to or below $12,500, in which case arbitration can be mandated. If the  parties participate in the CSLB-sponsored arbitration the arbitrator’s decision is binding.
  4. CSLB Enforcement Action: Once an investigation is concluded the CSLB may take one or more of the following actions: (a) issue a warning letter; (b) issue a citation; (c) file an accusation; or (d) close the complaint because the parties’  settled, for lack of evidence, or because it found no violation. In rare instances, the CSLB may seek injunctive relief with the courts or refer the matter to a local prosecutor for the filing of criminal charges.

What is a warning letter?

If a violation is found but the contractor’s actions are not egregious and the contractor’s history does not reflect a patter of violations the CSLB may just send a warning letter to the contractor. A warning letter remains a matter of record and could support more serious action against a contractor if further violations occur.

What is a citation?

If a contractor is found to have violated the License Law, the CSLB may issue a citation imposing a civil penalty payable to the CSLB as well as an order of restitution requiring the contractor to either correct deficiencies and/or pay for the damages of the complainant. Civil penalties on a single construction project, no matter the number of violations, cannot exceed $5,000. However, if a contractor is found to have contracted with an unlicensed contractor or have aided and abetted an unlicensed contractor a civil penalty of up to $15,000 may be assessed.

A contractor may appeal a citation by giving notice to the CSLB within 15 days of service of the citation by the CSLB. If a contractor appeals the citation, a hearing is held before the Registrar of Contractors who may revoke, modify, or affirm a citation. A mandatory settlement conference before the hearing may also be conducted.

If a contractor does not appeal or fails to appeal a citation within 15 days of service of the citation by the CSLB, the citation becomes final. If a contractor fails to comply with a citation it will result in the automatic suspension of his or her license 30 days after noncompliance with the terms of the citation. A contractor may contest the determination of noncompliance by giving notice to the CSLB within 15 days of service of a notice of noncompliance by the CSLB. If a contractor continues to fail to comply with a citation it will result in the automatic revocation of his or her license 90 days after the date of automatic suspension.

What is an accusation?

The most serious violations are subject to the filing of an accusation. In an accusation, the CSLB seeks to suspend or revoke a contractor’s license, and begins with the CSLB filing an accusation which is similar to a complaint filed in superior court and includes an allegation of claims. A contractor has 15 days from service of an accusation by the CSLB to file a notice of defense.

The Administrative Procedures Act (Government Code sections 11500 et seq.) govern accusations, including limited discovery of names and addresses of witnesses, statements taken, investigative reports, and documents sought to be admitted as evidence. A mandatory settlement conference before the hearing may be conducted.

At the hearing before the Administrative Law Judge (“ALJ”) the burden is on the CSLB to prove by clear and convincing evidence that a contractor’s license should be suspended or revoked. The rules of evidence, however, are typically more relaxed. Following the hearing, the ALJ will issue a proposed decision.

The CSLB may adopt the proposed decision in whole or in part or may enter its own ruling. The CSLB can also request that additional evidence be heard. The decision of the ALJ becomes a final decision 30 days after service of proposed decision unless reconsideration is requested.

A contractor who is unhappy with a decision can seek judicial relief by filing a petition for peremptory writ of administrative mandamus in the superior court. The peremptory writ provisions of California Code of Civil Procedure section 1094.5 govern writs and require the superior court to conduct an independent review of the record. The parties may also appeal the decision of the superior court to the court of appeal.

Contractors who lose an accusation may be required to pay the CSLB’s investigative and enforcement costs which can be in the tens of thousands of dollars. A contractor whose license is suspended may be reinstated upon proof of the contractor’s compliance with the conditions of suspension or, in the absence of such conditions, the discretion of the CSLB. A contractor whose license is revoked may not reinstate their license for a minimum of one year or up to a maximum of five years. A contractor will also be required to file a disciplinary bond.

How does the CSLB address complaints against unlicensed contractors?

Unlicensed contractors, as opposed to licensed contractors, don’t have a license which can be suspended or revoked. When the CSLB receives a complaint against an unlicensed contractor the CSLB may issue a citation including an order of abatement to cease and desist and a civil penalty up to $15,000, file a criminal action with the local district attorney’s office, or initiate injunction proceedings in the superior court.

