SB 1455: Contractors: licensing.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-09-22
Current Status:
Passed
(2024-09-22: Chaptered by Secretary of State. Chapter 485, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill allows federally recognized tribes and tribal businesses to apply for and hold California contractor licenses and exempts participating tribes from certain bond, suspension, and personal‑liability rules while preserving tribal jurisdiction. It removes the requirement and related misdemeanor penalty (a low‑level crime) that qualifying applicants file an employment duty statement about supervision. It also caps exam fees at the actual vendor cost (paid to the vendor), lets licensees pay reasonable expert‑investigation or inspection fees for public complaints, and delays workers’ compensation insurance deadlines while directing the board to create a process to verify exemption claims.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
(1)Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors and fix the registrars compensation, as specified.
This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.
(2)Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations, as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
(3)Existing law defines various terms for the purposes of the Contractors State License Law, including defining person to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.
This bill would expand the definition of person under the act to include a federally recognized tribe, as defined. The bill would require a corporation or limited liability company seeking licensure to provide its identification number issued by the Secretary of State. This bill would additionally make contractors licenses issuable to participating tribes, as the bill would define, that provide verification of their status as a tribal business, as specified. By expanding the category of who contractors licenses are issuable to and would be required to pay fees deposited into the Contractors License Fund, the bill would make an appropriation.
(4)Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe or participating tribe acting within tribal jurisdiction.
If a qualifying individual, as described, is neither the proprietor, a general partner, nor a joint licensee, existing law requires the qualifying individual to file a bond, as specified, in the sum of $25,000.
This bill would prohibit the above-described bond requirement from applying to a federally recognized tribe or a participating tribe.
Existing law requires a corporation license to be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state and requires a corporation to notify the registrar within 90 days of the dissolution, merger, or surrender. If a corporation fails to provide notice, existing law requires the corporation license to be canceled 60 days after the boards discovery when researching the corporate records of the Secretary of State.
This bill would extend the above-described requirements to a participating tribe and would specify the above-referenced corporate records to include only relevant corporate records.
(5)Existing law requires the suspension of a contractors license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.
This bill would exempt federally recognized tribes and participating tribes from the above-described suspension, notice, reinstatement, and liability provisions.
This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
(6)Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project.
This bill would require the awarding authoritys determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.
(7)Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to provide for workers compensation insurance coverage under state law. Under existing law, the failure to file the proper certification, as described, constitutes cause for disciplinary action, and the failure of a qualifier for a license to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.
This bill would extend the effective date of those provisions until January 1, 2028.
(8)As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.
This bill would instead make the above provisions operative on January 1, 2028.
This bill would require the board, by no later than January 1, 2027, to establish a process and procedure, as specified, to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers compensation insurance requirement.
(9)By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors and fix the registrars compensation, as specified.
This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.
(2)Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations, as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
(3)Existing law defines various terms for the purposes of the Contractors State License Law, including defining person to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.
This bill would expand the definition of person under the act to include a federally recognized tribe, as defined. The bill would require a corporation or limited liability company seeking licensure to provide its identification number issued by the Secretary of State. This bill would additionally make contractors licenses issuable to participating tribes, as the bill would define, that provide verification of their status as a tribal business, as specified. By expanding the category of who contractors licenses are issuable to and would be required to pay fees deposited into the Contractors License Fund, the bill would make an appropriation.
(4)Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe or participating tribe acting within tribal jurisdiction.
If a qualifying individual, as described, is neither the proprietor, a general partner, nor a joint licensee, existing law requires the qualifying individual to file a bond, as specified, in the sum of $25,000.
This bill would prohibit the above-described bond requirement from applying to a federally recognized tribe or a participating tribe.
Existing law requires a corporation license to be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state and requires a corporation to notify the registrar within 90 days of the dissolution, merger, or surrender. If a corporation fails to provide notice, existing law requires the corporation license to be canceled 60 days after the boards discovery when researching the corporate records of the Secretary of State.
This bill would extend the above-described requirements to a participating tribe and would specify the above-referenced corporate records to include only relevant corporate records.
(5)Existing law requires the suspension of a contractors license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.
This bill would exempt federally recognized tribes and participating tribes from the above-described suspension, notice, reinstatement, and liability provisions.
This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
(6)Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project.
This bill would require the awarding authoritys determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.
(7)Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to provide for workers compensation insurance coverage under state law. Under existing law, the failure to file the proper certification, as described, constitutes cause for disciplinary action, and the failure of a qualifier for a license to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.
This bill would extend the effective date of those provisions until January 1, 2028.
(8)As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.
This bill would instead make the above provisions operative on January 1, 2028.
This bill would require the board, by no later than January 1, 2027, to establish a process and procedure, as specified, to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers compensation insurance requirement.
(9)By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors and fix the registrars compensation, as specified.
This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.
Existing(2)Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
Existing(3)Existing law defines various terms for the purposes of the Contractors State License Law, including defining person to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.
This bill would expand the definition of person under the act to include a federally recognized tribe, as defined. The bill would require a corporation or limited liability company seeking licensure to provide its identification number issued by the Secretary of State. This bill would additionally make contractors licenses issuable to tribes and tribally owned businesses, participating tribes, as the bill would define, that provide verification of their status as a tribal business, as specified. By expanding the category of who contractors licenses are issuable to and would be required to pay fees deposited into the Contractors License Fund, the bill would make an appropriation.
Existing(4)Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe. tribe or participating tribe acting within tribal jurisdiction.
If a qualifying individual, as described, is neither the proprietor, a general partner, nor a joint licensee, existing law requires the qualifying individual to file a bond, as specified, in the sum of $25,000.
This bill would prohibit the above-described bond requirement from applying to a federally recognized tribe or a participating tribe.
Existing law requires a corporation license to be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state and requires a corporation to notify the registrar within 90 days of the dissolution, merger, or surrender. If a corporation fails to provide notice, existing law requires the corporation license to be canceled 60 days after the boards discovery when researching the corporate records of the Secretary of State.
This bill would extend the above-described requirements to a participating tribe and would specify the above-referenced corporate records to include only relevant corporate records.
Existing(5)Existing law requires the suspension of a contractors license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.
This bill would exempt federally recognized tribes and federally recognized tribes businesses that are chartered under tribal or federal law participating tribes from the above-described suspension, notice, reinstatement, and liability provisions.
This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
Existing(6)Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project.
This bill would require the awarding authoritys determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.
Existing(7)Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to obtain or maintain workers compensation insurance. Existing law excludes certain classes of contractors that do not hold specified licenses, including, among others, a license applicable to roofing contractors, and that do not have employees and file the above-mentioned certificate of exemption. Under existing law, the failure to file a proper certification constitutes cause for disciplinary action, and the failure of a qualifier for a license, as defined, to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.
This bill would extend the effective date of those provisions until January 1, 2028.
As(8)As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.
This bill would instead make the above provisions operative on January 1, 2028.
This bill would require the board, by no later than January 1, 2027, to establish a process and procedure, as specified, to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers compensation insurance requirement.
By(9)By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors and fix the registrars compensation, as specified.
This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.
Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
Existing law defines various terms for the purposes of the Contractors State License Law, including defining person to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.
This bill would expand the definition of person under the act to include a federally recognized tribe, as defined. This bill would additionally make contractors licenses issuable to tribes and tribally owned businesses, as specified. By expanding the category of who contractors licenses are issuable to and would be required to pay fees deposited into the Contractors Contractors License Fund, the bill would make an appropriation.
Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe.
Existing law requires the suspension of a contractors license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.
This bill would exempt federally recognized tribes and federally recognized tribes businesses that are chartered under tribal or federal law from the above-described suspension, notice, reinstatement, and liability provisions.
This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project project.
This bill would require the awarding authoritys determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.
Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to obtain or maintain workers compensation insurance. Existing law excludes certain classes of contractors that do not hold specified licenses, including, among others, a license applicable to roofing contractors, and that do not have employees and file the above-mentioned certificate of exemption. Under existing law, the failure to file a proper certification constitutes cause for disciplinary action, and the failure of a qualifier for a license, as defined, to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.
This bill would extend the effective date of those provisions until January 1, 2028.
As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.
This bill would instead make the above provisions operative on January 1, 2028.
This bill would require the board, by no later than January 1, 2027, to establish a process and procedure, as specified, to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers compensation insurance requirement.
By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Contractors State License Law, establishes the Contractors Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing Existing law requires the board to appoint a registrar of contractors and fix the registrars compensation, as specified.
This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.
Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
Existing law defines various terms for the purposes of the Contractors State License Law, including defining person to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.
This bill would expand the definition of person under the act to include a federally recognized tribe, as defined. This bill would additionally make contractors licenses issuable to tribes and tribally owned businesses, as specified. By expanding the category of who contractors licenses are issuable to and would be required to pay fees deposited into the Contractors License Fund, the bill would make an appropriation.
Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe.
Existing law requires the suspension of a contractors license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.
This bill would exempt federally recognized tribes and federally recognized tribes businesses that are chartered under tribal or federal law from the above-described suspension, notice, reinstatement, and liability provisions.
This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project
This bill would require the awarding authoritys determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.
Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to obtain or maintain workers compensation insurance. Existing law excludes certain classes of contractors that do not hold specified licenses, including, among others, a license applicable to roofing contractors, and that do not have employees and file the above-mentioned certificate of exemption. Under existing law, the failure to file a proper certification constitutes cause for disciplinary action, and the failure of a qualifier for a license, as defined, to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.
This bill would extend the effective date of those provisions until January 1, 2028.
As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.
This bill would instead make the above provisions operative on January 1, 2028.
By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law authorizes an applicant for a license to qualify the applicants knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employers or principals construction operations as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.
This bill would delete the requirement that an employment duty statement be included in a specified applicants or licensees information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that direct supervision or control for these purposes to mean, among other things, supervising construction operations.
(a)There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.
(b)Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.
(c)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 2.Section 7011 of the Business and Professions Code is amended to read:7011.(a)The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrars compensation.
(b)The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.
(c)For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.
(d)Appointments shall be made in accordance with the provisions of civil service laws.
(e)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3.Section 7025 of the Business and Professions Code is amended to read:7025.(a)Members of the personnel of record as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.
(b)Person as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, federally recognized tribe, association or other organization, or any combination thereof.
(c)Qualifying person, qualifying individual, or qualifier, as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.
SEC. 4.Section 7025.1 is added to the Business and Professions Code, to read:7025.1.(a)As used in this chapter, the following definitions apply:
(1)Federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) and includes an entity controlled by and established for the benefit of one or more tribes.
(2)Participating tribe means a federally recognized tribe that formally applies for licensure from the board pursuant to Section 7065.
(b)The board shall license a federally recognized tribe that applies for licensure under Section 7065 and is otherwise compliant with the provisions of this chapter for the purpose of engaging in a business regulated by this chapter.
(c)This chapter is not intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those participating tribes.
(d)This chapter does not confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a participating tribe.
SEC. 5.Section 7040 of the Business and Professions Code is amended to read:7040.(a)This chapter does not apply to an authorized representative of the United States government, the State of California, any federally recognized tribe or participating tribe acting within tribal jurisdiction, or any incorporated town, city, county, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
(b)Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.
SEC. 6.Section 7059 of the Business and Professions Code is amended to read:7059.(a)The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.
Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.
(b)(1)In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).
(2)Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
(3)Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.
SEC. 7.Section 7065 of the Business and Professions Code is amended to read:7065.(a)Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.
(b)(1)Contractors licenses are to be issued to individual owners, partnerships, corporations, limited liability companies, and participating tribes, in accordance with this chapter.
(A)Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.
(B)Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.
(2)A corporation or limited liability company, whether foreign or domestic, seeking licensure under this chapter shall provide its identification number issued by the Secretary of State.
(3)A tribal business, including a corporation organized or chartered by a federally recognized tribe pursuant to tribally enacted laws or to Section 17 of the federal Act of June 18, 1934, popularly known as the Indian Reorganization Act, shall provide verification of its status as a tribal business. Verification may include, but is not limited to, the following:
(A)Enacted resolution ratifying the charter pursuant to Section 17 of the Indian Reorganization Act.
(B)Enacted resolution authorizing the tribally chartered corporation under tribally enacted laws.
(C)Articles of incorporation or by-laws.
(D)A current list of federally recognized tribes or directory of tribal leadership published under the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) or on the internet website of the United States Bureau of Indian Affairs.
(c)An applicant shall qualify for licensure in accordance with this subdivision as follows:
(1)An individual owner may qualify by examination for a contractors license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.
(2)A partnership may qualify by examination for a contractors license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.
(3)A corporation or participating tribe may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.
(4)A limited liability company may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.
(d)No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.
(e)The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.
SEC. 8.Section 7068.1 of the Business and Professions Code is amended to read:7068.1.(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
SEC. 9.Section 7071.9 of the Business and Professions Code is amended to read:7071.9.(a)(1)If the qualifying individual, as referred to in Sections 7068 and 7068.1, is neither the proprietor, a general partner, nor a joint licensee, the qualifying individual shall file or have on file a qualifying individuals bond as provided in Section 7071.10 in the sum of twenty-five thousand dollars ($25,000). This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(2)This subdivision shall not apply to a federally recognized tribe or a participating tribe.
(b)Excluding the claims brought by the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10, the aggregate liability of a surety on claims brought against the bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500). The bond proceeds in excess of seven thousand five hundred dollars ($7,500) shall be reserved exclusively for the claims of the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10. However, nothing in this section shall be construed to prevent any beneficiary specified in paragraph (1) of subdivision (a) of Section 7071.10 from claiming or recovering the full measure of the bond required by this section. This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(c)The responsible managing officer of a corporation shall not be required to file or have on file a qualifying individuals bond, if the responsible managing officer owns 10 percent or more of the voting stock of the corporation and certifies to that fact on a form prescribed by the registrar.
(d)The qualifying individual for a limited liability company shall not be required to file or have on file a qualifying individuals bond if the qualifying individual owns at least a 10-percent membership interest in the limited liability company and certifies to that fact on a form prescribed by the registrar.
SEC. 10.Section 7076 of the Business and Professions Code is amended to read:7076.(a)An individual license shall be canceled upon the death of a person licensed as an individual. An immediate member of the family of the deceased licensee may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. Approval of the continuance of an individual license may be contingent upon meeting the bond requirements of Sections 7071.5 and 7071.6 within 90 days of notification by the board of that requirement. The immediate member of the family must apply for and obtain his or her own license to continue contracting after the continuance expires.
(b)A partnership license shall be canceled upon the death of a general partner. The remaining partner or partners shall notify the registrar in writing within 90 days of the death of a general partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The remaining general partner or partners may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(c)A partnership license shall be canceled upon the disassociation of a general partner or upon the dissolution of the partnership. The disassociating partner or the remaining partner or partners shall notify the registrar in writing within 90 days of the disassociation of a general partner or dissolution of the partnership. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action. The remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable length of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation or dissolution. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(d)The general partner or partners shall notify the registrar in writing within 90 days of the death of a limited partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The death of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the death of the limited partner unless a new limited partner is added to the license within 90 days of the death.
If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects in progress and to undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(e)The general partner or partners shall notify the registrar in writing within 90 days of the disassociation of a limited partner. Failure to notify the registrar of the disassociation, within 90 days, shall cause the disassociation to be effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation is grounds for disciplinary action.
The disassociation of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the disassociation of the limited partner unless a new limited partner is added to the license within 90 days of the disassociation. If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(f)A joint venture license shall be canceled upon the cancellation, revocation, or disassociation of any of its entity licenses or upon the dissolution of the joint venture. The registrar shall be notified in writing within 90 days of the disassociation of a joint venture entity or dissolution of the joint venture. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action.
