NEW CALIFORNIA CONTRACTORS STATE LICENSE BOARD (CSLB) LAWS -2021
New Contracting Laws Go into Effect January 1, 2021
CSLB Summarizes New Laws for Licensees
NEW CALIFORNIA CONTRACTORS STATE LICENSE BOARD (CSLB) LAWS -2020
New Contracting Laws Go into Effect January 1, 2020
CSLB Summarizes New Laws for Licensees
SACRAMENTO - The Contractors State License Board (CSLB) has summarized the new laws that will go into effect this January. Take note of these laws as they may change the way you do business.
Assembly Bill (AB) 754 requires solar contractors that excavate or put in a ground rod to call "811" prior to obtaining a permit to install a solar energy system. (Chapter 494, Statutes of 2019)
Assembly Bill (AB) 178 specifies that residential construction to repair or replace a residential building damaged or destroyed in a declared disaster must comply with any photovoltaic requirements in effect at the time the building was constructed, not at the time of repair of replacement.
This bill's provisions apply to emergencies declared before January 1, 2020 and self-repeals on January 1, 2023. (Chapter 259, Statutes of 2019).
AB 1076 requires the Department of Justice, on a monthly basis, to review the records in the statewide criminal justice databases and identify those eligible for relief by not disclosing their arrest or conviction records, as specified.
This bill's provisions do not apply to offenses requiring sex offender registration or to any pending criminal charges. The bill extends its requirements to the criminal information provided by the department to other entities for employment, licensing, or certification. (Chapter 578, Statutes of 2019)
AB 1296 empowers agencies participating in the Joint Enforcement Strike Force (JESF) on the Underground Economy to request specified information from the Employment Development Department, the California Department of Tax and Fee Administration, and the Franchise Tax Board, for the purposes of investigating tax or fee related crimes.
This bill also adds the Department of Justice, the California Department of Tax and Fee Administration, and the Franchise Tax Board to JESF, and authorizes the Department of Motor Vehicles and California Highway Patrol and other agencies to serve JESF in an advisory capacity. The bill authorizes JESF representatives to exchange intelligence, data, documents, confidential information, or lead referrals and authorizes sharing such information with the Labor Enforcement Task Force. (Chapter 626, Statutes of 2019)
AB 1475 clarifies that a construction manager on Department of Transportation projects be a licensed contractor pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code. (Chapter 289, Statutes of 2019)
Senate Bill (SB) 601 authorizes specified state agencies to establish a process for a person or business either displaced or experiencing economic hardship as a result of an emergency to apply for a fee reduction or waiver required to obtain a license, renew or activate a license, or replace a physical license for display. (Chapter 854, Statutes of 2019)
SB 610 extends the Contractors State License Board sunset date from January 1, 2020, to January 1, 2024. Among other provisions, this bill requires CSLB to conduct a study on whether or not the current contractor bond amount is sufficient and report the findings to the Legislature by January 1, 2021.
This bill also requires CSLB to charge C-10 (Electrician) contractors a $20 fee to enforce electrician certification requirements, and authorizes CSLB to automatically suspend a contractor's license for an unsatisfied construction-related judgment entered against a member of the personnel of record of a licensee. (Chapter 378, Statutes of 2019)
2019 CSLB LAW CHANGES FOR CALIFORNIA
New Requirement for Residential Solar Energy System Contracts to Take Effect January 1, 2019
SACRAMENTO – The Contractors State License Board (CSLB) is notifying the California construction industry that effective January 1, 2019, contractors who install residential solar energy systems will be required to comply with a new consumer notice requirement.
Assembly Bill 1070, Stats of 2017, Ch 662 established Business and Professions Code (BPC) section 7169. This new law requires the CSLB, in collaboration with the California Public Utilities Commission (PUC), to develop and make a solar energy system disclosure document available on its website by July 1, 2018. The disclosure document must be provided to consumers prior to the completion of a sale, financing or lease of a system. CSLB posted online a proposed one-page Solar Energy System Disclosure Document on June 29, 2018 and indicated the document was pending PUC approval.
At its August 23, 2018 meeting, the PUC approved Final Resolution M-4836 to endorse PUC staff's collaboration with CSLB to draft consumer disclosures required by AB 1070 and approved the Solar Energy System Disclosure Document posted on the CSLB’s website.
Contractors will be required to comply with this new requirement beginning January 1, 2019.
Some of the requirements of BPC section 7169 include:
- Solar energy system companies must provide the Solar Energy System Disclosure Document to consumers printed in boldface 16-point font on either the front or cover page of every solar energy contract prior to completing a sale, financing, or lease of a solar energy system to be installed on a residential building.
- The disclosure document and the contract must be written in the same language principally used in the oral sales presentation or the marketing materials provided to the consumer. English and Spanish versions of the disclosure document are available on CSLB’s website in English and Spanish. The contractor must translate the document into other languages, as necessary.
- If the sale of the solar energy system utilizes Property Assessed Clean Energy (PACE) financing, the PACE Financing Estimate and Disclosure form may be used in place of the new solar energy system disclosure document. The PACE form is available on the California Legislative Information website and State Assembly website.
PACE contractors must still comply with the current home improvement disclosure requirements of the Contractors State License Law .
BPC §7169 also contains provisions for the development of further disclosure content for residential solar energy systems contracts. To that end, CSLB hosted a meeting of stakeholders on August 24, 2018 to seek industry and consumer input on the development of further disclosure content. Please stay tuned for new Industry Bulletins regarding possible additional stakeholder meetings and possible future solar energy system contract disclosure requirements that will be implemented through the regulatory process, which will provide an additional opportunity for public comment.
CSLB hopes the requirement to include the Solar Energy System Disclosure Document in the contract for residential solar energy systems will reduce misunderstandings between contractors and consumers and help our licensees improve their relationships with customers.
New California Contracting Laws Kick into Gear on January 1, 2019
SACRAMENTO – The Contractors State License Board (CSLB) is providing a summary of new construction related laws that will go into effect with the coming of the new year.
Senate Bill (SB) 721 establishes requirements for inspecting and repairing “exterior elevated elements,” which includes decks and balconies, for buildings with three or more multi-family dwelling units. Additionally, it establishes reporting and repair requirements, including timeframes, if it is found repairs are needed.
This bill also specifies who can complete the inspections and repairs – such as “A” General Engineering, “B” General Building, and C-5 Framing and Rough Carpentry contractor license classifications, if specified experience requirements are met. Also, this bill provides for application of civil penalties if building owners violate the requirements. (Chapter 445, Statutes of 2018)
SB 981 removes the restriction on delivering or installing a water treatment device sold through a home solicitation contract during the consumer’s “three-day right to rescind” from the date the contract is signed. Instead, this bill allows for the installation to take place during that time period.
If the consumer subsequently withdraws the contract within the three-day period, the seller is responsible for the costs to remove the device and/or any material and to return the property to its same condition prior to the contract. (Chapter 932, Statutes of 2018)
SB 1042 authorizes CSLB’s registrar to “settle” less egregious administrative citations prior to an administrative hearing using an informal citation resolution process. The informal process is not subject to the Administrative Procedure Act and the person cited would not surrender their right to request an administrative hearing.
(Chapter 110, Statutes of 2018)
SB 1087 is a follow-up to AB 1284 (Dababneh, Statutes of 2017), which required the licensing and regulation of Property Assessed Clean Energy (PACE) program administrators by the Department of Business Oversight (DBO). Among other things, SB 1087 makes it unlawful to begin work under a home improvement contract if the property owner was not ultimately approved for the PACE financing applied for. (Chapter 798, Statutes of 2018)
SB 1465 requires contractors and insurers to report to CSLB any final civil judgments, settlements, or arbitration awards involving damage claims over $1,000,000 for construction defects in multi-family rental residential structures that meet specified criteria. (Chapter 514, Statutes of 2018)
Assembly Bill (AB) 2138 – Effective July 1, 2020, this bill prohibits an applicant from being denied a license solely because he or she has been convicted of specified crimes. It also authorizes a board to deny a license based on a conviction if it occurred within seven years from the date of application, regardless of the following:
- Incarceration status;
- If the crime is substantially related to the qualifications, functions, or duties of the license;
- If the conviction requires California sex offender registration; and
- If the conviction is a financial felony crime directly and adversely related to the qualifications, functions, or duties of the license.