Unlicensed contractors have 15 days from service of an administrative citation by the CSLB to appeal a citation. If an unlicensed contractor appeals a citation, a hearing is held before the Registrar of Contractors who may revoke, modify, or affirm a citation. A mandatory settlement conference before the hearing may also be conducted.

view post: What You Need to Know About Enforcement Actions by the Contractors State License Board

 

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CSLB Waiver Application

  • Q. Under what law or regulation does the CSLB have the authority to state the last line of the third bullet point?

  • A. None!

Under what circumstances am I not required to take the examination?

You are not required to take the examination if the qualifying individual meets one of the following requirements:

  • You are currently a qualifier on a license in good standing in the same classification(s) for which you are applying;
  • You have been a qualifier within the past five years in the same classification(s) for which you are applying;
  • Within the last five years, you have passed both the Law and Business Examination and the trade examination in the same classification for which you are applying, and the license for which you took the examinations was not denied due to lack of work experience.

CSLB Applying for a license waiver

The webpage above is located here: http://www.cslb.ca.gov/Applicants/ContractorsLicense/NoExamApplication/ApplyingForLicense.asp

What they are saying is that if you pass your exams and the application that you submitted to take those exams was denied due to lack of work experience, those passing exam scores then become invalid.

Exam waivers fall under Business and Professions Code 7065. There is nothing in that regulation that states “and the license for which you took the examinations was not denied due to lack of work experience.” So for the CSLB to put this on their website is overstepping at the least, a violation of law at the most.

  • Q. So why have they been posting applications and scheduling them for the exams, then referring them to enforcement (AIU) for investigation of experience?
  • A. So that they can come back later and tell you that your passing test scores are no longer valid when you reapply for your license.

Once again, it shows the CSLB has no regard for the rule of law. They are akin to the POTUS, as he said in the Rose Garden the other day… “I do what I want!”

It’s time for the Contractors State License Board to wake up and realize that they don’t get to make arbitrary laws, rules, and regulations.

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CSLB Application Processing

Has the CSLB Application Processing system completely run afoul?

I apologize if I spend too much time discussing this topic, but it really fries my shorts when State agencies abuse their power.

I received an email from an applicant who applied to add a classification to his existing license. You will see in the image below that the CSLB Licensing Unit requested additional documentation. The applicant submitted the documentation, it was accepted, the application was posted and he passed the trade exam. Six days after passing the exam, his application was sent to the infamous Application Investigation Unit, or AIU. Why??

The AIU is going to ask for the same documentation. Doesn’t this suggest that the Licensing Unit is incompetent? They chose to take on the role of experience verification experts. Are they incompetent? Do they not feel that they can perform these duties sufficiently and accurately? They did send the application to the investigation unit after they approved his experience documents, so that suggests the answer is No.

Being a Navy vet, I’m used to following set rules and guidelines. The CSLB needs to create a set of (reasonable) rules and guidelines and follow them. Making up the rules as they go along is wrong for any business, but for a State agency to do it is just flat unacceptable!

CSLB Application Processing

 

 

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New Contractors License Law

A new contractors license law goes into effect for 2014.

With the new application experience verification process in full swing, many people who contact me are asking about using someone else to qualify their license.new contractors license law

As I’ve stated in other posts, the law does allow this. But, with the new law listed below, you better be fully involved in the other licenses activities or the CSLB can and will come after you.

Agencies like The RMO Agency have been connecting companies and qualifiers for years. The problem is, they have no oversight to ensure that the people they are connecting are actually following the current rules/laws/regulations that pertain to qualifiers of licenses. I’m not suggesting they should have oversight. It is the qualifiers responsibility to ensure they are involved in the projects done by that other license, after all. But companies like this will put together a qualifier from northern cal with a company in southern cal. This puts the qualifier and the company in a perilous position. And now, with this new law coming into effect, the CSLB will have the power to take action against both parties.

Below is the section outlining the new law in the CSLB newsletter.

Qualifiers – CSLB is now able 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 pay a fine from $3,000-$5,000, or both, if convicted. SB 262 amended §7068.1 of the B&P Code.

My advice to anyone who may be thinking about qualifying another license… the new contractors license law can and will have a big impact on you, the license you qualify, and your own personal or corporate license. So I suggest you do what you can to be involved as much as possible.

via CLC Newsletter Winter 2013.

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CSLB Application Scrutiny Continues

The CSLB application scrutiny continues to be a hot topic with many people I’ve heard from recently.