Any remaining entity or entities may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days of the disassociation or dissolution. The remaining entity or entities must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(g)Any individual, partnership, or joint venture license continued in accordance with this section is subject to all other provisions of this chapter.
(h)A corporation license shall be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state. The corporation or participating tribe shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the corporation or participating tribe fails to notify the board of the dissolution, merger, or surrender, the corporation license shall be canceled 60 days after the boards discovery when researching the relevant corporate records. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(i)A limited liability company license shall be canceled upon the companys dissolution, merger, or surrender of its right to do business in this state. The limited liability company shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the limited liability company fails to notify the board of the dissolution, merger, or surrender, the limited liability company license shall be canceled 60 days after the boards discovery when researching the records of the Secretary of State. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(j)The registrar shall review and accept the petition of a licensee who disputes the date of cancellation upon a showing of good cause. This petition shall be received within 90 days of the boards official notice of cancellation.
SEC. 11.Section 7076.2 of the Business and Professions Code is amended to read:7076.2.(a)Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.
(b)Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the companys performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.
(c)This section shall not apply to a federally recognized tribe or a participating tribe.
SEC. 12.Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee who meets both of the following conditions:
(1)Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(2)Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d)A Certificate of Workers Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)No reimbursement has been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f)(1)For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g)(1)For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h)The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i)This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date.
SEC. 13.Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(c)A Certificate of Workers Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)Reimbursement has not been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e)The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f)This section shall become operative on January 1, 2028.
SEC. 14.Section 7125.7 is added to the Business and Professions Code, to read:7125.7.By no later than January 1, 2027, the board shall establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers compensation insurance requirement pursuant to Section 7125.
SEC. 15.Section 7137 of the Business and Professions Code is amended to read:7137.(a)The board may set fees by regulation. These fees shall be set according to the following schedule:
(1)Application fees shall be set as follows:
(A)The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).
(C)The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(D)The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(E)The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(F)The application fee for an asbestos certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(G)The application fee for a hazardous substance removal or remedial action certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(2)The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.
(3)Initial license and registration fees shall be set as follows:
(A)The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(B)The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).
(C)The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(D)(i)The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.
(ii)To demonstrate discharge grade at the time of the boards request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid drivers license or identification card issued by this state or another state with the word Veteran printed on its face or a copy of their DD214 long form.
(4)License and registration renewal fees shall be set as follows:
(A)The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).
(C)The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).
(D)The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).
(E)The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(5)The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.
(6)Miscellaneous fees shall be set as follows:
(A)In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.
(B)The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:
(i)Fees shall be fixed in an amount not more than the boards cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.
(ii)The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.
(iii)The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.
(C)The service fee to deposit with the registrar lawful money or cashiers check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashiers checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.
(D)The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).
(E)The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).
(F)The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.
(b)The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.
SEC. 16.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.
(b)Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.
(c)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 2.Section 7011 of the Business and Professions Code is amended to read:7011.(a)The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrars compensation.
(b)The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.
(c)For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.
(d)Appointments shall be made in accordance with the provisions of civil service laws.
(e)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3.Section 7025 of the Business and Professions Code is amended to read:7025.(a)Members of the personnel of record as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.
(b)Person as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, federally recognized tribe, association or other organization, or any combination thereof.
(c)Qualifying person, qualifying individual, or qualifier, as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.
SEC. 4.Section 7025.1 is added to the Business and Professions Code, to read:7025.1.(a)As used in this chapter, the following definitions apply:
(1)Federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) and includes an entity controlled by and established for the benefit of one or more tribes.
(2)Participating tribe means a federally recognized tribe that formally applies for licensure from the board pursuant to Section 7065.
(b)The board shall license a federally recognized tribe that applies for licensure under Section 7065 and is otherwise compliant with the provisions of this chapter for the purpose of engaging in a business regulated by this chapter.
(c)This chapter is not intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those participating tribes.
(d)This chapter does not confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a participating tribe.
SEC. 5.Section 7040 of the Business and Professions Code is amended to read:7040.(a)This chapter does not apply to an authorized representative of the United States government, the State of California, any federally recognized tribe or participating tribe acting within tribal jurisdiction, or any incorporated town, city, county, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
(b)Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.
SEC. 6.Section 7059 of the Business and Professions Code is amended to read:7059.(a)The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.
Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.
(b)(1)In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).
(2)Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
(3)Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.
SEC. 7.Section 7065 of the Business and Professions Code is amended to read:7065.(a)Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.
(b)(1)Contractors licenses are to be issued to individual owners, partnerships, corporations, limited liability companies, and participating tribes, in accordance with this chapter.
(A)Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.
(B)Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.
(2)A corporation or limited liability company, whether foreign or domestic, seeking licensure under this chapter shall provide its identification number issued by the Secretary of State.
(3)A tribal business, including a corporation organized or chartered by a federally recognized tribe pursuant to tribally enacted laws or to Section 17 of the federal Act of June 18, 1934, popularly known as the Indian Reorganization Act, shall provide verification of its status as a tribal business. Verification may include, but is not limited to, the following:
(A)Enacted resolution ratifying the charter pursuant to Section 17 of the Indian Reorganization Act.
(B)Enacted resolution authorizing the tribally chartered corporation under tribally enacted laws.
(C)Articles of incorporation or by-laws.
(D)A current list of federally recognized tribes or directory of tribal leadership published under the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) or on the internet website of the United States Bureau of Indian Affairs.
(c)An applicant shall qualify for licensure in accordance with this subdivision as follows:
(1)An individual owner may qualify by examination for a contractors license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.
(2)A partnership may qualify by examination for a contractors license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.
(3)A corporation or participating tribe may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.
(4)A limited liability company may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.
(d)No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.
(e)The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.
SEC. 8.Section 7068.1 of the Business and Professions Code is amended to read:7068.1.(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
SEC. 9.Section 7071.9 of the Business and Professions Code is amended to read:7071.9.(a)(1)If the qualifying individual, as referred to in Sections 7068 and 7068.1, is neither the proprietor, a general partner, nor a joint licensee, the qualifying individual shall file or have on file a qualifying individuals bond as provided in Section 7071.10 in the sum of twenty-five thousand dollars ($25,000). This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(2)This subdivision shall not apply to a federally recognized tribe or a participating tribe.
(b)Excluding the claims brought by the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10, the aggregate liability of a surety on claims brought against the bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500). The bond proceeds in excess of seven thousand five hundred dollars ($7,500) shall be reserved exclusively for the claims of the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10. However, nothing in this section shall be construed to prevent any beneficiary specified in paragraph (1) of subdivision (a) of Section 7071.10 from claiming or recovering the full measure of the bond required by this section. This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(c)The responsible managing officer of a corporation shall not be required to file or have on file a qualifying individuals bond, if the responsible managing officer owns 10 percent or more of the voting stock of the corporation and certifies to that fact on a form prescribed by the registrar.
(d)The qualifying individual for a limited liability company shall not be required to file or have on file a qualifying individuals bond if the qualifying individual owns at least a 10-percent membership interest in the limited liability company and certifies to that fact on a form prescribed by the registrar.
SEC. 10.Section 7076 of the Business and Professions Code is amended to read:7076.(a)An individual license shall be canceled upon the death of a person licensed as an individual. An immediate member of the family of the deceased licensee may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. Approval of the continuance of an individual license may be contingent upon meeting the bond requirements of Sections 7071.5 and 7071.6 within 90 days of notification by the board of that requirement. The immediate member of the family must apply for and obtain his or her own license to continue contracting after the continuance expires.
(b)A partnership license shall be canceled upon the death of a general partner. The remaining partner or partners shall notify the registrar in writing within 90 days of the death of a general partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The remaining general partner or partners may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(c)A partnership license shall be canceled upon the disassociation of a general partner or upon the dissolution of the partnership. The disassociating partner or the remaining partner or partners shall notify the registrar in writing within 90 days of the disassociation of a general partner or dissolution of the partnership. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action. The remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable length of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation or dissolution. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(d)The general partner or partners shall notify the registrar in writing within 90 days of the death of a limited partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The death of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the death of the limited partner unless a new limited partner is added to the license within 90 days of the death.
If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects in progress and to undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(e)The general partner or partners shall notify the registrar in writing within 90 days of the disassociation of a limited partner. Failure to notify the registrar of the disassociation, within 90 days, shall cause the disassociation to be effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation is grounds for disciplinary action.
The disassociation of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the disassociation of the limited partner unless a new limited partner is added to the license within 90 days of the disassociation. If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(f)A joint venture license shall be canceled upon the cancellation, revocation, or disassociation of any of its entity licenses or upon the dissolution of the joint venture. The registrar shall be notified in writing within 90 days of the disassociation of a joint venture entity or dissolution of the joint venture. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action.
Any remaining entity or entities may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days of the disassociation or dissolution. The remaining entity or entities must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(g)Any individual, partnership, or joint venture license continued in accordance with this section is subject to all other provisions of this chapter.
(h)A corporation license shall be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state. The corporation or participating tribe shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the corporation or participating tribe fails to notify the board of the dissolution, merger, or surrender, the corporation license shall be canceled 60 days after the boards discovery when researching the relevant corporate records. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(i)A limited liability company license shall be canceled upon the companys dissolution, merger, or surrender of its right to do business in this state. The limited liability company shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the limited liability company fails to notify the board of the dissolution, merger, or surrender, the limited liability company license shall be canceled 60 days after the boards discovery when researching the records of the Secretary of State. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(j)The registrar shall review and accept the petition of a licensee who disputes the date of cancellation upon a showing of good cause. This petition shall be received within 90 days of the boards official notice of cancellation.
SEC. 11.Section 7076.2 of the Business and Professions Code is amended to read:7076.2.(a)Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.
(b)Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the companys performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.
(c)This section shall not apply to a federally recognized tribe or a participating tribe.
SEC. 12.Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee who meets both of the following conditions:
(1)Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(2)Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d)A Certificate of Workers Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)No reimbursement has been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f)(1)For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g)(1)For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h)The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i)This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date.
SEC. 13.Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(c)A Certificate of Workers Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)Reimbursement has not been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e)The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f)This section shall become operative on January 1, 2028.
SEC. 14.Section 7125.7 is added to the Business and Professions Code, to read:7125.7.By no later than January 1, 2027, the board shall establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers compensation insurance requirement pursuant to Section 7125.
SEC. 15.Section 7137 of the Business and Professions Code is amended to read:7137.(a)The board may set fees by regulation. These fees shall be set according to the following schedule:
(1)Application fees shall be set as follows:
(A)The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).
(C)The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(D)The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(E)The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(F)The application fee for an asbestos certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(G)The application fee for a hazardous substance removal or remedial action certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(2)The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.
(3)Initial license and registration fees shall be set as follows:
(A)The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(B)The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).
(C)The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(D)(i)The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.
(ii)To demonstrate discharge grade at the time of the boards request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid drivers license or identification card issued by this state or another state with the word Veteran printed on its face or a copy of their DD214 long form.
(4)License and registration renewal fees shall be set as follows:
(A)The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).
(C)The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).
(D)The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).
(E)The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(5)The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.
(6)Miscellaneous fees shall be set as follows:
(A)In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.
(B)The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:
(i)Fees shall be fixed in an amount not more than the boards cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.
(ii)The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.
(iii)The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.
(C)The service fee to deposit with the registrar lawful money or cashiers check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashiers checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.
(D)The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).
(E)The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).
(F)The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.
(b)The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.
SEC. 16.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.
(b)Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.
(c)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 2.Section 7011 of the Business and Professions Code is amended to read:7011.(a)The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrars compensation.
(b)The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.
(c)For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.
(d)Appointments shall be made in accordance with the provisions of civil service laws.
(e)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3.Section 7025 of the Business and Professions Code is amended to read:7025.(a)Members of the personnel of record as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.
(b)Person as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, federally recognized tribe, association or other organization, or any combination thereof.
(c)Qualifying person, qualifying individual, or qualifier, as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.
SEC. 4.Section 7025.1 is added to the Business and Professions Code, to read:7025.1.(a)As used in this chapter, federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131), including an entity controlled by and established for the benefit of one or more tribes. the following definitions apply:
(1)Federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) and includes an entity controlled by and established for the benefit of one or more tribes.
(2)Participating tribe means a federally recognized tribe that formally applies for licensure from the board pursuant to Section 7065.
(b)The board shall license a federally recognized tribe that applies for licensure under Section 7065 and is otherwise compliant with the provisions of this chapter for the purpose of engaging in a business regulated by this chapter.
(b)(c)Nothing in this chapter is This chapter is not intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those federally recognized tribes. participating tribes.
(c)(d)Nothing in this chapter, whether express or implied, shall This chapter does not confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a federally recognized tribe. participating tribe.
SEC. 5.Section 7040 of the Business and Professions Code is amended to read:7040.(a)This chapter does not apply to an authorized representative of the United States government, the State of California, any federally recognized tribe, tribe or participating tribe acting within tribal jurisdiction, or any incorporated town, city, county, irrigation district, reclamation district district, or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
(b)Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.
SEC. 6.Section 7059 of the Business and Professions Code is amended to read:7059.(a)The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.
Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.
(b)(1)In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).
(2)Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
(3)Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.
SEC. 7.Section 7065 of the Business and Professions Code is amended to read:7065.(a)Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.
(b)(1)Contractors licenses are to be issued to individual owners, partnerships, corporations, limited liability companies, and federally recognized participating tribes, in accordance with this chapter.
(1)(A)Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.
(2)(B)Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.
(2)A corporation or limited liability company, whether foreign or domestic, seeking licensure under this chapter shall provide its identification number issued by the Secretary of State.
(3)A tribal business, including a corporation organized or chartered by a federally recognized tribe pursuant to tribally enacted laws or to Section 17 of the federal Act of June 18, 1934, popularly known as the Indian Reorganization Act, shall provide verification of its status as a tribal business. Verification may include, but is not limited to, the following:
(A)Enacted resolution ratifying the charter pursuant to Section 17 of the Indian Reorganization Act.
(B)Enacted resolution authorizing the tribally chartered corporation under tribally enacted laws.
(C)Articles of incorporation or by-laws.
(D)A current list of federally recognized tribes or directory of tribal leadership published under the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) or on the internet website of the United States Bureau of Indian Affairs.
(c)An applicant shall qualify for licensure in accordance with this subdivision as follows:
(1)An individual owner may qualify by examination for a contractors license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.
(2)A partnership may qualify by examination for a contractors license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.
(3)A corporation or participating tribe may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.
(4)A limited liability company may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.
(d)No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.
(e)The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.
SEC. 8.Section 7068.1 of the Business and Professions Code is amended to read:7068.1.(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
SEC. 9.Section 7071.9 of the Business and Professions Code is amended to read:7071.9.(a)(1)If the qualifying individual, as referred to in Sections 7068 and 7068.1, is neither the proprietor, a general partner, nor a joint licensee, the qualifying individual shall file or have on file a qualifying individuals bond as provided in Section 7071.10 in the sum of twenty-five thousand dollars ($25,000). This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(2)This subdivision shall not apply to a federally recognized tribe or a participating tribe.
(b)Excluding the claims brought by the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10, the aggregate liability of a surety on claims brought against the bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500). The bond proceeds in excess of seven thousand five hundred dollars ($7,500) shall be reserved exclusively for the claims of the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10. However, nothing in this section shall be construed to prevent any beneficiary specified in paragraph (1) of subdivision (a) of Section 7071.10 from claiming or recovering the full measure of the bond required by this section. This bond is in addition to, and shall not be combined with, any contractors bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.
(c)The responsible managing officer of a corporation shall not be required to file or have on file a qualifying individuals bond, if the responsible managing officer owns 10 percent or more of the voting stock of the corporation and certifies to that fact on a form prescribed by the registrar.
