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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How to Get a California Contractors License Part 5

IN THIS SERIES OF POSTS, I’LL TELL YOU HOW TO GET A CALIFORNIA CONTRACTORS LICENSE. HERE IS PART 5.

Now lets discuss different titles or positions and business entities:

RME or RMO Contractors21) What is the difference between an RMO and RME?

RMO or Responsible Managing Officer is the qualifier for the license and may or may not hold any ownership in the company. An RME or Responsible Managing Employee is the qualifier for the license and may not hold any ownership in the company.

22) Can an RMO be a qualifier on more than one License?

Yes. An RMO can be the qualifier on up to 3 corporate licenses as long as he or she holds at least 20% ownership in each company. The CSLB has passed a new law giving them more enforcement power over qualifiers who qualify more than one license. Those qualifiers need to have an active role in all projects done under the licenses for which they qualify. If enforcement action is taken against a qualifier on any one license, it will have a negative effect on every other license that he or she qualifies.

23) Can an RME be a qualifier on more than one License?

No. An RME can only qualify one license at a time. He or she may have a Sole Owner license but it must be inactive while the person is acting as an RME. By law, an RME must work a minimum of 32 hours a week.

24) Can an individual have more than one license?

Yes. An individual can have as many as 10 Sole Ownership licenses.

25) Can a Sole Owner also be an RMO or Qualifier on another License?

Yes. An individual can be an RMO on another license as long as he or she holds at least 20% ownership or more of the company. As I stated in #22, if you are going to qualify three licenses at the same time, be careful not to spread yourself too thin as you will be required to have an active participation in all projects done under all licenses you qualify.

The finale, Part 6, coming soon!

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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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