This bill also prohibits license denial if the applicant was pardoned, shows rehabilitation, or if the conviction was dismissed, and prohibits denial based on an arrest that resulted in anything other than a conviction.
Boards will also be prohibited from requiring an applicant to provide his or her criminal history and requires boards to produce annual reports about applicants
with a criminal background to the Legislature and for public posting. (Chapter 995, Statutes of 2018)
AB 2371 provides that before CSLB revises a landscaping contractor examination, it must confer with specified entities to determine if any updates or revisions to the exam are needed to reflect new and emerging landscape irrigation efficiency practices. (Chapter 867, Statutes of 2018)
AB 2705 increases the statute of limitations from one year to two years during which an unlicensed contractor can be prosecuted for failing to obtain workers’ compensation insurance for their employees. (Chapter 323, Statutes of 2018)
AB 3126 eliminates the option of a cash deposit with CSLB in lieu of a contractor license bond, bond of qualifying individual, or disciplinary bond to prevent contractors from removing bond funds from their private accounts and leaving no funds payable to a consumer following a valid claim against a bond. Contractors may also submit a cashier’s check. (Chapter 925, Statutes of 2018)
2018 CSLB LAWS DO NOT IMPACT YOUR FORM REQUIREMENTS ALREADY IN EFFECT
2017 CSLB LAW CHANGES FOR CALIFORNIA... THERE ARE NO NEW LAW CHANGES THAT EFFECT YOUR EXISTING FORMS PROVIDED YOUR FORMS ARE UP TO DATE FOR 2016.
From CSLB... New 2017 Laws Will Affect Contractors Business Operations...
SACRAMENTO — The Contractors State License Board (CSLB) is providing a round-up of new state laws affecting California’s construction industry that take effect in the new year.
Assembly Bill (AB) 1793 modifies the criteria the courts use to determine if a contractor substantially complied with licensing law under Business and Professions Code (BPC) section 7031. This allows a client to not pay a contractor and to demand the return of compensation paid for work completed if the contractor was unlicensed at any time during the course of work. The new legislation provides the court a modified set of criteria to use when determining if a contractor “substantially complied” with licensure requirements and acted promptly and in good faith to remedy the lapse in licensure once known.
Senate Bill (SB) 1209 provides for enhanced complaint disclosure of legal actions taken against licensees. Under the provisions of this legislation, citations issued against a licensed contractor follow that contractor if he or she is issued another license and allows for the public disclosure of these citations.
AB 2486 requires that by January 1, 2019, CLSB create a system that allows consumers to search CSLB’s website for a licensed contractor either by zip code or geographic area, which should make it easier for consumers to identify and hire properly licensed contractors.
In an effort to establish further safety measures around underground excavation, SB 661 enacts the Dig Safe Act of 2016, and makes several changes to existing requirements for excavation procedures. These include requiring that excavators delineate an area to be excavated prior to notifying an appropriate regional notification center and establishing the California Underground Facilities Safe Excavation Advisory Board within the Office of the State Fire Marshall.
AB 2286 authorizes CSLB to raise its various fees, resulting in what will be the first fee increase since 2011, and only the second fee increase since 1993. The 10 percent fee increase will ensure that CSLB has enough funds to operate in the coming years. Increases that take effect July 1, 2017 include: The application fee for an original license in a single classification will increase from $300 to $330; the renewal fee for an active license will increase from $360 to $400; and the registration and renewal fee for a Home Improvement Salesperson will increase from $75 to $83.
CSLB will provide the industry more information on the upcoming fee increase in the spring.
From CSLB... New 2016 Laws Will Affect Contractors Business Operations... Not Your Forms!
SACRAMENTO- California law (Business and Professions Code Section 7071) requires all contractors to have either a contractor's bond or cash deposit filed with the Contractors State License Board (CSLB). The bond or cash deposit is filed for the benefit of consumers who may be damaged as a result of defective construction or otherlicense law violations, and for the benefit of employees who have not been paid wages that are due to them.On January 1, 1016, the amount of the bond is increasing from $12,500 to $15,000. CSLB urges all contractors to make sure they've got their new bond or cash deposit in place by that date.CONTRACTORS WHO DO NOT MEET THE DEADLINE RISK HAVING THEIR LICENSE SUSPENDED!
SACRAMENTO-SB 561 SIMPLIFIES the registration proceedures for Home Improvement Salespersons. All contractors who have salespersons as part of their operations as well as the salespersons themselves are encouraged to familiarize themselves with these new proceedures which go into effect January 1, 2016.
2014 CSLB LAW CHANGES FOR CALIFORNIA... THERE ARE NO NEW LAW CHANGES THAT EFFECT YOUR EXISTING FORMS... PROVIDED YOU HAVE UPGRADED YOUR FORMS LAST YEAR...IT IS VERY IMPORTANT THAT YOU BE SURE YOUR FORMS COMPLY WITH THE NEW LAWS FROM 2012-2013.
From CSLB... New 2014 Laws May Affect Your Business
SACRAMENTO...The New Year rings in a host of new laws that impact licensed contractors. Following is a summary of major changes to contractor laws, effective January 1, 2014.
Fraudulent Use of License – CSLB can now take administrative action against any licensed or unlicensed contractor who commits violations related to the fraudulent use of a contractor license. Senate Bill 261 added §7114.2 to the Business and Professions Code (B&P Code).
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.
Incomplete License Renewal – This new law, created by SB 822, gives a break to CSLB licensees who submit an incomplete renewal application on or before the license expiration date. The application will be sent back by CSLB with an explanation, and the applicant will now have 30 days to correct and resubmit the renewal without a renewal delinquency fee. The law amends §7026.1, §7065.3, §7114, and §7141 of the B&P Code.
Fire Protection Systems – Licensed C-36 Plumbing contractors now will be allowed to install residential fire protection systems for one- or two-family homes. The law created by AB 433 will stay in effect until January 1, 2017. The law amends §7026.12 and §7057 of, and repeals §7026.13 of the B&P Code.
Excavations – Regional Notification Centers will be required, through AB 811, to compile information provided by operators and excavators regarding facility incidents and make that information available in annual reports and on their websites. The law amends §4216.6 of the Government Code relating to excavations.
Limited Liability Companies – Contractors licensed as a limited liability company (LLC) will be allowed to obtain statutorily required liability insurance from a surplus line insurer. AB 1236 amended B&P Code §7071.19.
Bidding Practices – Contractors making public works project bids or offers must list each subcontractor license number on those documents. AB 44 amended §4104 of the Public Contract Code.
Public-Private Partnership Agreements – Local governments' public-private partnership agreements for fee-producing infrastructure projects must include performance bonds and payment bonds. AB 164 amended §5956.6 of the Government Code.
Prevailing Wage Law – Charter cities that don't require contractors to comply with the state's prevailing wage law on any public works contract cannot receive nor use state funding or state assistance for those construction projects. SB 7 added §1782 to the Labor Code.
Water-Conserving Devices – Permit applicants for all building alterations or improvements to single-family residential real estate must replace all non-water-conserving plumbing fixtures with water-saving fixtures as a condition of receiving final permit approval from a local building department. Also, SB 407 requires that all noncompliant plumbing fixtures in any multifamily residential real property and commercial residential real property must be replaced with water-saving fixtures when specified renovations are made. The new law adds §1102.155 to, and Article 1.4 (commencing with §1101.1) to Chapter 2 of Title 4 of Division 2 of, the Civil Code, relating to water conservation.
2013 Revised Laws Affect California State Contracting Practices- Remember, substantial changes to CA Contractor Laws went into effect the second half of last year so be sure your forms are UP TO DATE!
SACRAMENTO – The broadly used term “consultant” as it relates to building and construction work becomes more clearly defined once Assembly Bill 2237 takes effect on January 1, 2013. The new law, sponsored by the CSLB, states that anyone who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a project is, in fact, acting in the capacity of a contractor and must be state-licensed. In California, a state contractor license is required for any project that is more than $500 in combined labor and material costs.
“AB 2237 is a valuable consumer protection measure and will place project responsibility where it belongs,” said CSLB Registrar Steve Sands. “All too often, people who don’t have a state contractor license call themselves construction consultants and encourage property owners to take on a home improvement project as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability.”