(d)The qualifying individual for a limited liability company shall not be required to file or have on file a qualifying individuals bond if the qualifying individual owns at least a 10-percent membership interest in the limited liability company and certifies to that fact on a form prescribed by the registrar.
(e)This section shall become operative on January 1, 2023.SEC. 10.Section 7076 of the Business and Professions Code is amended to read:7076.(a)An individual license shall be canceled upon the death of a person licensed as an individual. An immediate member of the family of the deceased licensee may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. Approval of the continuance of an individual license may be contingent upon meeting the bond requirements of Sections 7071.5 and 7071.6 within 90 days of notification by the board of that requirement. The immediate member of the family must apply for and obtain his or her own license to continue contracting after the continuance expires.
(b)A partnership license shall be canceled upon the death of a general partner. The remaining partner or partners shall notify the registrar in writing within 90 days of the death of a general partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The remaining general partner or partners may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(c)A partnership license shall be canceled upon the disassociation of a general partner or upon the dissolution of the partnership. The disassociating partner or the remaining partner or partners shall notify the registrar in writing within 90 days of the disassociation of a general partner or dissolution of the partnership. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action. The remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable length of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation or dissolution. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(d)The general partner or partners shall notify the registrar in writing within 90 days of the death of a limited partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.
The death of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the death of the limited partner unless a new limited partner is added to the license within 90 days of the death.
If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects in progress and to undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.
(e)The general partner or partners shall notify the registrar in writing within 90 days of the disassociation of a limited partner. Failure to notify the registrar of the disassociation, within 90 days, shall cause the disassociation to be effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation is grounds for disciplinary action.
The disassociation of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the disassociation of the limited partner unless a new limited partner is added to the license within 90 days of the disassociation. If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days after the disassociation. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(f)A joint venture license shall be canceled upon the cancellation, revocation, or disassociation of any of its entity licenses or upon the dissolution of the joint venture. The registrar shall be notified in writing within 90 days of the disassociation of a joint venture entity or dissolution of the joint venture. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the boards headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action.
Any remaining entity or entities may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the boards headquarters office within 90 days of the disassociation or dissolution. The remaining entity or entities must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.
(g)Any individual, partnership, or joint venture license continued in accordance with this section is subject to all other provisions of this chapter.
(h)A corporation license shall be canceled upon the corporations dissolution, merger, or surrender of its right to do business in this state. The corporation or participating tribe shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the corporation or participating tribe fails to notify the board of the dissolution, merger, or surrender, the corporation license shall be canceled 60 days after the boards discovery when researching the corporate records of the Secretary of State. relevant corporate records. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(i)A limited liability company license shall be canceled upon the companys dissolution, merger, or surrender of its right to do business in this state. The limited liability company shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the boards headquarters office. If the limited liability company fails to notify the board of the dissolution, merger, or surrender, the limited liability company license shall be canceled 60 days after the boards discovery when researching the records of the Secretary of State. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.
(j)The registrar shall review and accept the petition of a licensee who disputes the date of cancellation upon a showing of good cause. This petition shall be received within 90 days of the boards official notice of cancellation.
SEC. 9.SEC. 11.Section 7076.2 of the Business and Professions Code is amended to read:7076.2.(a)Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.
(b)Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the companys performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.
(c)This section shall not apply to a federally recognized tribe or a federally recognized tribes business that is chartered under tribal or federal law. participating tribe.
SEC. 10.SEC. 12.Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee who meets both of the following conditions:
(1)Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(2)Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d)A Certificate of Workers Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)No reimbursement has been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f)(1)For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g)(1)For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h)The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i)This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date.
SEC. 11.SEC. 13.Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(c)A Certificate of Workers Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)Reimbursement has not been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e)The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f)This section shall become operative on January 1, 2028.
SEC. 12.SEC. 14.Section 7125.7 is added to the Business and Professions Code, to read:7125.7.By no later than January 1, 2027, the board shall establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers compensation insurance requirement pursuant to Section 7125.
SEC. 13.SEC. 15.Section 7137 of the Business and Professions Code is amended to read:7137.(a)The board may set fees by regulation. These fees shall be set according to the following schedule:
(1)Application fees shall be set as follows:
(A)The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).
(C)The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(D)The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(E)The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(F)The application fee for an asbestos certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(G)The application fee for a hazardous substance removal or remedial action certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(2)The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.
(3)Initial license and registration fees shall be set as follows:
(A)The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(B)The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).
(C)The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(D)(i)The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.
(ii)To demonstrate discharge grade at the time of the boards request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid drivers license or identification card issued by this state or another state with the word Veteran printed on its face or a copy of their DD214 long form.
(4)License and registration renewal fees shall be set as follows:
(A)The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).
(C)The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).
(D)The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).
(E)The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(5)The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.
(6)Miscellaneous fees shall be set as follows:
(A)In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.
(B)The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:
(i)Fees shall be fixed in an amount not more than the boards cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.
(ii)The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.
(iii)The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.
(C)The service fee to deposit with the registrar lawful money or cashiers check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashiers checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.
(D)The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).
(E)The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).
(F)The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.
(b)The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.
SEC. 14.SEC. 16.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.
(b)Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.
(c)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 2.Section 7011 of the Business and Professions Code is amended to read:7011.(a)The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrars compensation.
(b)The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.
(c)For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.
(d)Appointments shall be made in accordance with the provisions of civil service laws.
(e)This section shall remain in effect only until January 1, 2029, and as of that date is repealed.
SEC. 3.Section 7025 of the Business and Professions Code is amended to read:7025.(a)Members of the personnel of record as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.
(b)Person as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, federally recognized tribe, association or other organization, or any combination thereof.
(c)Qualifying person, qualifying individual, or qualifier, as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.
SEC. 4.Section 7025.1 is added to the Business and Professions Code, to read:7025.1.(a)As used in this chapter, federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131), including an entity controlled by and established for the benefit of one or more tribes.
(b)Nothing in this chapter is intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those federally recognized tribes.
(c)Nothing in this chapter, whether express or implied, shall confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a federally recognized tribe.
SEC. 5.Section 7040 of the Business and Professions Code is amended to read:7040.(a)This chapter does not apply to an authorized representative of the United States government, the State of California, any federally recognized tribe, or any incorporated town, city, county, irrigation district, reclamation district or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
(b)Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.
SEC. 6.Section 7059 of the Business and Professions Code is amended to read:7059.(a)The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.
Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.
(b)(1)In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).
(2)Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
(3)Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.
SEC. 7.Section 7065 of the Business and Professions Code is amended to read:7065.(a)Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.
(b)Contractors licenses are to be issued to individual owners, partnerships, corporations, limited liability companies, and federally recognized tribes, in accordance with this chapter.
(1)Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.
(2)Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.
(c)An applicant shall qualify for licensure in accordance with this subdivision as follows:
(1)An individual owner may qualify by examination for a contractors license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.
(2)A partnership may qualify by examination for a contractors license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.
(3)A corporation may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.
(4)A limited liability company may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.
(d)No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.
(e)The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.
SEC. 8.Section 7068.1 of the Business and Professions Code is amended to read:7068.1.(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
SEC. 9.Section 7076.2 of the Business and Professions Code is amended to read:7076.2.(a)Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.
(b)Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the companys performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.
(c)This section shall not apply to a federally recognized tribe or a federally recognized tribes business that is chartered under tribal or federal law.
SEC. 10.Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee who meets both of the following conditions:
(1)Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(2)Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d)A Certificate of Workers Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)No reimbursement has been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f)(1)For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g)(1)For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h)The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i)This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date.
SEC. 11.Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(c)A Certificate of Workers Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)Reimbursement has not been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e)The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f)This section shall become operative on January 1, 2028.
SEC. 12.Section 7125.7 is added to the Business and Professions Code, to read:7125.7.By no later than January 1, 2027, the board shall establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers compensation insurance requirement pursuant to Section 7125.
SEC. 12.SEC. 13.Section 7137 of the Business and Professions Code is amended to read:7137.(a)The board may set fees by regulation. These fees shall be set according to the following schedule:
(1)Application fees shall be set as follows:
(A)The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).
(C)The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(D)The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(E)The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(F)The application fee for an asbestos certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(G)The application fee for a hazardous substance removal or remedial action certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(2)The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.
(3)Initial license and registration fees shall be set as follows:
(A)The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(B)The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).
(C)The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(D)(i)The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.
(ii)To demonstrate discharge grade at the time of the boards request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid drivers license or identification card issued by this state or another state with the word Veteran printed on its face or a copy of their DD214 long form.
(4)License and registration renewal fees shall be set as follows:
(A)The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).
(C)The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).
(D)The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).
(E)The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(5)The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.
(6)Miscellaneous fees shall be set as follows:
(A)In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.
(B)The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:
(i)Fees shall be fixed in an amount not more than the boards cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.
(ii)The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.
(iii)The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.
(C)The service fee to deposit with the registrar lawful money or cashiers check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashiers checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.
(D)The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).
(E)The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).
(F)The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.
(b)The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.
SEC. 13.SEC. 14.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.
(b)Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.
(c)This section shall remain in effect only until January 1, 2025, 2029, and as of that date is repealed.
SEC. 2.Section 7011 of the Business and Professions Code is amended to read:7011.(a)The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrars compensation.
(b)The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.
(c)For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.
(d)Appointments shall be made in accordance with the provisions of civil service laws.
(e)This section shall remain in effect only until January 1, 2025, 2029, and as of that date is repealed.
SEC. 3.Section 7025 of the Business and Professions Code is amended to read:7025.(a)Members of the personnel of record as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.
(b)Person as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, company, federally recognized tribe, association or other organization, or any combination thereof.
(c)Qualifying person, qualifying individual, or qualifier, as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.
SEC. 4.Section 7025.1 is added to the Business and Professions Code, to read:7025.1.(a)As used in this chapter, federally recognized tribe means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131), including an entity controlled by and established for the benefit of one or more tribes.
(b)Nothing in this chapter is intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those federally recognized tribes.
(c)Nothing in this chapter, whether express or implied, shall confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a federally recognized tribe.
SEC. 5.Section 7040 of the Business and Professions Code is amended to read:7040.(a)This chapter does not apply to an authorized representative of the United States government, the State of California, California, any federally recognized tribe, or any incorporated town, city, county, irrigation district, reclamation district or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entitys or representatives official capacity.
(b)Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.
SEC. 6.Section 7059 of the Business and Professions Code is amended to read:7059.(a)The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which he or she is they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.
Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which he or she is they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.
(b)(1)In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project. project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of his or her their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).
(2)Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
(3)Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.
SEC. 7.Section 7065 of the Business and Professions Code is amended to read:7065.(a)Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.
(b)Contractors licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies companies, and federally recognized tribes, in accordance with this chapter.
(1)Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.
(2)Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.
(c)An applicant shall qualify for licensure in accordance with this subdivision as follows:
(1)An individual owner may qualify by examination for a contractors license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.
(2)A partnership may qualify by examination for a contractors license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.
(3)A corporation may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.
(4)A limited liability company may qualify by examination for a contractors license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.
(d)No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.
(e)The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.
SECTION 1.SEC. 8.Section 7068.1 of the Business and Professions Code is amended to read:7068.1.(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
SEC. 9.Section 7076.2 of the Business and Professions Code is amended to read:7076.2.(a)Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.
(b)Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the companys performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.
(c)This section shall not apply to a federally recognized tribe or a federally recognized tribes business that is chartered under tribal or federal law.
SEC. 10.Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee who meets both of the following conditions:
(1)Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(2)Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d)A Certificate of Workers Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)No reimbursement has been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f)(1)For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g)(1)For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2)For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h)The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i)This section shall remain in effect only until January 1, 2026, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2026, 2028, deletes or extends that date.
SEC. 11.Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:7125.(a)Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicants or licensees business name. A Certificate of Workers Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b)This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers compensation laws of California or is not otherwise required to provide for workers compensation insurance coverage under California law.
(c)A Certificate of Workers Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d)(1)The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2)A workers compensation insurer shall also report to the registrar a licensee whose workers compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A)The insurer has completed a premium audit or investigation.
(B)A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C)Reimbursement has not been paid by the insured to the insurer.
(3)Willful or deliberate disregard and violation of workers compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e)The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f)This section shall become operative on January 1, 2026. 2028.
SEC. 12.Section 7137 of the Business and Professions Code is amended to read:7137.(a)The board may set fees by regulation. These fees shall be set according to the following schedule:
(1)Application fees shall be set as follows:
(A)The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).
(C)The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(D)The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).
(E)The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(F)The application fee for an asbestos certification examination shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(G)The application fee for a hazardous substance removal or remedial action certification examination shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).
(2)Examination scheduling fees shall be set as follows:(A)The fee for rescheduling an examination for an applicant who has applied for an original license, additional classification, a change of responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee, or for an asbestos certification or hazardous substance removal certification, shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).(B)The fee for scheduling or rescheduling an examination for a licensee who is required to take the examination as a condition of probation shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).(2)The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.
(3)Initial license and registration fees shall be set as follows:
(A)The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(B)The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).
(C)The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(D)(i)The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.
(ii)To demonstrate discharge grade at the time of the boards request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid drivers license or identification card issued by this state or another state with the word Veteran printed on its face or a copy of their DD214 long form.
(4)License and registration renewal fees shall be set as follows:
(A)The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).
(B)The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).
(C)The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).
(D)The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).
(E)The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).
(5)The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.
(6)Miscellaneous fees shall be set as follows:
(A)In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.
(B)The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:
(i)Fees shall be fixed in an amount not more than the boards cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.
(ii)The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.
(iii)The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.
(B)(C)The service fee to deposit with the registrar lawful money or cashiers check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashiers checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.
(C)(D)The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).
(D)(E)The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).
(E)(F)The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.
(b)The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.
SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employers or principals construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:
(1)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.
(2)The additional firm is a subsidiary of or a joint venture with the first. Subsidiary, as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.
(3)With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.
(b)Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.
(c)The following definitions shall apply for purposes of this section:
(1)Firm means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.
(2)Person is limited to natural persons, notwithstanding the definition of person in Section 7025.
(3)Supervision or and control means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.
(4)Direct supervision or control means any of the following:
(A)Supervising construction. construction operations.
(B)Managing construction activities by making technical and administrative decisions.
(C)Checking jobs for proper workmanship.
(D)Supervision on construction sites.
(d)The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individuals duties and responsibilities for supervision and control of the applicants construction operations, including, but not limited to, an employment duty statement prepared by the qualifiers employer or principal. Failure of an applicant or licensee to provide information required by this subdivision constitutes a violation of this section. operations.
(e)Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.