CSLB Application Scrutiny ContinuesThis week alone, I’ve heard from five people whose applications are being hit hard by the licensing and enforcement units. These applicants have submitted 100’s of documents to prove their experience only to receive a withdrawal request letter in their mailbox. One applicant received a letter asking for the additional documents AND the withdrawal request letter, thing is, he HAD submitted his additional documents with his application. So much for streamlining the process.

[Read more…]

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CSLB Application Seminar

Yesterday, 12/4/13, I attended a CSLB application seminar where they discussed application procedures.

Many license schools and services were invited to attend, or participate online, a seminar that covered application procedures for all classifications including the eight on the critical classifications list.

Some of the information was basic, and since the room was mostly full of people who prepare license applications for a living, some of it was redundant. But that’s ok, they had to start somewhere.

CSLB Application Seminar

There was one common thread to the conversation; the CSLB would “prefer” to receive applications from people who have experience obtained as an employee of a licensed contractor. In a perfect world, that would spectacular! Everyone’s job would be easier, including the applicant. But we don’t live in a perfect world, and therefore, there are plenty of applicants who have gained their experience as “self-employed.” Another tidbit of info that was given was that a handyman is not a journeyman. While that may be true by definition, the CSLB does accept self-employed experience. And if that self-employed experience was obtained by following the law and only doing work that was under the $500 limit for labor and materials, then how could a handyman obtain the necessary experience to allow him/her to obtain a license? So, it seems, that even though they will accept self-employed experience, as allowed by law, they’d “prefer” not to. [Read more…]

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2014 California Construction Law Update

2014 California Construction Law Update

by Garret Murai

2014 California Construction Law Update

Approximately 2,000 bills were introduced in the California State Legislature during the 2013-2014 legislative session. Of these, 896 bills made it to Governor Browns desk and 800 were signed into law.Looking back, 2013 could be called the year of the labor unions. Strong Democratic majorities controlled both the Assembly and Senate. Democratic Governor Brown, enjoying record high approval ratings, surpassed Republican Earl Warren as the longest-serving governor in Californias history. And, 2014 being a primary election year, incumbents are under pressure to show their supporters what theyve done for them lately.The stars aligned, labor unions saw the passage of legislation restricting the ability of charter cities to avoid prevailing wage laws, new laws expanding the authority of the California Labor Commissioner, and tighter…

Read the entire article here: via [New post] 2014 California Construction Law Update.

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How to Start a Construction Business

How to Start a Small Construction or General Contracting Business

by Caron_Beesley, Community  Updated: March 5, 2012

Below is an article I found about how to start a construction business. There are many great links to information on the Small Business Administration’s (SBA) website. I can also provide you with guidance, information, and tools to help you start your construction business. On my services offered page, we include corporation formation, bonding and insurance services, and of course, license application services.

Interested in getting into the construction business? Now might be the time, with market forecasts courtesy of IBISWorld predicting a steady rise in the value of the construction industry over the next five years – 12.5 percent annually for residential construction and 13 percent for private non-residential construction.

If you’re interested in starting a construction, home improvement, or contracting business, here are some business and regulatory basics you need to be aware of.

how to start a construction business10 Steps to Starting any Business

Start by familiarizing yourself with the basic steps involved in planning and forming any kind of business, including planning your business strategy, incorporating and registering with the right government agencies. Read these essential 10 Steps to Starting a Business from SBA.gov.

Get Licensed, Bonded, and Insured

Protect yourself, your business and your clients by ensuring you have the right licenses and permits, business insurance, and surety bonds. Here are three reasons why and information on how to obtain them:

1) Business Licenses and Permits – In addition to a general business license, most construction or contracting businesses need specific licenses to operate legally. For example, a tradesman license is required for electrical, plumbing, HVAC, gas fitting, and other construction trades.

Use this handy SBA.gov search tool – “Permit Me” – to identify the exact license and permits you’ll need. Just enter your zip code and business type. Local government websites also list this information and can guide you through what you’ll need.

2) Surety Bonds – A surety bond is not something many business owners think about, but in almost all cases, construction businesses need construction bonds in order to operate legally. You arrange for a surety bond from a third party who promises to pay your client if you do not fulfill your work obligations under a contract. Bond regulations vary by state, so research your state’s requirements or speak to a reputable surety bond agent. If you are unable to secure a bond through a commercial channel, SBA offers its own Surety Bond Guarantee program that can help.