Owner-builders that employ workers must be registered as an employer with the EDD Employment Development Department and must have protective measures in place for workers, including workers’ compensation insurance in the event of an onsite injury. The homeowner becomes responsible for all phases of a project and its integrity, including pulling project permits, requesting inspections, and making sure local and state building codes are met. The new law will clearly define when someone is a contractor and discourage unscrupulous individuals from working under a fraudulently obtained owner-builder permit.
Another CSLB-sponsored bill strengthens enforcement authority over contractors who violate state contracting laws. AB 2554 amends Business and Professions Code sections 7011.4 and 7106.5 to enable the CSLB Enforcement division and its representatives to issue notices to appear in court related to disciplinary actions against a license.
Several other laws affecting consumers, contractors, and the construction industry take effect January 1, 2013:
Workers’ Compensation Insurance
AB 1794 authorizes the Employment Development Department (EDD) to provide new employee information filed by employers with members of the Joint Enforcement Strike Force (which includes CSLB) to aid in prosecuting tax withholding and workers’ compensation insurance violations.
AB 2219 indefinitely extends the requirement that all C-39 Roofing contractors obtain workers’ compensation insurance coverage, even if they certify that they have no employees. The bill also extends, indefinitely, the requirement that insurers conduct annual audits, and requires that these audits be conducted in person to verify the accuracy of the reported number of employees.
SB 691 adds CSLB to the list of agencies approved to receive workers’ compensation insurance information from EDD.
AB 2114 enacts new construction permit requirements for swimming pools, spas, or public wading pools.
SB 1099 changes the effective date of regulations to four times annually, versus the current 30 days following Office of Administrative Law (OAL) approval, and requires OAL to provide a link on its website to all regulations filed with the Secretary of State.
SB 1520 makes minor changes to the state’s regulatory adoption processes.
CalRecycle’s Paint Stewardship Program is now in effect. These regulations outline the steps for recycling unused architectural paint.
Public Works Contracting
AB 2440 makes changes impacting those contracting for public works projects with the Los Angeles County Metropolitan Transportation Authority.
SB 1370 requires the Department of Industrial Relations to post on its website prevailing wage requirements on public works projects.
SB 1549 changes public works contract bidding in the San Diego region.
Boards and Licensees
AB 1588 waives fees or continuing education requirements for a licensee whose license expires while on active duty in the Armed Forces or California National Guard.
AB 1904 allows for the issuance of temporary professional licenses (including those issued by CSLB) to spouses of those serving in the military.
AB 2570 prohibits a licensee from including provisions in settlements of a civil dispute that prohibit the consumer from contacting, filing a complaint, or withdrawing a complaint with CSLB (or any other consumer protection program overseen by the Department of Consumer Affairs).
SB 1576 enables CSLB to take administrative action if a licensee files a false complaint against another licensee.
The California Air Resources Board (CARB) issued a regulatory advisory regarding labeling Requirements for off-road diesel-fueled construction vehicles.
The Occupational Safety and Health Standards Board (OSHA) introduced regulations pertaining to safety orders for forklifts, excavators, and woodworking equipment and machines, but will not proceed with those related to ladderway openings.
Additional Construction Laws
AB 1750 specifies that a C-27 Landscaping contractor can enter into a prime contract for a rainwater capture project.
AB 2339 requires state regulators and those involved in the heat pump and geothermal heating and cooling industries to evaluate policies and develop infrastructure for wider use of these technologies.
SB 1092 requires brokers of construction trucking services to demonstrate evidence annually of a valid surety bond.
SALES TAX ON LUMBER AND OTHER BUILDING MATERIALS
One Percent Tax on Lumber and Engineered Wood Products Begins January 1, 2013
Retailers and construction contractors who make retail sales will start collecting a 1 percent tax from California consumers who buy lumber and engineered wood products beginning January 1, 2013. A new law (AB 1492), Chapter 289, Statutes of 2012) requires the state Board of Equalization (BOE) to collect the assessment from retailers for various state agencies including the Department of Forestry and Fire Protection. BOE estimates the new lumber products tax will generate $35 million in fiscal year 2013-14 for the Timber Regulation and Forest Restoration Fund. Under the new law, receipts given to customers must clearly state the 1 percent lumber products assessment. The assessment is not subject to sales or use tax.
How does the new law affect construction contractors?
Contractors may be either consumers or retailers of lumber products or engineered wood products.
As a consumer of lumber products or engineered wood products, contractors will be required to pay the assessment to their California vendors.
As a consumer of lumber products or engineered wood products, contractors will be required to pay the assessment directly to BOE on purchases made from outside of California for use in this state.
As a retailer of lumber products, contractors will be required to charge and collect the assessment from their customers and report and pay the assessment to BOE on their sales and use tax return.
As a retailer of items that a contractor manufactures, assembles, processes, or produces from lumber products or engineered wood products (for example, prefabricated cabinets), no assessment is due on either the contractor’s purchase or on their subsequent sale of these items.
Contractors that hold a seller’s permit and sell lumber products or engineered wood products to consumers in this state may offset their reported lumber products assessment amounts against start-up costs of $250 per business location.
What products are subject to the lumber assessment?
In general, lumber products and engineered wood products subject to the 1 percent assessment are defined as “primary” wood products in which wood is a principal component (at least 10 percent of total content).
However, wood products that have been manufactured, assembled, processed, or produced from primary wood products are not subject to the 1 percent tax. These include “secondary” wood products where there has been additional labor that adds significant value to the product. See the examples below of products subject to the assessment and products not subject to the assessment:
SB 189 GOES INTO EFFECT JULY 1, 2012 AND CREATES CHANGES IN MANY LEGAL FORMS CALIFORNIA CONTRACTORS USE
Senate Bill 189 (Sections 8000 to 9566 of the California Civil Code) goes into effect July 1, 2012. This bill mandates many important changes in California construction law. SB 189 reorganizes and simplifies those provisions in the California Civil Code that deal with construction claims and remedies such as the mechanics lien and stop notice. All of our forms have been updated to comply with these changes and have been since June 1, 2012!
2012 CSLB LAW CHANGES FOR CALIFORNIA...FOR USERS OF OUR FORMS ONLY!!! THERE ARE NO LAW CHANGES THAT EFFECT YOUR EXISTING FORMS PROVIDED YOUR FORMS COMPLY WITH ALL 2011 CHANGES.
2012 CA LAW UPDATE!!... NOTE FOR USERS OF OUR FORMS ON DISK SOFTWARE: For 2012, your contracts and other forms are still current provided they comply with the major law changes that went into effect in 2007 and any minor changes made since then. If you have any doubts, contact us for a FREE evaluation of the forms you are currently using or take this test here!
SUMMARY OF MAJOR CHANGES TO CALIFORNIA CONTRACTOR LAW EFFECTIVE JANUARY 1, 2012 (from CSLB)
California Contractors, You'll want to pay attention to some of the new laws that are on the horizon as well as new conveniences being made available to licensees. Several new laws that take effect on January 1, 2012, may affect your business operations and employees. Among the laws:
•a new requirement to recertify your workers' compensation insurance exemption at the time of each license renewal;
•how misrepresenting information in a mechanic's lien voids the claim;
•a new requirement for workers' comp insurers to notify CSLB if your policy is cancelled;
•changes to the penalties for not paying the general prevailing wage on a public works project;
•requirements for notifying CSLB when a license qualifier disassociation takes place; and
•a new alert that is sent to CSLB from the Labor and Workforce Development Agency when employees are misclassified as independent contractors.
•LLC companies can be Licensed
CSLB Investigative Centers Begin Issuing Stop Orders
CSLB enforcement representatives (ERs) were given state authority to issue job site stop orders where employee workers' compensation insurance is lacking, beginning January 1, 2011. But ERs can also issue the orders without being at a physical location. Starting in November 2011, ERs in CSLB's Investigative Centers began issuing stop orders to contractors without valid workers' compensation policies.
The first stop order was issued from the Sacramento Investigative Center (IC). In this case, a consumer complained that a licensee hired to make repairs on a home addition had an exemption on file with CSLB, but was using two employees for the project. CSLB's investigator issued a stop order and administrative citation for filing a false workers' compensation insurance exemption. The licensee was cooperative, and obtained a valid policy for his workers within two weeks.