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Date
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Status
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|---|---|
| Sep 22, 2024 | Chaptered by Secretary of State. Chapter 485, Statutes of 2024. |
| Sep 22, 2024 | Approved by the Governor. |
| Sep 10, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 30, 2024 | Assembly amendments concurred in. (Ayes 40. Noes 0. Page 5751.) Ordered to engrossing and enrolling. |
| Aug 29, 2024 | Ordered to special consent calendar. |
| Aug 28, 2024 | In Senate. Concurrence in Assembly amendments pending. |
| Aug 28, 2024 | Read third time. Passed. (Ayes 77. Noes 0. Page 6807.) Ordered to the Senate. |
| Aug 20, 2024 | Read second time. Ordered to third reading. |
| Aug 19, 2024 | Read second time and amended. Ordered to second reading. |
| Aug 15, 2024 | From committee: Do pass as amended. (Ayes 11. Noes 0.) (August 15). |
| Jul 2, 2024 | July 2 set for first hearing. Placed on suspense file. |
| Jun 25, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 18. Noes 0.) (June 25). Re-referred to Com. on APPR. |
| Jun 3, 2024 | Referred to Com. on B. & P. |
| May 24, 2024 | In Assembly. Read first time. Held at Desk. |
| May 24, 2024 | Read third time. Passed. (Ayes 38. Noes 0. Page 4211.) Ordered to the Assembly. |
| May 22, 2024 | Ordered to special consent calendar. |
| May 20, 2024 | Read second time. Ordered to third reading. |
| May 16, 2024 | Read second time and amended. Ordered to second reading. |
| May 16, 2024 | From committee: Do pass as amended. (Ayes 7. Noes 0. Page 3984.) (May 16). |
| May 10, 2024 | Set for hearing May 16. |
| May 6, 2024 | May 6 hearing: Placed on APPR suspense file. |
| Apr 26, 2024 | Set for hearing May 6. |
| Apr 22, 2024 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 12. Noes 0. Page 3699.) (April 22). Re-referred to Com. on APPR. |
| Apr 18, 2024 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on B., P. & E. D. |
| Apr 5, 2024 | Set for hearing April 22. |
| Feb 29, 2024 | Referred to Com. on B., P. & E. D. |
| Feb 20, 2024 | From printer. May be acted upon on or after March 18. |
| Feb 16, 2024 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 30, 2024 | Special Consent SB1455 Ashby | Senate Floor |
Passed |
|
| Aug 28, 2024 | SB 1455 Ashby Senate Third Reading By Berman | Assembly Floor |
Passed |
|
| Aug 15, 2024 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 25, 2024 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Business and Professions |
Passed |
|
| May 24, 2024 | Special Consent SB1455 Ashby | Senate Floor |
Passed |
|
| May 16, 2024 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| May 6, 2024 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 22, 2024 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Business, Professions and Economic Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Associated General Contractors Of California | ** Support | |
| Associated General Contractors-San Diego Chapter | ** Support | |
| California Landscape Contractor'S Association | ** Support | |
| California Legislative Conference Of Plumbing, Heating & Piping Industry | ** Support | |
| California State Council Of Laborers | * Support | Jun 26, 2024 |
| California Tribal Business Alliance | ** Support | |
| CalTrout | * Support | Jun 26, 2024 |
| Calusa | * Support | Jun 25, 2024 |
| Calusa | ** Support | Jun 26, 2024 |
| Contractors State License Board | ** Support | |
| National Electrical Contractors Association | ** Support | |
| Northern California Allied Trades | ** Support | |
| Operating Engineers Local 3 | * Support | Jun 25, 2024 |
| Pechanga | * Support | Jun 26, 2024 |
| Plumbing Heating Cooling Contractors Of California | * Support | Jun 26, 2024 |
| Plumbing-Heating-Cooling Contractors Association of California | ** Support | |
| Tejon Indian Tribe | * Support | Jun 26, 2024 |
| United Contractors | ** Support | |
| Wall and Ceiling Alliance | ** Support | |
| Western Electrical Contractors Association | ** Support | |
| Western Wall And Ceiling Contractors Association | ** Support | |
| Yurok Tribe | ** Support |
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1455 |
UNFINISHED BUSINESS
Bill No: SB 1455
Author: Ashby (D)
Amended: 8/19/24
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 12-0, 4/22/24
AYES: Ashby, Nguyen, Alvarado-Gil, Archuleta, Becker, Dodd, Eggman, Glazer, Niello, Roth, Smallwood-Cuevas, Wilk
NO VOTE RECORDED: Menjivar
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/16/24
AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab
SENATE FLOOR: 38-0, 5/24/24
AYES: Alvarado-Gil, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
NO VOTE RECORDED: Allen, Archuleta
ASSEMBLY FLOOR: 77-0, 8/28/24 - See last page for vote
SUBJECT: Contractors: licensing
SOURCE: Author
DIGEST:
This bill extends the sunset date of the Contractors State License Board (CSLB) by four years, until January 1, 2029, ensures federally recognized tribes are able to obtain a contractor’s license, as specified; delays implementation of the workers compensation coverage requirements for licensure, for all contractors until January 1, 2028; and, makes other technical, clarifying and conforming changes.
Assembly Amendments
add clarifying language to the pathway for federally recognized tribes to obtain a contractor license.
ANALYSIS:
Existing law:
- Establishes CSLB under the jurisdiction of the Department of Consumer Affairs (DCA) to license and regulate contractors and home improvement salespersons, and sunsets the CSLB on January 1, 2025, and its authority to appoint a registrar. (Business and Professions Code (BPC) § 7000 et seq.)
- Establishes an enforcement division within the CSLB to rigorously enforce the Contractors State License Law (License Law), prohibiting all forms of unlicensed activity and obligating licensees to obtain and maintain valid and current workers’ compensation insurance, as specified. (BPC § 7011.4(a))
- States that the CSLB may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified, as defined in the License Law. (BPC § 7059(a))
- Requires for the purpose of public works contracts, the awarding authority to determine the license classification necessary to bid and perform the project and prohibits the awarding authority from awarding a prime contract to a specialty contractor whose classification constitutes less than a majority of the project, as specified. (BPC § 7059(b))
- States that contractor’s licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies (LLCs). (BPC § 7065(b))
This bill:
- Extends the sunset of the CSLB, and its authority to appoint a registrar until January 1, 2029.
- Deletes the current fee for scheduling an examination and instead, requires the fee to be no greater than the actual cost of the administration of the examination and requires the fee to be paid to the examination administrator by the applicant, as specified.
- Requires the CSLB to require a licensee who is subject to a public complaint requiring a professional or expert investigation or inspection and report, as specified, to pay those reasonable fees that are necessary to cover the costs of that investigation in accordance with the following:
- Fees must be fixed in an amount not to exceed the CSLB’s cost of contracting for the investigation or inspection and report, except that the minimum fee is to be $100 for each investigation and may not be increased to more than $1,000, as specified;
- The fee is only to be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation, as specified;
- The full amount of the fee shall be added to the fee for the active or inactive renewal, as specified.
- Clarifies that in public works contracts, the awarding authority shall determine the license classifications necessary to bid the projects in accordance with the classifications as specified in the contractor License Law.
- States that nothing in 4) above authorizes an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting and nothing deprives the registrar of the authority to investigate complaints.
- Requires the CSLB no later than January 1, 2027, to establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers’ compensation insurance requirement, as specified.
- Delays, until January 1, 2028, the requirement that a licensee without any employees be required to comply with the workers’ compensation insurance coverage requirements, as specified.
- Includes federally recognized tribe in the definition of “person”.
- Defines “federally recognized tribe” to mean a tribe located in this state and included on the list published in the Federal Register, as specified, and includes an entity controlled by and established for the benefit of one or more tribes.
- Defines “participating tribe” to mean a federally recognized tribe that formally applies for licensure from the CSLB.
- Requires the CSLB to license a federally recognized tribe that applies for licensure and is otherwise compliant with the provisions under the license law, as specified.
- States that the provisions of this bill are not intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those participating tribes.
- Provides that the license law does not confer upon the CSLB, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a participating tribe.
- Requires a federally recognized tribe pursuant to tribally enacted laws or the "Indian Reorganization Act" to provide verification of its status as a tribal business, as specified.
- Makes other technical and conforming changes.
Background
The CSLB is responsible for the implementation and enforcement of the laws and regulations related to the licensure, practice and discipline of the construction industry in California. As currently drafted, this bill proposes changes to the operations of the CSLB as identified in those issues raised in the background paper and raised during the CSLB’s joint sunset review hearing on March 11, 2024.
Industry Experts. For consumer complaints that cannot be resolved through the mediation process, the CSLB may refer the case for a field investigation. These field investigations increase costs for the CSLB, as additional resources are utilized to conduct investigations. In order to make the proper assessment of workmanship and costs of a construction-related project, the CSLB must rely on the expertise of industry experts (IEs) and contracts with IEs as part of the investigation and enforcement process. Per BPC § 7019, if funding is made available, the CSLB may contract with other licensed professionals including architects, engineers and geologists as appropriate, for the site investigation of the consumer complaint; however, the CSLB does not have the authority to obtain reimbursement from the contractor whose work is subject to the need of an IE. The registrar is responsible for determining the rate of reimbursement for the IE. This bill authorizes the CSLB to establish a fee for the cost of an IE inspection or investigation and report, and sets the floor at $100, and a maximum at no more than $1,000.
Implementation of SB 216 (Dodd, Chapter 978, Statutes of 2022). To address concerns that some applicants or licensees were providing a certification of exemption to avoid obtaining workers’ compensation insurance, SB 216 (Dodd, Chapter 978, Statues of 2022) expanded the license classifications required to have a Certificate of Workers’ Compensation Insurance on file with the CSLB regardless of whether the contractor has employees to include C-8 (Concrete), C-20 (HVAC,) C-22 (Asbestos Abatement), and D-49 (Tree Service). However, as noted in the CSLB’s 2023 Sunset Review Report, there are concerns that the implementation of SB 216 will have a greater impact on CSLB’s workload than anticipated and could potentially increase license-processing times. The CSLB is currently researching additional mechanisms to address the potential licensing challenges, including requesting new staff through the budget change proposal process. This bill delays the implementation of the requirement that all licensees obtain workers compensation coverage until January 1, 2028 and requires the CSLB to conduct a procedure or process to verify if an applicant or licensee is eligible for exemption from workers’ compensation insurance requirement by January 1, 2027.
Examination Fee Restructure. In July 2022, the CSLB entered into a master contract held by the DCA, joining several boards and bureaus who contract to administer licensing examinations through a third-party vendor. Prior to CSLB joining that contract, it was responsible for scheduling, creating, developing and administering its own examinations. Since the transition to PSI Exams, the existing fee structure for applicant examinations are outdated. Current law (BPC § 7137) specifies the fees applicants are required to pay the CSLB directly for examinations instead of the examination vendor, PSI Exams. CSLB then pays the vendor to administer the examination. The vendor in turn charges CSLB for each examination administered. This is a costly duplication of effort and paperwork for all parties involved. This bill revises how the examination fee is collected and requires the applicant pay the examination provider directly.
Issuing Licenses to Tribes and Tribally Owned Businesses. According to information in the CSLB’s 2023 Sunset Review Report, the CSLB has found that current law does not provide a pathway for a federally recognized tribe, seeking to operate as a licensed contractor outside of its tribal boundaries, to obtain a contractor license. Unlike many other license types in California, which are issued to the individual, (i.e., a nurse, a veterinarian, a physician and surgeon, a funeral director, or a cosmetologist), a contractor license is issued to the “business.” A CSLB license may be issued to a variety of business types, including individual owners, partnerships, corporations, and limited liability companies. As noted in the CSLB’s 2023 Sunset Review Report, several tribes have attempted to apply for a contractor license, but were denied, as there is no authority in current law to issue a license to a tribe. The License Law authorizes licenses to be issued to individual sole proprietorships or entities that are registered with the Secretary of State. BPC § 7026, defines a contractor as, “…a person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, …” The term “person” in the definition of a contractor is defined in BPC § 7025(b), as “an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof.” BPC § 7065(b) specifies that contractor licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies. This creates a barrier for tribes, which are distinctly not any of the above entities. Further, BPC § 7076.2 requires licensed contractors that do business as a corporation or limited liability company to register with the Secretary of State, and maintain good standing; failure to do so results in suspension. However, federally recognized tribes may form their corporations under tribal law, state law, or federal law (Section 17 of the Indian Reorganization Act). This bill provides the pathway for California’s federally recognized tribes to obtain a contractor’s license.
Contractor Classifications and Public Works Projects. Regardless of the scope or size of a project, or who hires the licensed contractor (a private or public entity), a contractor must abide by all parameters of the License Law, including contracting for work within the licensee’s classification. With respect to larger public works projects, BPC § 7059 requires for public works contracts that the awarding authority determine the classification necessary to bid and perform the project, and prohibits the awarding authority from issuing a contract to a specialty contractor whose classification constitutes less than a majority of the project. Stakeholders have noted that current law may lead to confusion for awarding agencies when determining the appropriate classification as BPC § 7059 specifies the awarding authority determines the classification necessary without specifying that those classifications should be consistent with the classifications specified in the License Law. This bill clarifies that the awarding authority for a public works contract is to award contracts in accordance with the licensing classifications specified in the License Law.
Technical Changes. Due to numerous statutory changes and implementation delays, code sections can become confusing, contain provisions that are no longer applicable, make references to outdated report requirements, and cross-reference code sections that are no longer relevant. The CSLB’s sunset review is an appropriate time to review, recommend, and make necessary statutory changes.
Extension of the CSLB. Although, there are places where the CSLB can improve, including fiscal prudence, strengthening its licensing and enforcement objectives and those respective programmatic units, and identifying legislative priorities sooner, the CSLB should continue with a four-year extension so that the Legislature may once again review whether the issues and recommendations in this Background Paper have been addressed. This bill extends the sunset date of the CSLB by four years to January 1, 2029.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes
According to the Assembly Committee on Appropriations, the bill will result in ongoing special fund costs of approximately $85 million annually for the continued operation of the CSLB’s licensing and enforcement activities and unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers’ compensation insurance. The CSLB anticipates an annual revenue increase of approximately $250,000 in industry expert investigation and inspection cost recovery. This bill requires a licensee subject to a public complaint requiring an industry expert investigation or inspection to pay reasonable fees necessary to cover the costs of the investigation or inspection and report.
SUPPORT: (Verified 8/27/24)
Associated General Contractors of California
Associated General Contractors-san Diego Chapter
California Landscape Contractor's Association
California Legislative Conference of Plumbing, Heating & Piping Industry
California Tribal Business Alliance
Contractors State License Board
National Electrical Contractors Association (NECA)
Northern California Allied Trades
Plumbing-heating-cooling Contractors Association of California
United Contractors (UCON)
Wall and Ceiling Alliance
Western Electrical Contractors Association
Western Wall and Ceiling Contractors Association (WWCCA)
Yurok Tribe
OPPOSITION: (Verified 8/27/24)
None received
ARGUMENTS IN SUPPORT: Supporters note generally support for the sunset extension of the CSLB and its licensing and enforcement functions, along with the provisions, which remove barriers to issuing contractor licenses to tribes.
ASSEMBLY FLOOR: 77-0, 8/28/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Cervantes, Ortega
Prepared by: Elissa Silva / B., P. & E.D. / 916-651-4104
8/28/24 23:12:17
**** END ****
SENATE THIRD READING
STR Bill Id:SB 1455
Author:(Ashby)
As Amended Ver:August 19, 2024
Majority vote
SUMMARY
Extends the sunset date for the Contractors State License Board (CSLB or board) and its authority to appoint a registrar until January 1, 2029, and enacts technical changes, statutory improvements, and policy reforms in response to issues raised during the board's sunset review oversight process.
Major Provisions
- Requires the awarding authority of a public works contract to determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by the License Law. (Emphasis added to distinguish from existing law.)
- Deletes the requirement for an applicant or licensee to submit an employment duty statement for a qualifying individual.
- Delays until January 1, 2028, the requirement for every licensee to have workers' compensation insurance.
- Requires, by no later than January 1, 2027, the CSLB to establish a process and procedure, as specified, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers' compensation insurance requirement.
- Deletes the fee for scheduling or rescheduling an examination, and instead requires the fee charged to take an examination that is conducted or administered by a public or private organization to be no greater than the actual cost of the administration of the examination, and be paid directly to the organization by the applicant.
- Mandates the board to require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report to pay reasonable fees that are necessary to cover the costs of that investigation or inspection and report, as specified.
- Authorizes contractor licenses to be issued to a "federally recognized tribe," defined as a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 and includes an entity controlled by and established for the benefit of one or more tribes.
- Requires a corporation or limited liability company, whether foreign or domestic, seeking licensure by the CSLB to provide its identification number issued by the Secretary of State. A tribal business, including a corporation organized or chartered by a federally recognized tribe pursuant to tribally enacted laws or the "Indian Reorganization Act" shall provide verification of its status as a tribal business, as specified.