3) Insurance – Depending on the nature of your work and whether you employ workers directly, you will need several types of business insurance. Consider getting general liability insurance as well as vehicle and property insurance. This will protect you against claims for personal injury and property damage, and cover the costs of legal proceedings. Individual states also require businesses to carry specific insurance, such as workers’ compensation insurance, unemployment and state disability insurance. Read this article for more information on business insurance: Business Liability Insurance – Tips for Protecting your Assets with the Right Coverage.

Remember: jobsites won’t do business with you unless you can prove you have the right coverage.

Familiarize Yourself with Construction Industry Regulations

From energy efficiency standards to workplace safety regulations, the construction industry is heavily regulated. Read SBA.gov’s Construction Industry Guide, which compiles everything you need to know in one place.

Develop an Occupational Health and Safety Plan

The Occupational Safety and Health Act (OSHA) requires that construction workers are provided a safe workplace free from recognized hazards. Fortunately, the OSHA.gov website offers a variety of tools and services that can help you comply and develop a safe workplace. These include on-site consultations, training, and more. Read more in SBA’s Workplace Safety and Health guide. Check out these quick reference resources, too:

Finding and Hiring Labor

The construction industry generally secures labor from four sources – subcontractors, hired employees, labor brokers, or independent contractors. Of course, the law differs in how you work with each of these. For example, when hiring employees, you’ll take on additional obligations such as withholding taxes, paying wages, benefits, complying with employment law, and so on. To get you started read, 10 Steps to Hiring your First Employee on SBA.gov.

While there are no specific laws governing how you work with subcontractors, you may wish to draw up a contractual agreement and ensure that they, too, are licensed, bonded, and insured.

If you engage a broker to find labor, you will pay the broker directly. If you hire independent contractors (self-employed individuals), you will pay them directly but, unlike employees, you are not responsible for paying benefits or withholding taxes. There are strict tax reporting requirements for working with independent contractors. Read about them here.

via How to Start a Small Construction or General Contracting Business | SBA.gov.

Here is an additional and updated article that you may find helpful: https://www.cleverism.com/employment-law-guide/

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New CSLB Senate Bills

New CSLB Senate Bills that affect Unlicensed Contractors and Qualifiers.

senate billRegarding a statement I made in my earlier post, the CSLB is doing something about individuals who qualify more than one license at a time. I officially stand corrected.

In my defense, I was suggesting they remove the 3 license qualifier rule. The Bill’s below don’t change that. So basically the CSLB is just giving itself the ability to enforce a new law after the consumer has been harmed.

Senate Bill 261 adds administrative penalties to existing Contractors State Licensing Law for licensed or unlicensed contractors who commit violations related to the fraudulent use of a contractor license. It adds a new section to the Business and Professions Code: B&P Code section 7114.2.

Senate Bill 262 amends Section 7068.1 of the Business and Professions Code. It allows CSLB to take disciplinary action against a qualifier and the licensed entity they are qualifying when a qualifier is not actively involved in the construction activities of the license he or she is qualifying. In addition to administrative penalties, the individual falsely serving as a qualifier on the license is subject to a misdemeanor criminal charge, with a penalty of up to six months in jail, fine of up to $5,000, or both, upon conviction.

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Contractors State License Board meeting, Sacramento, CA. 9/16/13

I attended the CSLB Board meeting today and here are a few note worthy items.

1) The CSLB is working with the Highway Patrol to educate some officers on contractors license law. It’s currently a pilot program, but if you are pulled over and have a truck full of construction materials, the officer may ask you for proof of a license. Just something to be aware of.

2) The CSLB conducted some trial stings where they approached contractors, or persons who looked like contractors, at SoCal area building supply stores. They approached these persons to get their contact information. Then they made appointments to have these persons come over to a sting house to give a quote. Several were caught, cited, and/or arrested.

The bottom line here…. the CSLB is cracking down on unlicensed activity in many ways that haven’t been seen or used before. I commend them on their efforts.

3) It was stated in today’s meeting that if you submit self employed experience and are afraid that if you provide documents that may suggest you are working illegally without a license…. no worries. They have said on the record that they will not pursue you administratively for working above the $500 limit. Their goal is to get people licensed.

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