CSLB's stop order authority was established when Senate Bill 1254 passed in 2010. Since that time, ERs in CSLB's Statewide Investigative Fraud Team (SWIFT) have regularly issued them at sting operations. In addition to SWIFT and IC actions, CSLB's Intake and Mediation Center representatives can cancel a false workers' compensation exemption and suspend the license. While under a workers' comp suspension, the licensee has 30 days to obtain a valid workers' compensation policy or recertify the exemption.
Limited Liability Company Licensing Begins in Late December
Limited liability companies (LLCs) will be able to apply for a CSLB license by January 1, 2012, as required by 2010 state legislation. The passage of Senate Bill 392 authorized CSLB to issue contractor licenses to LLCs.
CSLB's licensing and programming staff has nearly completed the new application processes, which will add new types of personnel to this license category: officers and members. The LLC license will also require a $100,000 employee bond and $1,000,000 to $5,000,000 in liability insurance.
LLC applicants will have to fill out a separate application for licensure as a sole owner, partnership, or corporation. Those interested in applying for an LLC license should periodically check the Forms & Applications section of the CSLB website; the form will appear there as soon as CSLB is prepared to process the new LLC applications.
The separate LLC application is specifically designed for LLCs to obtain an original license (exam or waiver), to add a classification, or to replace a qualifying individual.
Below are some primary requirements for and components of LLC licenses that will apply once CSLB begins processing applications for LLC licenses.
$100,000 Surety Bond
A $100,000 surety bond (in addition to the $12,500 contractor bond) is required for the issuance, reissuance, reinstatement, reactivation, and renewal of an LLC license for the benefit of any employee or worker damaged by the LLC's failure to pay wages, interest on wages, or fringe benefits, as well as other contributions (not required for inactive LLC licenses).
$1 Million Liability Insurance Minimum
Liability insurance with the aggregate limit of $1 million for licensees with five or fewer persons listed as members of the personnel of record is required; plus, an additional $100,000 is required for each additional member of the personnel of record, not to exceed $5 million total.
Personnel of Record
Every person who is an officer, member, or manager must be listed as personnel of record on LLC applications.
LLC licenses must be qualified by appearance of a responsible managing employee (RME), responsible managing officer (RMO), responsible managing member, or responsible managing manager.
$1 Million Personal Liability during Secretary of State Suspension
If an LLC license is suspended for failing to be registered and in good standing with the Secretary of State, each person within the LLC may be held personally liable up to $1 million each during the time the LLC is suspended.
Liability Insurance Information on Contracts:
Specific general liability insurance information is required to be included on the LLC's home improvement and service and repair contracts.
License Number Reissuance
Sole owner and corporate license numbers may be reissued to LLCs under certain circumstances.
Joint Venture Licenses
An LLC may be listed as an entity on a joint venture license.
LLCs may serve as a general partner on a partnership license provided the LLC meets the above requirements relating to the additional surety bond and liability insurance. An LLC serving as a limited partner on a partnership license is not required to meet the additional surety bond and liability insurance requirements.
Business Name Styles
According to the Secretary of State's office, LLC business names have specific requirements and restrictions. Interested parties should visit the Secretary of State's website for full information about LLC business name issues. Briefly, LLC business names must comply with the following: •The name of an LLC must end with the phrase "Limited Liability Company" or the abbreviation "LLC" or "L.L.C." The words "Limited" and "Company" may be abbreviated to "Ltd." and "Co.," respectively.
•The name of an LLC may not include the words "bank," "trust," "trustee," "incorporated," "Inc.," "corporation," or "corp."
•The name of an LLC may not include the words "insurer" or "insurance company" or any words suggesting that it is in the business of issuing policies of insurance and assuming insurance risks.
•If the name of a foreign (out-of-state or out-of-country) LLC does not conform to the requirements of California Corporations Code Section 17052, the foreign LLC must agree to transact intrastate business under an assumed name that meets CCC 17052 requirements in order to register with the Secretary of State.
Most other requirements and provisions that apply to corporate licenses will also apply to LLC licenses.
Be Ready to Recertify: Proof of Workers' Compensation Insurance Coverage or Exemption Required with Each License Renewal
As part of CSLB's ongoing effort to level the playing field for licensees who comply with workers' compensation insurance laws, the Board this year sponsored a pair of bills that became law: Assembly Bills 397 and 878. Starting January 1, 2012, Assembly Bill 397 requires a contractor who has certified that he/she has no employees and is exempt from carrying a workers' compensation policy must submit a new certification, or proof of workers' compensation insurance coverage or self-insurance, each time the license is up for renewal. C-39 Roofing contractors must still purchase workers' compensation insurance coverage even if they have no employees, as required by Business and Professions Code section 7125. CSLB will notify licensees once instructions on how to comply with this law and new renewal forms are available, which is anticipated by mid-2012.
Assembly Bill 878 will require workers' compensation insurers to report to CSLB if a licensee's policy is cancelled as the result of a premium audit or investigation, or a misrepresentation that results in harm to the insurer without reimbursement being made. This legislation further states that disregard and violation of workers' compensation insurance laws are cause for discipline by the Registrar.
Following are additional laws passed and signed into law in 2011. Laws with effective dates other than January 1, 2012 are noted in bold italics.
•Assembly Bill 551 increases the fines for contractors who fail to pay prevailing wage on a public works project and for failure to provide certified payroll records in a timely fashion. It also requires the Labor Commissioner to notify CSLB when it updates its lists for these violations, and to annually notify awarding bodies of the availability of the list.
•Assembly Bill 766 is the companion to AB 551 and requires that certified copies of the payroll records be made available to members of the Joint Enforcement Strike Force on the Underground Economy or other law enforcement on request. If such records are requested by the public, information on the employees would be redacted.
•Senate Bill 459 authorizes the Labor and Workforce Development Agency to issue fines for the willful misclassification of employees as independent contractors, and requires the agency to notify CSLB of violators who are licensees. The legislation further requires the board to initiate actions against such licensees.
•Assembly Bill 1091 requires that CSLB be notified within 90 days of a Responsible Managing Officer's or Employee's disassociation from the license. The bill also enables a 90-day extension in limited circumstances to replace the qualifier for the license.
•Senate Bill 543 continues CSLB's operation as a board until January 1, 2016, unless the board's sunset date is extended before then.
•Senate Bill 944 makes a variety of technical changes and updates to Contractor License Law.
•Assembly Bill 1307 states that CSLB may discipline a license for failure to resolve outstanding final liabilities assessed by the Board of Equalization, in addition to the current disciplinary laws coordinated between CSLB and the Franchise Tax Board, Employment Development Department, and Department of Industrial Relations.
•Assembly Bill 1424 requires CSLB to state on its applications that the law allows the Board of Equalization and Franchise Tax Board to share information with CSLB and that a license may be suspended for failure to pay state tax obligations.
•Senate Bill 190 makes technical changes to the mechanic's lien overhaul legislation passed last year (SB 189) that is to take effect on July 1, 2012.
•Senate Bill 424 (Chapter 127, adds section 8319 to the Civil Code) enables a design professional lien to be converted to a mechanic's lien if the design professional lien expires and remains partially or fully unpaid. The converted lien is recorded and enforced as a mechanic's lien, except the design professional is not required to provide a preliminary notice to enforce the mechanic's lien and is done within 30 days of the design professional lien expiring.
•Assembly Bill 456 (Chapter 673, amends sections 3084 and 8416 of the Civil Code) clarifies that the proof of service affidavit that must accompany a mechanic's lien filing to validate the lien must show the name of the property owner and the title or capacity in which the person or entity was served the claim of lien.
•Senate Bill 474 bars contractors from using indemnification clauses to pass through to subcontractors the liability for certain legal damages, beginning January 1, 2013. Subcontractors would not have to pay for either accidental or deliberate harm caused by contractors, other subcontractors, or other parties. The law does not apply to certain contracts such as those governing residential homes, public buildings, workers' compensation agreements, and some insurance agreements.
•Senate Bill 56 changes some requirements for construction trade apprenticeship programs and the Division of Apprenticeship Standards responsibilities for oversight of such programs.
•Assembly Bill 1346 requires those seeking electrical certification from the Division of Apprenticeship Standards to include an employment history report from the Social Security Administration when submitting an application for certification and examination.
•Senate Bill 454 authorizes the California Energy Commission to assess civil or administrative penalties for violating energy efficiency standards. It further prohibits public utility rebates or incentives unless the recipient certifies that the improvement or installation was completed by a properly licensed contractor and that required permits and inspections were obtained.