COMMENTS
Sunset review. Each year, the Assembly Business and Professions Committee and the Senate Business, Professions and Economic Development Committee hold joint sunset review oversight hearings to review the licensing boards under the DCA. The DCA boards are responsible for protecting consumers and the public and regulating the professionals they license. The sunset review process provides an opportunity for the Legislature, DCA, boards, and stakeholders to discuss the performance of the boards and make recommendations for improvements.
Each board subject to review has an enacting statute that has a repeal date, which means each board requires an extension before the repeal date. This bill is one of the “sunset” bills that are intended to extend the repeal date of the boards undergoing sunset review, as well as include the recommendations from the sunset review oversight hearings. There are five sunset review bills authored by the Chair of the Assembly Business and Professions Committee and five sunset review bills authored by the Chair of the Senate Business, Professions and Economic Development Committee.
Contractors State License Board. The CSLB is responsible for the implementation and enforcement of the License Law, which governs the licensure, practice, and discipline of the construction industry in California. Any business or individual who constructs or alters, or offers to construct or alter, any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the CSLB if the total cost of labor, materials, and all other items of one or more contracts on the project is $500 or more.
The CSLB issues licenses to business entities and sole proprietors. Each license requires a qualifying individual (a "qualifier") who directly supervises and controls construction work performed under the license. The qualifying individual must be at least 18 years old, have at least four years of specified work experience, undergo a criminal background check, and pass both a law and business exam as well as a trade-specific exam. Additionally, licensed contractors are required to maintain a contractor's bond and workers' compensation insurance, and pay various fees.
The CSLB currently issues four license types: "A" General Engineering Contractor license; "B" General Building Contractor license; "B-2" Residential Remodeling Contractor license; and "C" Specialty Contractor licenses of which there are 42 classifications. Each licensing classification (e.g. electrical, drywall, painting, plumbing, roofing, and fencing) specifies the type of contracting work permitted in that classification. Specific license holders are also eligible for Asbestos or Hazardous Substance Removal certifications issued by the CSLB. The board also regulates Home Improvement Salespersons (HIS). There are approximately 300,000 licensed contractors (active and inactive status licenses) and 30,000 registered HIS in California.
The board's mission, as stated in its 2022-2024 Strategic Plan is as follows:
CSLB protects consumers by regulating the construction industry through policies that promote the health, safety, and general welfare of the public in matters relating to construction, including home improvement.
The board reports that it accomplishes its mission by doing all of the following:
- Ensuring that construction, including home improvement, is performed in a safe, competent, and professional manner;
- Licensing contractors and enforcing licensing laws;
- Requiring licensure for any person practicing or offering to practice construction contracting;
- Enforcing the laws, regulations, and standards governing construction contracting in a fair and uniform manner;
- Providing resolution to disputes that arise from construction activities; and
- Educating consumers so they can make informed choices.
In preparation for the CSLB's sunset review hearing, committee staff published a background paper that identifies current issues and recommendations. For more information, please refer to the policy committee analysis of this bill.
According to the Author
This bill is the sunset review vehicle for the CSLB, authored by the Chair of the Senate Business, Professions, and Economic Development Committee.
Arguments in Support
The Contractors State License Board writes in support of this bill:
The bill would extend the Contractors State License Board until January 1, 2029, and includes proposals identified as "New Issues" in CSLB's December 2023 Sunset Review Report [...] CSLB believes it is effectively executing its public protection mandate, by setting minimum standards for contractor licensure and removing bad actors from the marketplace when appropriate. The Board looks forward to continuing its work with the legislature and interested stakeholders to further its essential consumer protection work.
Arguments in Opposition
No opposition on file.
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- Ongoing special fund costs of approximately $85 million annually (Contractors License Fund) for the continued operation of the CSLB's licensing and enforcement activities. Operations of the CSLB are self-funded with license fee revenues. In 2019, when the CSLB was undergoing its last sunset review by the Legislature, the CSLB noted declining reserves, which led the CSLB to conduct a fee study and subsequently propose a fee increase. SB 607 (Min, Chapter 367, Statutes of 2021) increased various licensing, application, renewal and miscellaneous fees. As a result, the CSLB reports that the fiscal outlook has improved with a current four-month reserve.
- Unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers' compensation insurance (Contractors License Fund). This revenue loss may be lower to the extent that providing an exemption for workers' compensation insurance requirements facilitates more contractors to continue to remain licensed.
- The CSLB anticipates an annual revenue increase of approximately $250,000 in industry expert investigation and inspection cost recovery. This bill requires a licensee subject to a public complaint requiring an industry expert investigation or inspection to pay reasonable fees necessary to cover the costs of the investigation or inspection and report.
VOTES
SENATE FLOOR: 38-0-2
YES: Alvarado-Gil, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ABS, ABST OR NV: Allen, Archuleta
ASM BUSINESS AND PROFESSIONS: 18-0-0
YES: Berman, Flora, Alanis, Bains, Juan Carrillo, Chen, Dixon, Grayson, Irwin, Jackson, Low, Lowenthal, McKinnor, Stephanie Nguyen, Pellerin, Sanchez, Soria, Zbur
ASM APPROPRIATIONS: 11-0-4
YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua
ABS, ABST OR NV: Sanchez, Dixon, Jim Patterson, Ta
UPDATED
VERSION: August 19, 2024
CONSULTANT: Kaitlin Curry / B. & P. / (916) 319-3301 FN: 0003930
Date of Hearing: July 2, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
SBPCA Bill Id:SB 1455
Author:(Ashby) – As Amended Ver:May 16, 2024
Policy Committee: | Business and Professions | Vote: | 18 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill extends the sunset date on the Contractors' State License Board (CSLB), within the Department of Consumer Affaris (DCA), by four years until January 1, 2029, and makes additional technical changes, statutory improvements, and policy reforms in response to issues raised during the Board’s sunset review oversight process.
Specifically, this bill:
- Extends the sunset date for the CSLB and its authority to appoint a registrar from January 1, 2025, to January 1, 2029.
- Authorizes contractors’ licenses be issued to a federally recognized tribe, as specified.
- Requires the awarding authority of a public works contract to determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by the License Law.
- Deletes the requirement for an applicant or licensee to submit an employment duty statement for a qualifying individual.
- Delays until January 1, 2028, the requirement for every licensee to have workers’ compensation insurance.
- Requires, by January 1, 2027, the CSLB to establish a process and procedure, as specified, to verify an applicant or licensee without any employees is eligible for exemption from the workers’ compensation insurance requirement.
- Deletes the fee for scheduling or rescheduling an examination, and instead requires the fee charged to take an examination conducted or administered by a public or private organization to be no greater than the actual cost of the administration of the examination, and be paid directly to the organization by the applicant.
- Mandates the board to require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report to pay reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.
- Makes nonsubstantive and conforming changes.
FISCAL EFFECT:
- Ongoing special fund costs of approximately $85 million annually (Contractors License Fund) for the continued operation of the CSLB’s licensing and enforcement activities. Operations of the CSLB are self-funded with license fee revenues. In 2019, when the CSLB was undergoing its last sunset review by the Legislature, the CSLB noted declining reserves, which led the CSLB to conduct a fee study and subsequently propose a fee increase. SB 607 (Min, Chapter 367, Statutes of 2021) increased various licensing, application, renewal and miscellaneous fees. As a result, the CSLB reports that the fiscal outlook has improved with a current four-month reserve.
- Unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers’ compensation insurance (Contractors License Fund). This revenue loss may be lower to the extent that providing an exemption for workers’ compensation insurance requirements facilitates more contractors to continue to remain licensed.
- The CSLB anticipates an annual revenue increase of approximately $250,000 in industry expert investigation and inspection cost recovery. This bill requires a licensee subject to a public complaint requiring an industry expert investigation or inspection to pay reasonable fees necessary to cover the costs of the investigation or inspection and report.
COMMENTS:
- Purpose. This bill is authored by the Chair of the Senate Committee on Business, Professions and Economic Development as part of the committee’s review of the authorities and activities of the boards and bureaus under DCA. This bill extends the sunset date for the CSLB and enacts technical changes, statutory improvements, and policy reforms in response to issues identified during the CSLB’s sunset review oversight process.
- Background. The CSLB is responsible for the implementation and enforcement of the Contractors State License Law, including the laws and regulations related to the licensure, practice and discipline of the construction industry in California. Any business or individual who constructs or alters, or offers to construct or alter, any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the CSLB if the total cost of labor, materials, and all other items of one or more contracts on the project is $500 or more. Additionally, licensed contractors are required to maintain a contractor’s bond and workers’ compensation insurance, and pay various fees.
The CSLB issues four distinct license types, within three branches of contracting services, and separately registers home improvement sales persons (HIS). As of December 2023, the CSLB regulates approximately 285,000 licensees, issues two certifications and registers approximately 29,000 HIS. Each licensing classification specifies the type of contracting work permitted in that classification. Existing law establishes a sunset of the CSLB on January 1, 2025, which provides for continued legislative oversight of the board’s regulatory activities.
- Related Legislation. This bill is one of eight measures introduced this session to review and extend the operation of licensing boards and bureaus within DCA. The other Senate measures include SB 1452 (Ashby), pending in the Assembly Judiciary Committee, SB 1453 (Ashby), pending in the Assembly Business and Professions Committee, and SB 1454 (Ashby), pending in this committee. The Assembly bills include AB 3252, AB 3253, AB 3254, and AB 3255, all authored by the Assembly Business and Professions Committee. These bills are pending in the Senate Business, Professions, and Economic Development Committee.
- Prior Legislation. SB 1443 (Roth), Chapter 625, Statutes of 2022, extended the sunset date for the CSLB by one year, to January 1, 2025.
SB 610 (Glazer), Chapter 378, Statutes of 2019, extended the sunset date of the CSLB by four years, to January 1, 2024, and made additional changes identified through the sunset review process.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081
Date of Hearing: June 25, 2024
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Marc Berman, Chair
SBPCA Bill Id:SB 1455
Author:(Ashby) – As Amended Ver:May 16, 2024
SENATE VOTE: 38-0
SUBJECT: Contractors: licensing
SUMMARY: Extends the sunset date for the Contractors State License Board (CSLB or board), authorizes the CSLB to issue a license to a federally recognized tribe, requires the awarding authority of a public works contract to use the license classifications prescribed by law, waives the requirement for an applicant to submit an employment duty statement, delays implementation of the universal worker’s compensation requirement to January 1, 2028, and makes additional policy reforms stemming from the board’s sunset review.
EXISTING LAW:
- Establishes, until January 1, 2025, the CSLB under the Department of Consumer Affairs (DCA) to implement and enforce the Contractors State License Law (License Law), which includes the licensing and regulation of contractors and home improvement salespersons. (Business and Professions Code (BPC) §§ 7000 et seq.)
- Requires, until January 1, 2025, the board, by and with the approval of the director, to appoint a registrar of contractors, to be the executive officer and secretary of the board and to carry out all of the administrative duties of the board. (BPC § 7011)
- Defines “person” to mean an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof. (BPC § 7025(b))
- Defines “qualifying person,” “qualifying individual,” or “qualifier” to mean a person who qualifies for a license. (BPC § 7025(c))
- Exempts from the License Law, an authorized representative of the United States government, the State of California, or any incorporated town, city, county, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entity’s or representative’s official capacity, except that the entity or its authorized representative may not contract with an unlicensed contractor for work that is required to be performed by a licensed contractor. (BPC § 7040)
- Requires the awarding authority in public works contracts to determine the license classification necessary to bid and perform the project, as specified. (BPC § 7059(b))
- Authorizes the CSLB to issue contractors’ licenses to individual owners, partnerships, corporations, and limited liability companies. (BPC § 7065(b))
- Mandates the board to require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations, including, but not limited to, an employment duty statement prepared by the qualifier’s employer, or principal. Failure of an applicant or licensee to provide this information constitutes a violation. (BPC §7068.1(d))
- Specifies that the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar will result in the automatic suspension of the license by operation of law. (BPC § 7076.2(a))
- Requires, until January 1, 2026, as a condition of licensure, that an applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, unless that applicant or licensee has no employees and does not hold a C-8, C-20, C-22, C-39, or a D-49 license; the applicant or licensee is organized as a joint venture; or the license is inactive, as specified. (BPC § 7125(a-d))
- Requires, beginning January 1, 2026, as a condition of licensure, that an applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, unless the applicant or licensee is organized as a joint venture or the license is inactive, as specified. (BPC § 7125(a-c))
- Sets the application fee for an asbestos certification examination and a hazardous substance removal or remedial action certification examination at $125 and authorizes both to be increased to $157. (BPC § 7137(a)(1)(F-G))
- Sets the fee for rescheduling an examination for an applicant who has applied for an original license, additional classification, a change of responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee, or for an asbestos certification or hazardous substance removal certification, at $100 and authorizes it to be increased to $125. (BPC § 7137(a)(2)(A))
- Sets the fee for scheduling or rescheduling an examination for a licensee who is required to take the examination as a condition of probation at $100 and authorizes it to be increased to $125. (BPC § 7137(a)(2)(B))
- Authorizes the board to contract with licensed professionals, as specified, for the site investigation of consumer complaints, if funding is made available for that purpose. (BPC § 7019(a))
- Authorizes the board to contract with other professionals whose skills or expertise are required to aid in the investigation of prosecution of a licensee, registrant, applicant, or those subject to licensure or registration by the board. (BPC § 7019(b))
- Requires the board to determine the rate of reimbursement for individuals assisting with an investigation. (BPC § 7019(c))
THIS BILL:
- Extends the sunset date for the board and its authority to appoint a registrar until January 1, 2029.
- Authorizes contractors’ licenses to be issued to a federally recognized tribe.
- Defines “federally recognized tribe” to mean a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994, including an entity controlled by and established for the benefit of one or more tribes.
- Specifies that nothing in the License Law is intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those federally recognized tribes.
- Specifies that nothing in the License Law, whether express or implied, shall confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a federally recognized tribe.
- Exempts a federally recognized tribe and a federally recognized tribe’s business that is chartered under tribal or federal law from the requirement to be registered and in good standing with the Secretary of State.
- Updates the definition of “person” to include a federally recognized tribe.
- Requires the awarding authority of a public works contract to determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by the License Law. (Emphasis added to distinguish from existing law)
- Specifies that nothing shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.
- Specifies that nothing shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of the requirement determine the license classification necessary using existing classifications prescribed by law and regulations.
- Deletes the requirement for an applicant or licensee to submit an employment duty statement for a qualifying individual.
- Delays until January 1, 2028, the requirement for every licensee to have workers’ compensation insurance.
- Requires, by no later than January 1, 2027, the board to establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers’ compensation insurance requirement.
- Deletes the fee for scheduling or rescheduling an examination, and instead requires the fee charged to take an examination conducted or administered by a public or private organization to be no greater than the actual cost of the administration of the examination, and be paid directly to the organization by the applicant.
- Mandates the board to require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report to pay reasonable fees that are necessary to cover the costs of that investigation or inspection and report.
- Specifies that fees shall be fixed in an amount not more than the board’s cost of contracting for the investigation or inspection and report, except that the minimum fee shall be $100 for each investigation or inspection and report and may be increased to not more than $1,000 for each investigation or inspection and report.
- Specifies that the fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation.
- Specifies that the full amount of the assessed fee shall be added to the fee for the licensee’s active or inactive renewal and that a license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report.
- Makes nonsubstantive and conforming changes.
FISCAL EFFECT:
According to the Senate Appropriations Committee:
- Unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers’ compensation insurance (Contractors License Fund). This revenue loss may be lower to the extent that providing an exemption for workers’ compensation insurance requirements facilitates more contractors to continue to remain licensed.