•Assembly Bill 341 requires businesses that generate more than four cubic yards of commercial, solid waste per week arrange for recycling services by July 1, 2012.
•Senate Bill 341 requires that construction vehicles with a gross vehicle weight rating of 14,000 pounds or more be equipped an automatic backup alarm audible from 200 feet under normal conditions.
•Senate Bill 221 (Chapter 64, amends and repeals section 116.221 and adds and repeals section 116.224 of the Code of Civil Procedure) raises small claims court jurisdiction from $7,500 to $10,000.
Make Sure a Bad Contract Doesn't Ruin a Good Business
Consumer service representatives in CSLB's Northern and Southern Intake Mediation Centers have noted the most common consumer complaints continue to be for illegal contracts and poor workmanship. Many of these complaints could have been resolved before the consumer filed a complaint with CSLB if the licensee had included a provision for project changes to the original contract terms, products or prices in writing, and made sure to have their customers sign these change orders before they performed the work.
Make sure you follow Business and Professions Code section 7159(d) in all of your home improvement contracts, as is required by state law. Ask your customers to confirm that they understand all of the contract terms when they initially sign it, and that they fully agree with any alterations noted in written change orders before they sign them and before the work is performed. This includes work that will not alter the contract price. For example, your customer may decide on a different type of product or material that is the same price as what was contracted for, but you still must write up a change order for this item to protect yourself and the consumer.
Making sure that everything is signed and in writing before the change occurs, and that you and your customer have an understanding of what the completed project should look like will help alleviate any confusion or disappointment, reducing the likelihood of a complaint being filed against your work
Avoiding HVAC Permits Can Subject You and Your customers to Fines
If you repair or replace warm-air heating, ventilating, and air-conditioning (HVAC) units, make sure to obtain a building permit from the city or county where the work is being done. Without the proper permit, you face enforcement action by the California Energy Commission and CSLB, and subject your customers to fines and the possibility of additional repairs.
During CSLB sting operations during the past three years, investigators have noted a growing trend of licensees who are violating state law by telling consumers that permits are not required for installing HVAC systems. CSLB and the Energy Commission recently issued a press release informing Californians that their contractor must obtain these permits, and that a homeowner's insurance policy can be cancelled if the insurer finds out that work has been done on the property without the required permit. CSLB sting operations will continue to target HVAC contractors who skirt the permit laws and regulations.
The state's 2008 Building Energy Efficiency Standards require that HVAC ducts perform with no more than 15 percent in leakage. More information on the 2008 HVAC change-out guidelines, and information cards that explain the process for contractors and consumers, are available in English and Spanish and can be printed out from the commission's website.
SUMMARY OF MAJOR CHANGES TO CALIFORNIA CONTRACTOR LAW EFFECTIVE JANUARY 1, 2011 (from CSLB)
SACRAMENTO - Several new state laws and regulations passed in 2010 to help improve or standardize professional codes that affect California contractors become effective on January 1, 2011. The Contractors State License Board (CSLB) operates under the state Business and Professions Code, yet several other codes affect the way contractors conduct their livelihood. The laws affect "A" General Engineering, "B" General Building and "C" Specialty contractors differently so awareness of the changes is important to keep your business in compliance.
Here are some key laws you’ll want to be aware of:
Stop Work Orders – Workers’ Compensation Insurance
Senate Bill 1254 (Leno) established that CSLB can issue an immediate "stop work" order to any contractor who does not have a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, or a statement on file with CSLB certifying that he or she has no employees and is not required to obtain or maintain workers’ compensation insurance coverage. The order is effective immediately when it is served.
Failure of any employer, officer, or any person having direction, management, or control of any place of employment or of employees to observe a stop order issued and served upon him or her is a misdemeanor punishable by imprisonment in the county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both. An employer who is subject to this section may protest the stop order by making and filing with the CSLB Registrar a written request for a hearing within 20 days after service of the stop order.
(See Business and Professions Code §7127.)
Mechanic’s Liens – Mandatory Proof of Service Affidavit
Assembly Bill 457 (Monning) ensures that any property owner will be notified if a mechanic’s lien is placed on their property. Contractors, subcontractors or materials suppliers who are not paid for their work on a home improvement project are entitled to file a mechanic’s lien with the county Recorder’s Office on the property to force payment. The new law ensures that consumers will be notified of a pending lien. If the property owner is not notified, the lien becomes unenforceable.
(See amended Civil Code §3084 and 3146.)
Mandatory Residential Fire Sprinklers
Beginning January 1, 2011, an automatic fire sprinkler system will be mandatory in all new one and two-family dwellings throughout the state. In line with the 2009 International Building, Fire and Residential Code, this change comes from modifications to the California Building Code through the State Building Standards Commission. "A" General Engineering, "B" General Building, C-36 Plumbing contractors need to be aware that only the C-16 Fire Protection classification is legally permitted to lay out, fabricate or install fire protection systems. Other trades can provide work up to the fire protection system only, regardless of whether the fire protection system is combined or stand-alone.
The new residential code does not affect home remodel, only new construction; however, there are currently about 100 local ordinances related to residential fire sprinklers and it would be a good idea to check with your local jurisdiction before beginning any projects.
The Office of the State Fire Marshal’s website has detailed information on the new code, including training classes being offered.
(See the 2010 California Residential Code for more on the new construction residential fire sprinkler requirement.)
Cooling Systems – Commercial Refrigerant
"A" General Engineering, "B" General Building, C-20 HVAC, C-36 Plumbing, and C-38 Refrigeration contractors’ projects may be affected by a new Air Resources Board (ARB) regulation to minimize leaks of environmentally harmful refrigerants that takes effect on January 1, 2011. The regulation, known as the Refrigerant Management Program, applies to the larger industrial and commercial systems that use high global warming potential refrigerants – those typically used in supermarkets, cold storage warehouses, food processing plants and process cooling operations. The program builds on long established federal rules on refrigeration systems.
ARB adopted the regulation in December 2009 under California's Global Warming Solutions Act. Leaking refrigeration systems are California’s single largest source of high-Global Warming Potential gases – compounds such as chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs), and hydrofluorocarbons (HFCs) that are hundreds to thousands of times more efficient at trapping the Earth’s heat than carbon dioxide. Fixing refrigerant leaks is one of the most cost-effective ways to clean California’s air while saving businesses money in costly refrigerants.
Beginning in 2011, businesses running systems with a refrigerant capacity of more than 50 pounds must fix leaks within 14 days of detection. These businesses must also keep on-site records of all leak repair work and other refrigeration system servicing, including receipts of refrigerant purchases. The regulation also affects any person who installs, services, or disposes any appliance using a high-GWP refrigerant or sells, distributes and/or reclaims high-GWP refrigerants. Businesses whose systems use only ammonia or carbon dioxide as refrigerants are not subject to the rule. The Refrigerant Management Program also affects wholesalers, distributors and reclaimers of refrigerants. There will be a gradual phase-in of facility registration, annual reporting, and fees that are scheduled to take place from 2012 to 2016.
(See Health and Safety Code §38500 related to the California Global Warming Solutions Act of 2006.)
SUMMARY OF MAJOR CHANGES TO CALIFORNIA CONTRACTOR LAW EFFECTIVE JANUARY 1, 2010 (from CSLB)
SACRAMENTO -The Contractors State License Board (CSLB) is alerting contractors to new regulations and laws that become effective January 1, 2010, and that may impact their business operations.
Legislation passed by the Senate and Assembly and signed into law by Governor Schwarzenegger in 2009 made changes in the California Business & Professions (B&P) Code to increase the penalties for contracting without a license; eliminate sanctions against unlicensed owner-builders; and modify mechanic's lien notification (which takes effect in 2011). Changes to the California Code of Regulations that were approved by the Office of Administrative Law become effective December 30, 2009, and make changes to the C-45 Sign and C-46 Solar license classifications; re-examination for original licenses and added classifications; and definitions of contractor advertising.