The CSLB notes providing a delayed implementation date would help to address the immediate additional decline in the board’s licensee population and corresponding renewal revenue loss. The CSLB does not anticipate additional licensing or enforcement workload by extending the delayed implementation date.
- Unknown workload impact to CSLB to establish the exemption verification process and procedure. Costs may include staff resources to promulgate regulations and conduct stakeholder outreach.
- The CSLB anticipates an annual revenue increase of approximately $250,000 in industry professional or expert investigation or inspection and report recovery fees.
COMMENTS:
Purpose. This bill is the sunset review vehicle for the CSLB, authored by the Senate Business, Professions, and Economic Development Committee. This bill extends the sunset date for the board and enacts technical changes, statutory improvements, and policy reforms in response to issues raised during the board’s sunset review oversight process.
Background.
Sunset review. Each year, the Assembly Committee on Business and Professions and the Senate Committee on Business, Professions and Economic Development hold joint sunset review oversight hearings to review the licensing boards under the DCA. The DCA boards are responsible for protecting consumers and the public and regulating the professionals they license. The sunset review process provides an opportunity for the Legislature, DCA, boards, and stakeholders to discuss the performance of the boards and make recommendations for improvements.
Each board subject to review has an enacting statute that has a repeal date, which means each board requires an extension before the repeal date. This bill is one of the “sunset” bills that are intended to extend the repeal date of the boards undergoing sunset review, as well as include the recommendations from the sunset review oversight hearings. There are five sunset review bills authored by the Assembly Committee on Business and Professions and five sunset review bills authored by the Chair of the Senate Business, Professions and Economic Development Committee.
Contractors State License Board. The CSLB is responsible for the implementation and enforcement of the License Law, which governs the licensure, practice, and discipline of the construction industry in California. Any business or individual who constructs or alters, or offers to construct or alter, any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the CSLB if the total cost of labor, materials, and all other items of one or more contracts on the project is $500 or more.
The CSLB issues licenses to business entities and sole proprietors. Each license requires a qualifying individual (a “qualifier”) who directly supervises and controls construction work performed under the license. The qualifying individual must be at least 18 years old, have at least four years of specified work experience, undergo a criminal background check, and pass both a law and business exam as well as a trade-specific exam.[1] Additionally, licensed contractors are required to maintain a contractor’s bond and workers’ compensation insurance, and pay various fees.
The CSLB currently issues four license types: “A”’ General Engineering Contractor license; “B” General Building Contractor license; “B-2” Residential Remodeling Contractor license; and “C” Specialty Contractor licenses of which there are 42 classifications. Each licensing classification (e.g. electrical, drywall, painting, plumbing, roofing, and fencing) specifies the type of contracting work permitted in that classification. Specific license holders are also eligible for Asbestos or Hazardous Substance Removal certifications issued by the CSLB. The board also regulates Home Improvement Salespersons (HIS). There are approximately 300,000 licensed contractors (active and inactive status licenses) and 30,000 registered HIS in California.[2]
The board’s mission, as stated in its 2022-2024 Strategic Plan is as follows:
CSLB protects consumers by regulating the construction industry through policies that promote the health, safety, and general welfare of the public in matters relating to construction, including home improvement.
The board reports that it accomplishes its mission by doing all of the following:
- Ensuring that construction, including home improvement, is performed in a safe, competent, and professional manner;
- Licensing contractors and enforcing licensing laws;
- Requiring licensure for any person practicing or offering to practice construction contracting;
- Enforcing the laws, regulations, and standards governing construction contracting in a fair and uniform manner;
- Providing resolution to disputes that arise from construction activities; and
- Educating consumers so they can make informed choices.[3]
Current Related Legislation.
AB 2622 (J. Carillo) would authorize a person who does not have a contractor license to both advertise for and perform construction work or a work of improvement if the total cost of labor, materials, and all other items, is less than $1,000, subject to limitations. AB 2622 is pending in the Senate Business, Professions, and Economic Development Committee.
AB 3251 (Committee on Business and Professions) is the sunset bill for the Board of Accountancy. AB 3251 is pending in the Senate Business, Professions, and Economic Development Committee.
AB 3252 (Committee on Business and Professions) is the sunset bill for the Court Reporters Board. AB 3252 is pending in the Senate Business, Professions, and Economic Development Committee.
AB 3253 (Committee on Business and Professions) is the sunset bill for the Board for Professional Engineers, Land Surveyors, and Geologists. AB 3253 is pending in the Senate Business, Professions, and Economic Development Committee.
AB 3254 (Committee on Business and Professions) is the sunset bill for the Cemetery and Funeral Bureau. AB 3254 is pending in the Senate Business, Professions, and Economic Development Committee.
AB 3255 (Committee on Business and Professions) is the sunset bill for the Board of Vocational Nursing and Psychiatric Technicians of the State of California. AB 3255 is pending in the Senate Business, Professions, and Economic Development Committee.
SB 1452 (Ashby) is the sunset bill for the California Architects Board and the Landscape Architects Technical Committee. SB 1452 is pending in this committee.
SB 1453 (Ashby) is the sunset bill for the Dental Board of California. SB 1453 is pending in this committee.
SB 1454 (Ashby) is the sunset bill for the Bureau of Security and Investigative Services. SB 1453 is pending in this committee.
SB 1071 (Dodd) would have delayed, until January 1, 2028, the requirement that all CSLB licensees be required to comply with workers’ compensation requirements in law. The contents of SB 1071 were incorporated into this bill and SB 1071 died in the Senate Appropriations Committee.
Prior Related Legislation.
SB 216 (Dodd), Chapter 978, Statutes of 2022, required asbestos abatement contractors; concrete contractors; heating, ventilation, and air conditioning (HVAC) contractors; and tree service contractors to have workers' compensation insurance, regardless of whether they have employees, until January 1, 2026, at which time all contractors are required to have workers' compensation insurance regardless of whether they have employees.
AB 830 (Flora), Chapter 376, Statutes of 2021, states that a duty statement is required to establish the responsibilities of a qualifying individual on a contractors’ license.
ARGUMENTS IN SUPPORT:
In support of this bill, the CSLB writes, “CSLB believes it is effectively executing its public protection mandate, by setting minimum standards for contractor licensure and removing bad actors from the marketplace when appropriate. The Board looks forward to continuing its work with the legislature and interested stakeholders to further its essential consumer protection work.”
SUNSET ISSUES FOR CONSIDERATION: In preparation for the sunset hearings, committee staff publishes background papers that identify outstanding issues relating to the entity being reviewed. The background papers are available on the Committee’s website: https://abp.assembly.ca.gov/jointsunsethearings. While all of the issues identified in the background paper remain available for discussion, the following are currently being addressed in this bill or otherwise actively discussed:
- Issue #1: Expert Investigation and Inspection Costs. The CSLB is responsible for enforcement of the License Law. As part of its enforcement arm, the CSLB actively responds to and conducts investigations of consumer complaints. The CSLB reports that a primary goal of the CSLB’s Intake and Mediation Unit is to resolve as many complaints as practical without further referral to a field investigation. Investigations can increase costs for the CSLB, as greater resources are needed to conduct investigations. As noted by the CSLB, when a complaint is referred for a field investigation, the investigation is likely to result in a settlement, citation, letter of admonishment, or arbitration none of which provide a mechanism for cost recovery of the CSLB’s work including staff-time or other resources necessary to investigate and resolve these complaints.
According to the CSLB, to resolve a workmanship dispute, CSLB must evaluate the work that needs to be completed for a project to meet industry standards and any associated costs to complete that work. In order to make the proper assessment of workmanship and costs of a construction-related project, the CSLB must rely on the expertise of industry experts (IEs) and contracts with IEs as part of the investigation and enforcement process. Per BPC § 7019, if funding is made available, the CSLB may contract with other licensed professionals including architects, engineers and geologists as appropriate, for the site investigation of the consumer complaint. The registrar is responsible for determining the rate of reimbursement for the IE.
As noted by the CSLB, it annually receives more than 13,000 consumer-filed complaints, the majority of which allege incomplete and/or defective work. For the complaints that allege workmanship issues, IE services are required to determine if the contracted work was completed and performed to minimum trade standards. While IEs provide valuable industry expertise in their evaluation of work as part of a complaint, the utilization of IEs is costly to the CSLB. As reported by the CSLB, costs can be around $800 for a single IE to inspect the project site of a complaint and prepare a report utilized by the CSLB to make an enforcement determination. Between FYs 2019/20 through 2022/23, the CSLB spent $2,061,446 on IEs, (one case may require more than one IE). Costs associated with the use of IEs also include travel to the job site. These costs can increase depending on the severity of the complaint and the type of work that must be inspected based on a complaint. Currently, the CSLB does not have the statutory authority to seek reimbursement for the costs associated with IEs during the enforcement process. However, in those cases with formal discipline, such as probation or suspension, an ALJ may require cost recovery as part of the formal discipline process but for less severe penalties such as citations, CSLB does not have cost recovery authority.
As noted in the CSLB’s 2023 Sunset Review Report, CSLB requests authority to obtain reimbursement for the cost of repeatedly inspecting poor workmanship or incomplete work prior to, and in lieu of, the disciplinary stage of a complaint when appropriate. Providing authority to recover some IE costs will serve as a deterrent to contractors who do not respond timely to requests to correct work or who repeatedly rely on CSLB to incur the cost of an IE to tell them how to correct and complete their contracted work.
At least one other DCA agency has authority to charge for inspections in the enforcement process. The Bureau of Household Goods and Services (BHGS), under the Home Furnishings and Thermal Insulation Act (BPC §§ 19213 and 19213.1), is authorized to charge a fee when an inspection is needed to establish a violation. These sections do not require cost recovery through disciplinary action to invoke the fee. Unlike BHGS, which has staff to conduct and report on inspections, CSLB does not have in-house expertise to identify workmanship violations or the staff resources to conduct inspections at the rate complaints are received. Thus, CSLB must rely on experts in the field to conduct inspections. The CSLB notes in its 2023 Sunset Review Report that “To ensure CSLB can continue to 25 contract with IEs as the cost of services rises, authorization would be recommended to charge actual costs.”
Staff Recommendation: The CSLB should advise the Committees on any anticipated cost savings associated with authority to seek the cost reimbursement of IEs.
Board Response: Anticipated cost savings could be around $250,000 a fiscal year, or about 40 to 60 percent of the board’s annual IE costs.
This is based on the board’s recommendation that this proposal be limited to IE cost reimbursement on investigations resulting only in letters of admonishment or citations because each resolution affords a right to appeal. The board estimates that approximately 40 to 60 percent of its total IE invoices each fiscal year result in a citation or letter of admonishment (though much more commonly a citation). The proposal is not needed for accusations, which afford the board formal cost recovery.
In addition to anticipated cost savings, the board is optimistic the proposal will result in fewer consumer complaints and serve as a deterrent to contractors that repeatedly rely on CSLB to contract with an IE to serve as quality control for their business rather than timely address their complaints with their customers.
Sunset Recommendation: This bill mandates that the board require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection to pay between $100 and $1,000 to cover the board’s cost of contracting for the investigation or inspection and report.
- Issue #3: Workers’ Compensation Insurance. The License Law requires applicants and licensees, as a condition of licensure, to submit to the CSLB a valid Certificate of Workers’ Compensation Insurance, or a valid Certification of Self-Insurance from the Department of Industrial Relations if they have any employees. As specified in BPC § 7125, if an applicant or licensee does not have employees and does not hold a (C-8) concrete license, (C-20) Warm-Air Heating, Ventilating and Air-Conditioning license, (C-22) Asbestos Abatement contractor license, (D-49) Tree Service contractor license, or (C-39) roofing contractor license, they are able to provide a certification of exemption (meaning they have no employees) and are then not required to meet the workers’ compensation insurance requirements as a condition of licensure, until January 1, 2026, when all applicants and licensees will be required to provide a valid Certificate of Workers Compensation Insurance for initial licensure and renewal.
To address concerns that some applicants or licensees were providing a certification of exemption in order to avoid obtaining the required workers’ compensation insurance, SB 216 (Dodd), Chapter 978, Statues of 2022, expanded the license classifications required to have a Certificate of Workers’ Compensation Insurance on file with the CSLB to include the (C-8 Concrete), (C-20 HVAC,) (C-22 Asbestos Abatement), (D-49 Tree Service) regardless if the contractor has employees. Prior to the passage of SB 216, only a C-39 Roofing contractor was required to have workers’ compensation insurance regardless of whether or not they had any employees. Beginning January 1, 2026, all licensure classifications under the jurisdiction of the CSLB, regardless of whether or not they have employees, must obtain workers’ compensation insurance. The requirements in SB 216 stemmed from work conducted by the CSLB in 2017, as it reviewed strategies to combat workers’ compensation insurance avoidance. The CSLB reported that between January 2018 and March 2020, CSLB issued 500 stop work orders to licensed contractors on job sites for failure to secure workers’ compensation and further made 342 legal actions against licensed contractors for workers’ compensation insurance violations.
SB 216 provided a delayed implementation for all licensure classifications to meet the workers’ compensation mandate. However, as noted in the CSLB’s 2023 Sunset Review Report, there are concerns that the implementation of SB 216 will have a greater impact on CSLB’s workload than anticipated and could potentially increase license-processing times. The CSLB is currently researching additional mechanisms to address the potential licensing challenges, including requesting new staff through the budget change proposal process.
In addition to concerns regarding implementation, there has been stakeholder feedback from contractors who will be required to obtain a certificate of workers compensation insurance even though they report to have no employees. California law requires that employers, including those in the construction industry, carry workers' compensation insurance, even if they have only one employee, including receptionists or other staff.
Staff Recommendation: The CSLB should advise the Committees if legislative changes are necessary to ensure effective implementation of SB 216. Additionally, the CSLB should advise the Committees if it foresees any workforce issues resulting from the implementation. Is the CSLB conducting any outreach or informational sessions to help applicants and licensees meet this new requirement or better understand what it means to have “employees”? Does the CSLB need more time to implement the requirements?
Board Response: If the 2026 mandate in SB 2016 took effect today, approximately 115,000 contractors would currently need a policy. CSLB may expect 10 percent of licensees to stop paying to maintain a license, resulting in a possible loss of $8 million to CSLB’s fund that may impact enforcement operations. Staff also anticipates a significant increase in document processing with an increase in certificates and possibly applications to inactivate or cancel licenses. Staff will need to explore an entirely online certificate process or pursue a partnership with the Workers’ Compensation Insurance Rating Bureau to assist with the tracking and registering of certificates.
The board’s Chair assigned a two-board member advisory committee to connect with industry stakeholders on concerns raised by the legislature by potential SB 216 impacts. The stakeholder meeting was held on April 10, 2024. In addition to the two CSLB board members assigned, invitees included insurance regulators, attorneys, contractor association representatives, and smaller contractors who opposed the requirement. With minimal exception, industry attendees supported maintaining the “status quo” and the original policy of the bill to protect property owners, workers, and level the playing field for law-abiding contractors. Attendees did acknowledge the hardship that may come from very small businesses who truly never use a single worker from being forced to buy a policy and suggested the board could develop a new minimal-scope trade classification for licensed contractors who are not employers to perform maintenance work at a defined limit.
As to outreach, since October 2022, CSLB has issued industry bulletins and over 30,000 letters with education and resources about the requirement. The industry bulletins are on its website. CSLB will send letters and explore additional avenues for ensuring compliance with the 2026 WC requirements.
As to workforce issues, contractors have expressed concern about being forced to pay for a policy that does not benefit them. There has always been a concern with any requirement of this nature that a percentage of licentiate will “go underground” instead of paying for workers’ compensation insurance.