Significant 2009 legislative changes to B&P Code are as follows:
Penalties for Unlicensed Contracting Increased
AB 370 (Eng) Business & Professions Code § 7028 and 7028.16
This bill increases the penalties for contracting without a license for those who perform works of home improvement valued at $500 or more for labor and materials. Those convicted of a first offense will be subject to up to $5,000 in fines, and/or up to six months in county jail. For a second offense, those contracting without a license could face fines of up to 20 percent of the payments they received, or up to $5,000, whichever is greater, and not less than 90 days in county jail. A third offense for contracting without a license will be subject to between $5,000 and $10,000 in fines or 20 percent of payments made to the unlicensed contractor, whichever is greater, and up to one year in county jail. This bill also amends the law to include that a person who used the services of an unlicensed contractor is considered a victim of a crime and eligible for restitution, regardless of whether that person knew the contractor did not have a license. (Amended Stats 2009 ch 319 § 1 and 2, effective January 1, 2010.)
Owner-Builder Sanction Deleted
SB 821 (Senate Business, Professions & Economic Development Committee) Business & Professions Code § 7028.7, 7044, 7044.1, 7108.5 (repeal and add), 7159, 7159.5, and 7159.14.
This bill deletes the provision under existing law that a person who violates the law by engaging in work as an owner-builder without a contractor license (or an exemption from licensure) is prohibited from obtaining a contractor license for a period of one year following the violation. In addition, the bill includes clean-up language for several provisions of Contractors State License Law, making technical, nonsubstantive changes to those provisions. (Amended Stats 2009 ch 307 § 69-76, effective January 1, 2010.)
Mechanic's Lien Notices (Effective 2011)
AB 457 (Monning) Civil Code § 3084 and 3146
This bill provides that the definitions of "claim of lien" and "mechanic's lien" are the same. It also requires that a Notice of Mechanic's Lien be served on the owner or person believed to be the owner of the property or on the construction lender or original contractor, and that a "proof of service affidavit" to the above mentioned party or parties be completed and signed by the person serving the Notice of Mechanic's Lien. Failure to serve the mechanic's lien and confirm a proof of service affidavit will cause the mechanic's lien to be unenforceable. (Amended Stats 2009 ch 109 § 1 and 2, effective January 1, 2011.)
Following are the California Code of Regulations changes approved by the Office of Administrative Law:
C-45 "Electrical Sign Contractor" changed to Sign Contractor
California Code of Regulations § 832.45
This change in the regulation adds non-electrical signs including, but not limited to, those now covered by the regulation. (Authority cited: Business & Professions Code § 7008 and § 7059. Reference: Business & Professions § 7058 and § 7059.)
C-46 Solar Contractor references to "Exam Development" and "Active System" definition Deleted
California Code of Regulations § 832.46
This change in the regulation deletes obsolete reference to the classification being issued when an exam is developed, and changes references from "active" solar energy systems to "thermal and photovoltaic" solar energy systems and removes the definition of "active" systems. The updated language reflects current terminology and is more general to allow for future innovations in the field. (Authority cited: Business & Professions Code § 7008 and §7059. Reference: Business & Professions § 7058 and §7059.)
Re-Examination Section Repealed
California Code of Regulations § 842
This change in regulation repeals Section 842, which allowed an applicant for an original license, additional classification, or change of qualifier that failed the exam or failed to take it to apply for re-examination twice within 90 days of notification of the failure. This section was inconsistent with B&P Code Section 7074 that allows unlimited re-examination within 18 months of the Board's acceptance of the application. (Authority cited: Business & Professions Code § 7008. Reference: Business & Professions Code § 7065, §7074, and §7137.)
"License Number in Advertising" changed to Advertising Defined
California Code of Regulations § 861
This change in the regulation adds "electronic transmission" to what constitutes an advertisement and changes the title of the regulation to "Advertising Defined," from "License Number Required in Advertising," to more accurately reflect the regulation's content. Also, the exemption provision was deleted, as statute does not give the Registrar the authority to grant such exemptions. (Authority cited Business & Professions Code §7008. Reference: Business & Professions Code § 7030.5)
SUMMARY OF MAJOR CHANGES TO CONTRACTOR LAW EFFECTIVE JANUARY 1, 2009
SB 797 (Ridley-Thomas)
Business & Professions Code § 490
Existing law provides for the licensure and regulation of various professions and vocations by boards within the Department of Consumer Affairs. Existing law authorizes a board to suspend or revoke a license on certain bases, including the licensee's conviction of a crime that is substantially related to the qualifications, functions, or duties of the business or profession for which the license was issued. This bill specifies that this authorization to suspend or revoke a license is in addition to any other action that a board is permitted to take against the licensee. (Amended Stats 2008 ch 33 § 2, effective January 1, 2009.)
Business & Professions Code § 7028
Existing law, the state Contractors License Law, creates the Contractors State License Board within the Department of Consumer Affairs and provides for the licensure and regulation of contractors. Existing law makes it a misdemeanor for any person to engage in the business or act in the capacity of a contractor without having a license, and subjects a person who violates this prohibition to specified fines and imprisonment. This bill applies specified penalty provisions to a person named on a revoked license if he or she is responsible for the act or omission resulting in the revocation. (Amended Stats 2008 ch 33 § 5, effective January 1, 2009.)
SB 963 (Ridley-Thomas)
Business & Professions Code § 7000.5
Existing law establishes the Contractors State License Board and provides that these provisions become inoperative on July 1, 2009, and are subsequently repealed on January 1, 2010. This bill changed the dates on which these provisions are to become inoperative and repealed to January 1, 2011. (Amended Stats 2008 ch 385 § 1, effective January 1, 2009.)
Business & Professions Code § 7011
Existing law authorizes the Contractors State License Board to appoint an executive officer and provides that these provisions become inoperative on July 1, 2009, and are subsequently repealed on January 1, 2010. This bill changes the dates on which these provisions are to become inoperative and repealed to January 1, 2011. (Amended Stats 2008 ch 385 § 1, effective January 1, 2009.)
SB 1432 (Margett)
Business & Professions Code § 7071.5 and § 7071.10
Existing law, the state Contractors License Law, provides for licensure and regulation of contractors by the Contractors State License Board and requires a licensee to notify the Registrar of Contractors in writing of any unsatisfied judgment imposed on the licensee. Existing law requires that a licensee, or applicant for a license, and the qualifying individual of a licensee or applicant file or have on file a $12,500 contractor bond, except as specified. Existing law requires that these bonds be for the benefit of, among others, a homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation of the state Contractors License Law. This bill also requires that the contractor's bond and the qualifying individual's bond be for the benefit of a property owner contracting for the construction of a single-family dwelling who is damaged as a result of a violation of the state Contractors License Law, if the dwelling is not intended or offered for sale at the time the damages were incurred. (Amended Stats 2008 ch 157 § 1(1), effective January 1, 2009.)
Business & Professions Code § 7071.11
Existing law provides that a contractor, or a qualifying individual acting in the capacity of a contractor, shall provide a bond or deposit, as specified, for the benefit of homeowners and other persons damaged as a result of specified violations. Existing law provides that any action, other than to recover wages or fringe benefits, against a contractor's bond or the bond of a qualifying individual shall be brought within 2 years after the expiration of the license period during which the act or omission occurred or within 2 years of the date that the license was inactivated, canceled, or revoked, whichever first occurs. This bill instead provides that the action, other than to recover wages or fringe benefits, against the contractor's bond or the bond of a qualifying individual must be brought within 2 years after the expiration of the license period during which the act or omission occurred or within 2 years of the date the license of the active licensee would have expired had the license not been inactivated, canceled, or revoked. (Amended Stats 2008 ch 157 § 3(c)(2), effective January 1, 2009.)
Code of Civil Procedure § 116.220
Existing law specifies that the jurisdiction of the small claims court includes various actions in which the demand does not exceed $5,000, with specified exceptions. This jurisdiction includes (1) any action brought by a natural person against the Registrar of the Contractors State License Board as the defendant guarantor if the demand does not exceed $7,500, except as specified, (2) any action against a defendant guarantor that does not charge a fee for its guarantor or surety services, if the amount of the demand does not exceed $2,500, and (3) any action against a defendant guarantor that charges a fee for its guarantor or surety services or an action brought by an entity other than a natural person against the Registrar of the Contractors State License Board as the defendant guarantor, if the amount of the demand does not exceed $4,000. This bill increases the jurisdiction of the small claims court for any action brought by a natural person against a defendant guarantor that charges a fee for its guarantor or surety services from $4,000 to $6,500. (Amended Stats 2008 ch 157 § 4(4)(c)(3), effective January 1, 2009.)