Sunset Recommendation: This bill delays the universal workers’ compensation insurance mandate to January 1, 2028. Additionally, in anticipation of a potential reversal of that policy in the future, this bill requires the board, by no later than January 1, 2027, to establish a process and procedure to verify that an applicant or licensee without a single employee is eligible for an exemption.
- Issue #7: Exam Fees. In July of 2022, the CSLB entered into a master contract held by the DCA, joining several boards and bureaus whose license examinations are administered by a third-party vendor. Prior to CSLB joining that contract, it was responsible for scheduling, creating, developing and administering its own examinations. Because the CSLB was involved in all aspects of the examination process, any fees associated with examinations were set in statute and paid directly to the CSLB by the applicant. However, since the transition to PSI Exams, the existing fee structure for applicant examinations may be outdated. Because of current specifications in statute, applicants are paying the CSLB for examination administration instead of the vendor PSI Exams.
Current law (BPC § 7137) specifies the fees applicants are required to pay the CSLB directly for examinations. CSLB then pays the vendor to administer the examination. The vendor in turn charges CSLB for each examination administered. This is a costly duplication of effort and paperwork for all parties involved.
Scheduling examinations and retakes requires significant staff resources to receive and process payments and then notify candidates and PSI Exams that they may schedule a second (or subsequent) examination, some as many as 12 times. Applicants could pay a lesser fee for rescheduling an exam or retaking after failing if the CSLB was not required to process examination reschedules. BPC § 7137(a)(2) specifies the fee to reschedule an examination is $100; however, PSI Exams invoices CSLB $45.65 for each standard examination. Therefore, the CSLB has recommended in its 2023 Sunset Review Report to amend the License Law to require candidates to pay examination fees directly to PSI Exams, instead of the CSLB, saving both time and money for the applicant and CSLB staff resources.
Staff Recommendation: The CSLB should advise the Committees on the statutory language necessary to make this change. The CSLB should advise the Committees on whether outsourcing the administration of the examinations has created efficiencies for the CSLB and/or applicants.
Board Response: Outsourcing examinations has resulted in several efficiencies by authorizing the CSLB applicant to work with PSI directly to schedule their examinations. Efficiencies include greatly expanding the hours and locations available for applicants to take examinations, as well as allowing applicants to choose their own examination date and schedule and cancel their own examinations. This has allowed CSLB to close its test centers and eliminate the need to staff test centers with proctors or licensing staff to schedule examinations. The final piece of these efficiencies is this proposal that would have the applicant pay the testing administrator the examination fee directly, which would be $45 or $90 depending on the number of examinations being scheduled.
However, the board has been clear this is an additional fee on applicants they are not currently paying ($90 or $45 depending on number of examinations taken).
When CSLB conducted a fee study in 2020 and fees were raised commensurate with the cost of current services, it was envisioned that PSI would administer examinations at some point in the future. So updated CSLB fees did not include examination “administration” costs.
Staff will tender for committee’s consideration draft legislative language to accomplish this.
Sunset Recommendation: This bill deletes exam fees in statute and requires applicants to pay the third-party exam vendor directly.
- Issue #8: Federally Recognized Tribes. According to information in the CSLB’s 2023 Sunset Review Report, the CSLB has found that current law does not provide a pathway for a federally recognized tribe, seeking to operate as a licensed contractor outside of its tribal boundaries, to obtain a contractor license. Unlike many other license types in California, which are issued to the individual, (i.e., a nurse, a veterinarian, a physician and surgeon, a funeral director, or a cosmetologist), a contractor license is issued to the “business.” A CSLB license may be issued to a variety of business types including individual owners, partnerships, corporations, and limited liability companies. As noted in the CSLB’s 2023 Sunset Review Report, several tribes have attempted to apply for a contractor license, but have been denied, as there is no authority in current law to issue a license to a tribe. The License Law authorizes licenses to be issued to individual sole proprietorships or entities that are registered with the Secretary of State.
BPC § 7026, defines a contractor as, “…a person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, …” The term “person” in the definition of a contractor is defined in BPC § 7025(b), as “an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof,”
BPC § 7065(b) specifies that contractor licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies. This creates a barrier for tribes, which are distinctly not any of the above entities. Further, BPC 7076.2 requires licensed contractors that do business as a corporation or limited liability company to register with the Secretary of State, and maintain good standing. Failure to do so results in suspension.
A tribe may form a corporation as a tribally chartered corporation under tribal law, a state chartered corporation formed under state law, or a federally chartered corporation under Section 17 of the Indian Reorganization Act. However, the License Law only recognizes registration with the Secretary of State as a valid method of forming a corporation for purposes of CSLB licenses. As sovereign governments, tribes often pursue economic development initiatives by operating for-profit businesses. These businesses can, but are not required to, register their businesses with the Secretary of State as foreign corporations. Additionally, tribes cannot obtain a license as a sole proprietor, because a tribe has a right to self-governance that is not afforded to an individual. As a result, CSLB is unable to issue contractor licenses to tribal businesses. Federally recognized tribes do not need licenses to operate within their boundaries, unless their tribal laws designate such specific requirements.
Other boards and bureaus share similar challenges associated with issuing licenses to tribal businesses including the Bureau of Automotive Repair, the Bureau of Security and Investigative Services and the Structural Pest Control Board. The CSLB recommends in its 2023 Sunset Review Report to address this issue to expand business opportunities and reduce licensure barriers for federally recognized tribes conducting business operations outside of its tribal boundaries.
Staff Recommendation: The CSLB should advise the Committees on the appropriate legislative changes necessary to permit a tribe or tribally owned business to obtain a contractor license.
Board Response: Tribal governments sometimes seek to do business outside of federal or tribal land. As such, a contractor’s license is required.
Existing law requires the CSLB to collect a social security number for a sole owner, a federal employer identification number for a partnership, and a registration number for a corporation or an LLC. However, Tribal organizations are set up as entities under Tribal Law as opposed to entities with a Secretary of State registration. Tribal organizations have expressed to the CSLB the preference the tribe be licensed rather than individual members obtaining a sole ownership or partnership license.
As a result, tribal entities have applied for contractor licensure several times and CSLB is unable to issue a license to the tribal entity. This is neither in the interests of consumer protection nor the legislature’s policy of reducing barriers to licensure.
The CSLB has been advised that any such proposal may need to include a waiver of tribal sovereignty for imposing discipline on the license; the Department of Cannabis Control has similar provisions. This would ensure the CSLB could take disciplinary action for violations of the License Law as it would with any other licensee.
Staff will tender for committee’s consideration draft legislative language to accomplish this.
Sunset Recommendation: This bill expressly authorizes the board to issue a license to a federally recognized tribe and makes conforming changes.
- Issue #12: Contractor Classifications for Public Works Projects. BPC § 7059 provides the CSLB with authority to adopt rules and regulations pertaining to the license classifications, including establishing limits in the field and scope of the operations a licensed contractor may engage in based upon the classification of license held (“A” General Engineering, “B” General Building, “B-2” Residential Remodeling, and “C” Specialty). BPC § 7117.6 specifically prohibits working outside of the licensee’s classification and subjects that contractor to enforcement actions by the CSLB.
The various classifications of contractor work in which licensees operate are consistent amongst all types of projects on which a contractor may engage. Regardless of the scope or size of a project, or who hires the licensed contractor (a private or public entity), a contractor must abide by all parameters of the License Law, including contracting for work within the licensee’s classification. With respect to larger public works projects, BPC § 7059 requires in public works contracts that the awarding authority determines the classification necessary to bid and perform the project, and prohibits the awarding authority from issuing a contract to a specialty contractor whose classification constitutes less than a majority of the project. Stakeholders have noted that current law may lead to confusion for awarding agencies when determining the appropriate classification as BPC § 7059 specifies the awarding authority determines the classification necessary without specifying that those classifications should be consistent with the classifications specified in the License Law.
Staff Recommendation: The CSLB should advise the Committees if statutory clarification would be beneficial to ensure that public works projects are only awarded to contractors with the appropriate license type.
Board Response: Statutory clarification would be beneficial as local agencies sometimes determine a classification for a public works project that is not the appropriate classification. Existing law allows a public agency to determine the contractor license classification necessary to bid and perform a public works project. CSLB believes this includes the responsibility to select the classification whose trade description provided by law that most appropriately fits the work to be bid on the project. However, existing law does not say this in the section of law about agencies selecting contractors should consider CSLB regulations, so clarification is appropriate.
This proposal will clarify existing law to simply state, in the section related to public works, that the awarding authority’s determination is based on CSLB’s authority to establish license classifications. This will provide clarity for awarding agencies and contractors when selecting classifications for which a contract is awarded and not impede CSLB’s regulatory ability to ensure licensees are contracting within their authorized classification.
Sunset Recommendation: This bill clarifies that in public works contracts, the awarding authority must determine the necessary license classification using the classifications prescribed in the License Law and related regulations.
- Issue #17: Technical Clean-up. Since the CSLB’s last sunset review in 2019, the CSLB has sponsored or been impacted by numerous pieces of legislation which address all or parts of the CSLB’s duties, oversight authority, licensing requirements, examination standards, among others. As a result, there may be a number of non-substantive and technical changes to the License Law to correct deficiencies or other inconsistencies in law. Because of numerous statutory changes and implementation delays, code sections can become confusing, contain provisions that are no longer applicable, make references to outdated report requirements, and cross-reference code sections that are no longer relevant. The board’s sunset review is an appropriate time to review, recommend, and make necessary statutory changes.
Staff Recommendation: The CSLB should recommend cleanup or technical amendments to the Committees.
Board Response: Staff will tender for committee’s consideration draft legislative language to accomplish this.
Sunset Recommendation: This bill makes various nonsubstantive and conforming changes.
Additionally, this bill, responds to a concern that was raised in the board’s December 2023 sunset report in response to a question asking whether there are existing statutes that hinder the efficient and effective processing of applications and/or examinations, to which the board replied:
BPC section 7068.1 was amended by AB 830 (Flora, Chapter 376, Statutes of 2021), to state a duty statement could be required to establish a qualifier’s responsibility to exercise supervision and control over the applicant’s projects. This amendment created confusion as to whether employers are required to submit a duty statement to demonstrate the qualifier’s supervision and control over projects. Prior to this amendment, CSLB had existing authority to collect detailed information on the qualifying individual’s duties and responsibilities, including a duty statement when warranted.
The Licensing Division has fielded calls from applicants, new qualifiers, licensees, and construction law attorneys during renewal who believe section 7068.1 requires a duty statement as a condition of licensure. Additionally, the Licensing Division has received duty statements from licensees and applicants who believe a duty statement is required to renew their license. AB 830 created an additional, unnecessary workload and added a burden to employers who believe they must create a document to satisfy this requirement. The needed clarifying amendment is technical and is, therefore, included in CSLB’s technical bill proposal.
This bill deletes the requirement that applicants and licensees submit an employment duty statement prepared by the qualifier’s employer or principal and redundant language that failure to do so is a violation.
- Issue #18: Continued Regulation. The safety and welfare of consumers persists under the presence of a strong licensing and regulatory structure to oversee the contractor profession. The CSLB’s focus is consumer protection, to that end, has demonstrated its commitment to ensuring a robust contractor marketplace. Although, there are places where the CSLB can improve, including fiscal prudence, strengthening its licensing and enforcement objectives and those respective programmatic units, and identifying legislative priorities sooner, the CSLB should continue with a four-year extension so that the Legislature may once again review whether the issues and recommendations in this Background Paper have been addressed.
Staff Recommendation: Recommend that the licensing and regulation of contractors and HIS continue under the CSLB’s regulatory authority in order to protect the interests and safety of the public. The CSLB should continue its work to help address the unlicensed economy through its enforcement operations and continue its administrative efforts to increase examinations in multiple languages. The CSLB should continue to develop staff management policies to ensure it has well-trained and cross-trained staff to alleviate pressures when disaster response is necessary. Further, the recommendation is for the CSLB to be reviewed by the appropriate policy committees of the Legislature once again in four years.
Board Response: The board agrees with this recommendation and thanks the committees for the opportunity to participate in the Sunset Review process.
Sunset Recommendation: This bill delays the sunset date for the board by four years to January 1, 2029.
REGISTERED SUPPORT:
Contractors State License Board
California Legislative Conference of Plumbing, Heating & Piping Industry
National Electrical Contractors Association
Northern California Allied Trades
Plumbing-Heating-Cooling Contractors Association of California
United Contractors
Wall and Ceiling Alliance
Western Electrical Contractors Association
Western Wall and Ceiling Contractors Association
Yurok Tribe
REGISTERED OPPOSITION:
None on file
Analysis Prepared by: Kaitlin Curry / B. & P. / (916) 319-3301
Contractors State License Board. (n.d.) Get Licensed to Build: A Guide to Becoming a California Licensed Contractor. ↑
Contractors State License Board (2023, December) Sunset Review Report
https://www.cslb.ca.gov/Resources/Reports/Sunset/CSLB_2023_Sunset_Report.pdf ↑
Contractors State License Board (n.d.) 2022-2024 Strategic Plan https://www.cslb.ca.gov/Resources/reports/StrategicPlan/StrategicPlan_2022-24_ADA.pdf ↑
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 1455 |
THIRD READING
Bill No: SB 1455
Author: Ashby (D)
Amended: 4/18/24
Vote: 21
SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 12-0, 4/22/24
AYES: Ashby, Nguyen, Alvarado-Gil, Archuleta, Becker, Dodd, Eggman, Glazer, Niello, Roth, Smallwood-Cuevas, Wilk
NO VOTE RECORDED: Menjivar
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/16/24
AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab
SUBJECT: Contractors: licensing
SOURCE: Author
DIGEST:
This bill extends the sunset date of the Contractors State License Board (CSLB) by four years, until January 1, 2029, ensures federally recognized tribes are able to obtain a contractor’s license, as specified; delays implementation of the workers compensation coverage requirements for licensure, for all contractors until January 1, 2028; and, makes other technical, clarifying and conforming changes.
ANALYSIS:
Existing law:
- Establishes CSLB under the jurisdiction of the Department of Consumer Affairs (DCA) to license and regulate contractors and home improvement salespersons, and sunsets the CSLB on January 1, 2025, and its authority to appoint a registrar. (Business and Professions Code (BPC) § 7000 et seq.)
- Establishes an enforcement division within the CSLB to rigorously enforce the Contractors State License Law (License Law), prohibiting all forms of unlicensed activity and obligating licensees to obtain and maintain valid and current workers’ compensation insurance, as specified. (BPC § 7011.4(a))
- States that it is a misdemeanor for any contractor, whether licensed or unlicensed, to perform or engage in asbestos-related work without certification, as specified. (BPC § 7028.1)
- States that no person engaged in the business or acting in the capacity of a contractor may bring or maintain any action, or recover in law or equity in any action, in any court in California, for the collection of compensation for the performance of any act or contract where a license is required without alleging that they were a duly licensed contractor at all times during the performance of that act or contract regardless of the merits of the cause of action brought by the person, unless specifically exempted. (BPC § 7031(a))
- States that the CSLB may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified, as defined in the License Law. (BPC § 7059(a))
- Requires for the purpose of public works contracts, the awarding authority to determine the license classification necessary to bid and perform the project and prohibits the awarding authority from awarding a prime contract to a specialty contractor whose classification constitutes less than a majority of the project, as specified. (BPC § 7059(b))
- States that contractor’s licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies (LLCs). (BPC § 7065(b))
- Requires the individual who meets the qualification for licensure to be held responsible for exercising direct supervision and control over the operation of the contractor business in order to ensure full compliance with the License Law, as specified. (BPC § 7068.1(a))
- Requires every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations, including, but not limited to, an employment duty statement prepared by the qualifier’s employer or principal, and the failure of an applicant or licensee to provide the required information constitutes a violation. (BPC § 7068.1(d))
This bill:
- Extends the sunset of the CSLB, and its authority to appoint a registrar until January 1, 2029.