SB 1362 (Margett)
Business & Professions Code § 7137
Under the existing state Contractors License Law, the Contractors State License Board is uthorized to establish fees for, among other things, an application for an original license, rescheduling an examination, and the renewal of an active or an inactive license. This bill authorizes the board, in addition to any other fees charged to C-10 Electrical and C-7 Low Voltage systems contractors, to charge a fee not to exceed $20, to be used by the board to enforce provisions of the Labor Code related to electrician certification. Because these fees would be deposited into the Contractors License Fund, which is continuously appropriated, the bill would make an appropriation. (Amended Stats 2008 ch 716 § 1(k), effective July 1, 2009.)
Labor Code § 3099.2
Existing law requires that persons performing work as electricians for specified contractors be certified pursuant to certification standards established by the Division of Apprenticeship Standards within the Department of Industrial Relations. This bill requires the Chief of the Division of Apprenticeship Standards to develop a process for referring cases to the Contractors State License Board upon determining that a violation of certification requirements has likely occurred and to execute a memorandum of understanding with the Registrar of Contractors to further this end by July 1, 2009. The bill authorizes the Registrar of Contractors to open an investigation and initiate disciplinary action against a licensed contractor pursuant to these provisions upon his or her own investigation or upon a finding of the Chief of the Division of Apprenticeship Standards alleging a violation of these provisions. (Amended Stats 2008 ch 716 § 2(i)(j), effective July 1, 2009.)
AB 2335 (Nakanishi)
Health and Safety Code § 19825
Existing law, in separate provisions, requires every city or county that necessitates the issuance of a permit as a condition precedent to the construction, alteration, improvement, demolition, or repair of any building or structure, at a minimum, to have the owner of the building or structure complete specific forms and declarations that identify the property and any agents or contractors performing the work, if applicable, and declaring the project complies with various laws. Existing law also requires the city or county to provide notice to the owner of the property of the legal implications of construction on the property. This bill repeals those separate provisions and creates a single provision that combines and modifies the existing forms, declarations, and notices to the property owner and expands the acknowledgments property owners are required to make. (Repeals Sections 19825 § 1, 19830 § 3, 19831 § 4, and 19832 § 5 of the Health and Safety Code, and Added Stat 2008 ch 66 H;S 19825 § 2(a), effective January 1, 2009.)
SUMMARY OF MAJOR CHANGES TO CALIFORNIA CONTRACTOR LAW EFFECTIVE JANUARY 1, 2008 (from CSLB)
Business & Professions Code
101.7 - Boards and other entities within the Department of Consumer Affairs (DCA) must meet three (3) times each calendar year, and at least once in northern California and once in southern California. The DCA Director is authorized to excuse a Board from meeting upon showing cause, and/or to call a special meeting.
125.6 - In addition to facing disciplinary action if a licensed contractor refuses services based upon race, color, sex, religion, ancestry, disability, marital status, or national origin, licensees will face disciplinary action if they discriminate by refusing construction-related services based upon a prospective client's medical condition or sexual orientation.
7026.11 - The terms "mobile home" and "manufactured home" will now have separate and distinct definitions for reasons that are unrelated to Contractors License Law. The General Manufactured Housing (C-47) classification continues to be the appropriate specialty license for performing work relative to mobile homes and manufactured housing.
7027.5 - Landscape Contractors (C-27) licensed by the Contractors State License Board are authorized to enter into prime contracts to construct and install outdoor cooking centers and fireplaces, as long as the projects are included in a residential landscape project, and the fireplace is not attached to the dwelling. Other properly licensed specialty or general contractors would still be required for tasks that are beyond the scope of the landscape contractor classification.
7083.1 - Contractors whose licenses have expired, are canceled, or are otherwise inactive, must notify the CSLB Registrar of their current address(es), in writing, for five (5) years, instead of the previously designated three (3) years.
7091 - If a licensee is convicted of a crime that is substantially related to the qualifications, functions or duties of a contractor, the CSLB will have two (2) years from the date the conviction is discovered in which to file disciplinary action against the licensee. Also, the CSLB will have 18 months after the date a warranty expires in which to file a disciplinary action against a licensee who fails to honor the terms of the warranty.
7114 - As part of disciplinary action against a licensee, the Registrar of Contractors is authorized to order a licensee to pay a specific amount of money to an injured party if the licensee has aided an unlicensed person or allowed an unlicensed person to use his or her license.
7159.5 - A statute of limitations has been established for filing criminal charges against contractors who furnish a bond, bond equivalent, or Joint Control that is approved by the Registrar and who are exempt from referencing the down payment, schedule of payments, the Mechanic's Lien warning, or using the 10%/$1,000 down payment rule in a Home Improvement Contract where the cost of all labor and materials exceeds $500. The date the first payment is given to the contractor is the date used in establishing the statute of limitations for filing criminal charges.
7159.14 - For the case where a Service and Repair Contract is not reduced to writing as required by the law, the date the first payment is given to the contractor is the date used in establishing the statute of limitations for filing criminal charges.
Related Laws: Civil Code
2782 - Residential construction contracts and amendments that indicate a general contractor or subcontractor is to be held harmless for construction defects, injury or negligence are legally unenforceable as of January 1, 2008.
11760.1 - If an employer fails to provide access to an insurance company or its representative to perform a workers' compensation audit, the employer will be liable to pay the insurance company three (3) times the total premium, plus associated costs.
The following California Industry Bulletin highlights the new laws effecting the construction industry that went into effect January 1, 2007. None of these laws will require users of our software to change their forms..... providing, of course, the form software being used by our customer was purchased or upgraded in 2006. Remember, California did an almost complete rewrite of Home Improvement Laws last year, 2006. We get calls every day from Contractors who have gotten into trouble because they were using old, pre 2006 forms. Don't make this same mistake, it is not worth the headaches of your business being shut down until you show compliant forms, fines (at least $750), and problems collecting money rightfully owed you. Call us at 1.800.820.5656 and purchase compliant forms and/or form software now!
New Law Cracks Down on Old Contracting ProblemSeries of new law go into effect with start of new year (2007).
Sacramento - Illegal contractors who try to skirt the law by operating with someone else's license number face new tougher penalties. This is one of the new laws taking effect at the Contractors State License Board (CSLB) in January 2007.
The law created by AB 2897 makes it a criminal charge for anyone involved with a revoked license (member, officer, director, owner, or partner) to knowingly let the revoked person act as a contractor or hire revoked licensees as anything other than a non-supervising employees.
"Some individuals have tried to get around a revoked license by operating with another license taken out by friends or family members," said CSLB Registrar Steve Sands. "This breaks the cycle of illegal operation."
One example is a contractor, Richard Ladd Turek from the San Diego area, who had his license revoked, was later caught using his wife's license number and then his father's license number to continue to contract and harm consumers. July 27, 2006, Richard Turek pleaded no contest to contracting without a license and was sentenced to three years summary probation and a $1,200 fine. However, due to AB 2897 a violation of this section is now a misdemeanor punishable by a fine of not less than four thousand five hundred dollars ($4,500), by imprisonment in a county jail for not less than neither 30 days nor more than one year, or by both the fine and imprisonment.
Other new laws taking place at the Contractor's Board as of January 1, 2007 include:
(AB 881) Workers compensation will be mandatory for C-39 Roofers. Other licensees can still get by without it, if they do not have employees. Most roofers need workers to do the job. But, it was proven that a significant number were not reporting that they had workers
Bond Amount Increases
The amount for a contractor bond goes up from $10,000 to $12,500. (Business and professions code section 7071.9). This is the bond that all licensed contractors are required to have in California. It is money that homeowners, employees or others hurt by a licensee can file against for restitution.
The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. The CSLB licenses and regulates California's 304,000 contractors, and investigates more than 20,000 complaints against contractors annually. In fiscal year 2005-06, the CSLB helped consumers get more than $36 million in restitution.
YOU CAN NOW START JOBS WORTH LESS THAN $750 IN CALIFORNIA WITHOUT WAITING 3 DAYS USING THE NEW FOR 2006 SERVICE AND REPAIR CONTRACTS!
New CA Law will Require All Roofing Contractors with Active Licenses to Have Workers' Compensation Coverage
New requirements take effect on January 1, 2007"Sacramento - A new law signed by Governor Arnold Schwarzenegger on Friday May 26 affects roofing contractors in California. Assembly Bill (AB) 881 contains new licensing requirements for all 6,000 licensees with an active Roofing (C-39) classification. If you hold the Roofing (C-39) classification, you must take action as outlined below or your right to perform roofing work in California will be suspended until you comply with the new law.
Beginning January 1, 2007, all active licensees holding the Roofing (C-39) classification must have either a valid Certification of Workers' Compensation Insurance or a valid Certification of Self-Insurance on file with the Contractors State License Board (CSLB). AB 881 amends Section 7125 of the Business and Professions Code to require that all Roofing (C-39) contractors carry workers' compensation coverage effective January 1, 2007, regardless of whether or not they have employees. Failure to have one of the required certifications on file with the CSLB will result in the removal of the Roofing (C-39) classification from a license with multiple classifications or in the suspension of a license where the sole classification is the Roofing (C-39) classification. No exemptions will be granted.
NOTE: Inactive Roofing (C-39) contractors will not be subject to this requirement as long as they remain in inactive status. In order to return to active status, they would need to have one of the required certifications on file with the Board.
In addition, AB 881 adds Section 11665 to the Insurance Code, requiring insurers who issue workers' compensation insurance to Roofing (C-39) contractors to perform an annual payroll audit for the contractor. The insurer may impose a surcharge on the policyholder for the audit.
The new workers' compensation insurance requirements imposed by AB 881 will remain in effect until January 1, 2011.
If you have questions about these requirements, please contact your workers' compensation insurance provider or the Contractors State License Board's Workers' Compensation Unit at the above address."
IF YOU DO NOT HAVE WORKERS' COMP NOW BETTER START SHOPPING FOR A POLICY BEFORE THE RUSH. HISTORICALLY, WHEN THIS HAPPENS RATES GO UP AS SUPPLY GOES DOWN!! AND... be sure you are using 2006 compliant roofing contracts. .. SEE THE NEXT TOPIC BELOW
CALIFORNIA HOME IMPROVEMENT CONTRACTS FOR 2006 SB 30 then SB 1113 now AB 316
CA LAW SAYS THROW AWAY YOUR OLD CONTRACT FORMS AND UPDATE YOUR CONTRACTS RIGHT NOW!!!
The Bottom Line: All home improvement contracts that do not include the new laws from SB 30, SB 1113, and AB 316 are not legal for use in California! If your contracts are not 2006 versions, do not use them any longer. The penalties are stiff and include fines, jail time, loss of lien rights, loss of your right to sue in court and many other unpleasant things that you do not need to deal with just because you want to use up your old forms or do not want to upgrade your form software.
From the California Assembly, AB 316.....
"The home improvement business in California constitutes a large portion of the state's construction industry. Because of the very nature of the home improvement field, there is a potential for problems or abuses to occur. Abuses are usually caused by unlicensed operators or unethical or incompetent contractors. Problems can occur because of a general misunderstanding of basic requirements and of the agreement entered into by the owner and the contractor. Special requirements concerning the home improvement contract were placed into the law as an attempt to eliminate as many of these problems as possible. It is important that contractors keep abreast of current requirements.
The most recent changes to home improvement contract law resulted from the passage of Senate Bill (SB) 30 in 2004, and SB 1113 and Assembly Bill (AB) 316 in 2005. The Legislature made significant additions to the information the contractor must provide to the buyer of home improvements. The idea behind the legislation is to use the contract itself to inform homeowners of the most important contract requirements. With this information in hand, consumers will be better able to understand the process. The Board expects the availability of this simple consumer protection information will reduce the number of disputes between contractors and homeowners and, therefore, the number of complaints homeowners make to the Board.
SB 30 maintained many of the existing home improvement contract provisions and added some new requirements as well. Among the requirements: any changes made to contracts must be in writing, be legible, be easy to understand, and inform a consumer of his or her right to cancel or rescind the contract, and a home improvement contract must contain various information, notices, and disclosures for the protection of the consumer. SB 30 also created a "service and repair contract" to be used by licensed contractors for jobs of $750 or less, provided that the contract meets all four of the new requirements. The bill enacted various disclosure requirements applicable to the service and repair contract. SB 30 provided that any violation of the provisions subjects the contractor to discipline. The bill made conforming changes and revised and recast certain existing provisions regarding home improvement contracts and related matters. SB 30 was to become operative on July 1, 2005.
SB 1113 postponed implementation of the provisions of SB 30 until January 1, 2006. The bill also revised and recast some of the provisions and made other related changes in other provisions of law. SB 1113 took effect immediately as an emergency statute.
AB 316 revised and recast the service and repair contract requirements and set forth information, notices, and disclosures required to be included as part of the contract. In addition, a service and repair contract that does not meet specified requirements is subject to the requirements applicable to a home improvement contract regardless of the aggregate contract price.
In developing contracts, contractors should pay strict attention to the requirements for typeface of the notices and disclosures. For example, unless a larger typeface is specified, text in any printed form shall be in at least 10-point type and the headings shall be in at least 10-point boldface type. "
MAJOR CALIFORNIA HOME IMPROVEMENT LAW CHANGE FOR 2005. SB30
"Section 7159 of the California Business & Professions Code. Under existing law, Section 7159 provides specific requirements that must be included in home improvement contracts. Effective July 1, 2005, Senate Bill 30 (See 7159 et seq.) will replace Section 7159. Under the new law, contractors are required to include various disclosures and notices in their contracts. SB 30 also creates a new service and repair contract for jobs of $750 or less. A licensed contractor using a contract that meets all the new service and repair contract requirements can perform a service and/or a repair without running afoul of the three-day right to cancel." ..CSLB
Please note that the changes in Section 7159 essentially re-write California Home Improvement contract requirements. All users of our software will need to upgrade to the new forms when we have them available after January 1, 2006. The law changes we are speaking of do not go into effect until January1, 2006. ****(Date has been pushed up from July 1, 2005 until January 1, 2006!)****
CALIFORNIA PRELIMINARY 20-DAY NOTICE CHANGE FOR 2004
SB134 BECOMES LAW! Changes to California Civil Code Section 3097 and Section 3259.5. The bottom line- Be sure to throw out your old 20-Day Notices and use the new ones mandated by law (naturally, we have them and the new version is included in all our CA software packages).
For details click on this link: SB 134
UPDATE ON HOME IMPROVEMENT CERTIFICATION (HIC)- 10-03
From the California Contractors State License Board:
"Please note that effective January 1, 2004, Home Improvement Certification (HIC) will no longer be required. Legislation that created the HIC program will sunset on that date. All of the information contained in the HIC exam will be incorporated into the law portion of the Contractors License Exam, so it will no longer be necessary for contractors to obtain the separate certification. After January 1, 2004, HIC will not appear on the list of classes/certifications held by the contractor on license inquiries, and may not appear on the contractor's pocket license."
IMPORTANT INFORMATION ABOUT 3 DAY RIGHT TO CANCEL FOR CALIFORNIA
Do not forget that you must give your customers the right to cancel their contract or agreement with you within 3 business days (7 business days for disaster repair in California), for any home improvement work you do over $25 in value that is signed in-home. This is a Federal law and California law, as does all state law, follows Federal law. Many California contractors are confused about the dollar value before the 3 day right to cancel must be given because in California, you do not need to write a contract or even be licensed for work valued under $500. Even so, you must give the 3 day right to cancel when the value of the work is $25 or more. This means that if you do a roof repair or clean a clogged sewer, for example, and the job value is over $25 but less than $500, you MUST STILL GIVE THE 3 DAY RIGHT TO CANCEL! A customer cannot just voluntarily waive their right to cancel to allow work to begin before the three day period ends under most circumstances. The law does allow for a waiver of the right to cancel in what is called "the making of emergency or immediate necessity repairs or services that are necessary for the immediate protection of persons or real or personal property." In this case, the customer can waive, in their own words, their 3-day right to cancel so work can begin immediately. We have form CNW- WAIVER of 3 DAY RIGHT TO CANCEL for use by your customers when a waiver is needed so emergency or immediate necessity repairs or services can begin immediately. If you have an doubt about the way your Company is handling the 3 day or 7 day right to cancel with your home improvement customers, we urge you to contact your attorney to discuss this.