- Deletes the current fee for scheduling an examination and instead, requires the fee to be no greater than the actual cost of the administration of the examination and requires the fee to be paid to the examination administrator by the applicant, as specified.
- Requires the CSLB to require a licensee who is subject to a public complaint requiring a professional or expert investigation or inspection and report, as specified, to pay those reasonable fees that are necessary to cover the costs of that investigation in accordance with the following:
- Fees must be fixed in an amount not to exceed the CSLB’s cost of contracting for the investigation or inspection and report, except that the minimum fee is to be $100 for each investigation and may not be increased to more than $1,000, as specified;
- The fee is only to be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation, as specified;
- The full amount of the fee shall be added to the fee for the active or inactive renewal, as specified.
- Clarifies that in public works contracts, the awarding authority shall determine the license classifications necessary to bid the projects in accordance with the classifications as specified in the contractor License Law.
- States that nothing in 4) above authorizes an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting and nothing deprives the registrar of the authority to investigate complaints.
- Authorizes the CSLB to issue a license to a federally recognized tribe, as specified, and exempts the requirement that a federally recognized tribe or business that is chartered under tribal or federal law from the requirement to be registered in good standing with the California Secretary of State for purposes of licensure.
- Requires the CSLB no later than January 1, 2027, to establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers’ compensation insurance requirement, as specified.
- Delays, until January 1, 2028, the requirement that a licensee without any employees be required to comply with the workers’ compensation insurance coverage requirements, as specified.
Background
In early 2024, the Senate Business, Professions and Economic Development Committee and the Assembly Committee on Business and Professions (Committees) began their comprehensive sunset review oversight of 10 regulatory entities including the CSLB. The Committees conducted two oversight hearings in March of this year. This bill and the accompanying sunset bills aim to implement legislative changes as recommended by staff of the Committees, which are reflected in the Background Papers prepared by Committee staff for each agency and program reviewed this year.
The CSLB is responsible for the implementation and enforcement of the laws and regulations related to the licensure, practice and discipline of the construction industry in California. As currently drafted, this bill proposes changes to the operations of the CSLB as identified in those issues raised in the background paper and raised during the CSLB’s joint sunset review hearing on March 11, 2024.
Industry Experts. For consumer complaints that cannot be resolved through the mediation process, the CSLB may refer the case for a field investigation. These field investigations increase costs for the CSLB, as additional resources are utilized to conduct investigations. In order to make the proper assessment of workmanship and costs of a construction-related project, the CSLB must rely on the expertise of industry experts (IEs) and contracts with IEs as part of the investigation and enforcement process. Per BPC § 7019, if funding is made available, the CSLB may contract with other licensed professionals including architects, engineers and geologists as appropriate, for the site investigation of the consumer complaint; however, the CSLB does not have the authority to obtain reimbursement from the contractor whose work is subject to the need of an IE. The registrar is responsible for determining the rate of reimbursement for the IE. This bill authorizes the CSLB to establish a fee for the cost of an IE inspection or investigation and report, and sets the floor at $100, and a maximum at no more than $1,000.
Implementation of SB 216 (Dodd, Chapter 978, Statutes of 2022). To address concerns that some applicants or licensees were providing a certification of exemption to avoid obtaining workers’ compensation insurance, SB 216 (Dodd, Chapter 978, Statues of 2022) expanded the license classifications required to have a Certificate of Workers’ Compensation Insurance on file with the CSLB regardless of whether the contractor has employees to include C-8 (Concrete), C-20 (HVAC,) C-22 (Asbestos Abatement), and D-49 (Tree Service). However, as noted in the CSLB’s 2023 Sunset Review Report, there are concerns that the implementation of SB 216 will have a greater impact on CSLB’s workload than anticipated and could potentially increase license-processing times. The CSLB is currently researching additional mechanisms to address the potential licensing challenges, including requesting new staff through the budget change proposal process. This bill delays the implementation of the requirement that all licensees obtain workers compensation coverage until January 1, 2028 and requires the CSLB to conduct a procedure or process to verify if an applicant or licensee is eligible for exemption from workers’ compensation insurance requirement by January 1, 2027.
Examination Fee Restructure. In July 2022, the CSLB entered into a master contract held by the DCA, joining several boards and bureaus who contract to administer licensing examinations through a third-party vendor. Prior to CSLB joining that contract, it was responsible for scheduling, creating, developing and administering its own examinations. Because the CSLB was involved in all aspects of the examination process, any fees associated with examinations were set in statute and paid directly to the CSLB by the applicant. However, since the transition to PSI Exams, the existing fee structure for applicant examinations are outdated. Current law (BPC § 7137) specifies the fees applicants are required to pay the CSLB directly for examinations instead of the examination vendor, PSI Exams. CSLB then pays the vendor to administer the examination. The vendor in turn charges CSLB for each examination administered. This is a costly duplication of effort and paperwork for all parties involved. This bill revises how the examination fee is collected and requires the applicant pay the examination provider directly.
Issuing Licenses to Tribes and Tribally Owned Businesses. According to information in the CSLB’s 2023 Sunset Review Report, the CSLB has found that current law does not provide a pathway for a federally recognized tribe, seeking to operate as a licensed contractor outside of its tribal boundaries, to obtain a contractor license. Unlike many other license types in California, which are issued to the individual, (i.e., a nurse, a veterinarian, a physician and surgeon, a funeral director, or a cosmetologist), a contractor license is issued to the “business.” A CSLB license may be issued to a variety of business types, including individual owners, partnerships, corporations, and limited liability companies. As noted in the CSLB’s 2023 Sunset Review Report, several tribes have attempted to apply for a contractor license, but were denied, as there is no authority in current law to issue a license to a tribe. The License Law authorizes licenses to be issued to individual sole proprietorships or entities that are registered with the Secretary of State. BPC § 7026, defines a contractor as, “…a person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, …” The term “person” in the definition of a contractor is defined in BPC § 7025(b), as “an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof.” BPC § 7065(b) specifies that contractor licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies. This creates a barrier for tribes, which are distinctly not any of the above entities. Further, BPC § 7076.2 requires licensed contractors that do business as a corporation or limited liability company to register with the Secretary of State, and maintain good standing; failure to do so results in suspension. However, federally recognized tribes may form their corporations under tribal law, state law, or federal law (Section 17 of the Indian Reorganization Act). This bill creates a pathway for California’s federally recognized tribes to obtain a contractor’s license.
Contractor Classifications and Public Works Projects. Regardless of the scope or size of a project, or who hires the licensed contractor (a private or public entity), a contractor must abide by all parameters of the License Law, including contracting for work within the licensee’s classification. With respect to larger public works projects, BPC § 7059 requires for public works contracts that the awarding authority determine the classification necessary to bid and perform the project, and prohibits the awarding authority from issuing a contract to a specialty contractor whose classification constitutes less than a majority of the project. Stakeholders have noted that current law may lead to confusion for awarding agencies when determining the appropriate classification as BPC § 7059 specifies the awarding authority determines the classification necessary without specifying that those classifications should be consistent with the classifications specified in the License Law. This bill clarifies that the awarding authority for a public works contract is to award contracts in accordance with the licensing classifications specified in the License Law.
Technical Changes. Due to numerous statutory changes and implementation delays, code sections can become confusing, contain provisions that are no longer applicable, make references to outdated report requirements, and cross-reference code sections that are no longer relevant. The CSLB’s sunset review is an appropriate time to review, recommend, and make necessary statutory changes.
Prior to the change in AB 830 (Flora, Chapter 376, Statutes of 2021), the CSLB had existing authority to collect detailed information on the qualifying individual’s duties and responsibilities, including a duty statement when warranted. Unfortunately, the implementation of AB 830, by requiring a duty statement in all cases to establish a qualifier’s responsibility to exercise supervision and control over the applicant’s projects, has inadvertently led to industry confusion. To address the potential confusion with how the duty statement may be utilized as part of the application process, this bill will delete the requirement that an applicant provide an employment duty statement in applicant information submitted to the CSLB. The CSLB’s requested change aims to be technical and clarifying.
Extension of the CSLB. Although, there are places where the CSLB can improve, including fiscal prudence, strengthening its licensing and enforcement objectives and those respective programmatic units, and identifying legislative priorities sooner, the CSLB should continue with a four-year extension so that the Legislature may once again review whether the issues and recommendations in this Background Paper have been addressed. This bill extends the sunset date of the CSLB by four years to January 1, 2029.
FISCAL EFFECT: Appropriation: Yes Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
The bill will result in unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers’ compensation insurance. The bill will also result in unknown workload impact to CSLB to establish the exemption verification process and procedure. Costs may include staff resources to promulgate regulations and conduct stakeholder outreach. CSLB anticipates an annual revenue increase of approximately $250,000 in industry professional or expert investigation or inspection and report recovery fees.
SUPPORT: (Verified 5/16/24)
None received
OPPOSITION: (Verified 5/16/24)
Prepared by: Elissa Silva / B., P. & E.D. / 916-651-4104
5/17/24 10:18:35
**** END ****
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
SB 1455 (Ashby) - Contractors: licensing
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
SB 1455 is the sunset bill for the Contractors State License Board (CSLB) and makes changes recommended during the joint sunset review of the CSLB.
*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on May 16, 2024
Fiscal Impact:
- Unknown, likely significant revenue loss ranging into the millions of dollars annually beginning in 2028 as a result of contractors who may choose to not renew their license rather than obtain workers’ compensation insurance (Contractors License Fund). This revenue loss may be lower to the extent that providing an exemption for workers’ compensation insurance requirements facilitates more contractors to continue to remain licensed.
The CSLB notes providing a delayed implementation date would help to address the immediate additional decline in the board’s licensee population and corresponding renewal revenue loss. The CSLB does not anticipate additional licensing or enforcement workload by extending the delayed implementation date.
- Unknown workload impact to CSLB to establish the exemption verification process and procedure. Costs may include staff resources to promulgate regulations and conduct stakeholder outreach.
- The CSLB anticipates an annual revenue increase of approximately $250,000 in industry professional or expert investigation or inspection and report recovery fees.
Author Amendments:
By January 1, 2027, require CSLB to establish a process and procedure to verify that an applicant or licensee without an employee or employees is eligible for exemption from workers’ compensation insurance requirements.
-- END --
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
SB 1455 (Ashby) - Contractors: licensing
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
SB 1455 is the sunset bill for the Contractors State License Board (CSLB) and makes changes recommended during the joint sunset review of the CSLB.
Fiscal Impact:
The 2024-25 Governor’s Budget provides approximately $82.87 million (Contractors License Fund) and 427.6 positions to support the continued operation of the CSLB’s licensing and enforcement activities.
The CSLB anticipates an annual revenue increase of approximately $250,000 in industry professional or expert investigation or inspection and report recovery fees.
Background:
The CSLB is responsible for the implementation and enforcement of the laws and regulations related to the licensure, practice and discipline of the construction industry in California. All businesses and individuals who by themselves or through others construct, alter, or repair, or offer to construct, alter, or repair, any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the CSLB if the total cost, including both labor and materials of one or more contracts on the project is $500 or more. The CSLB oversees approximately 285,000 licensed contractors and over 25,000 home improvement salespersons.
Proposed Law:
- Extends the sunset of the CSLB, and its authority to appoint a registrar until January 1, 2029.
- Deletes the current fee for scheduling an examination and instead requires the fee to be no greater than the actual cost of the administration of the examination and requires the fee to be paid to the examination administrator by the applicant, as specified.
- Requires the CSLB to require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report, as specified, to pay those reasonable fees that are necessary to cover the costs of that investigation in accordance with the following:
- Fees must be fixed in an amount not to exceed the CSLB’s cost of contracting for the investigation or inspection and report, except that the minimum fee is to be $100 for each investigation and may not be increased to more than $1,000, as specified.
- The fee is only to be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation, as specified.
- The full amount of the fee shall be added to the fee for the active or inactive renewal, as specified.
- Clarifies that in public works contracts, the awarding authority shall determine the license classifications necessary to bid the projects in accordance with the classifications specified in the contractor license law.
- States that nothing in the above authorizes an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting; and, nothing deprives the registrar of the authority to investigate complaints.
- Authorizes the CSLB to issue a license to a federally recognized tribe, as specified, and exempts the requirement that a federally recognized tribe or business that is chartered under tribal or federal law from the requirement to be registered in good standing with the secretary of state for purposes of licensure.
- Delays, until January 1, 2028, the requirement that a licensee without any employees be required to comply with the workers’ compensation licensure coverage requirements, as specified.
Related Legislation:
SB 1452 (Ashby, 2024) is the California Architects Board and Landscape Architects Technical Committee sunset bill. SB 1452 is pending in this committee.
SB 1453 (Ashby, 2024) is the Dental Board of California sunset bill. SB 1453 is pending in this committee.
SB 1454 (Ashby, 2024) is the Bureau of Security and Investigative Services sunset bill. SB 1454 is pending in this committee.
SB 1456 (Ashby, 2024) is the California State Athletic Commission sunset bill. SB 1456 is pending in this committee.
AB 3251 (Assembly Business and Professions Committee, 2024) is the Board of Accountancy sunset bill. AB 3251 is pending in the Assembly Appropriations Committee.
AB 3252 (Assembly Business and Professions Committee, 2024) is the Court Reporters Board sunset bill. AB 3252 is pending in the Assembly Appropriations Committee.
AB 3253 (Assembly Business and Professions Committee, 2024) is the Board for Professional Engineers, Land Surveyors and Geologists sunset bill. AB 3253 is pending in the Assembly Appropriations Committee.
AB 3254 (Assembly Business and Professions Committee, 2024) is the Cemetery and Funeral Bureau sunset bill. AB 3254 is pending in the Assembly Appropriations Committee.
AB 3255 (Assembly Business and Professions Committee, 2024) is the Board of Vocational Nursing and Psychiatric Technicians sunset bill. AB 3255 is pending in the Assembly Appropriations Committee.
-- END --
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Angelique Ashby, Chair
2023 - 2024 Regular
Bill No: Hearing Date: April 22, 2024
Author: | |||
Version: | April 18, 2024 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Elissa Silva | ||
Subject:
SUMMARY:
Extends the sunset date of the contractors state license board (CSLB) by four years, until January 1, 2029, ensures federally recognized tribes are able to obtain a contractors license, as specified; extends the implementation of the workers compensation coverage requirements for licensure, for all contractors until January 1, 2028; and, makes other technical, clarifying and conforming changes stemming from the CSLB’s joint sunset review hearing.
Existing law:
- Establishes the Contractors State License Board (CSLB) under the jurisdiction of the Department of Consumer Affairs (DCA) to license and regulate contractors and home improvement salespersons (HIS), and sunsets the CSLB on January 1, 2025, and its authority to appoint a registrar. Business and Professions Code (BPC) § 7000 et seq.)
- Establishes an enforcement division within the CSLB to rigorously enforce the Contractors License Law (license law), prohibiting all forms of unlicensed activity and enforce the obligation to secure the payment of valid and current workers’ compensation insurance, as specified. (BPC § 7011.4(a))
- Defines a “contractor” as any person who undertakes to or offers to undertake, or purports to have the capacity to undertake, or submits a bid or does himself or herself or by or through others, constructs, alters, repairs, adds to, subtracts from, improves, moves, wrecks or demolishes any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, or the cleaning of grounds or structures in connection therewith, or the preparation and removal of roadway construction zones, lane closures, flagging, or traffic diversions, or the installation, repair, maintenance, or calibration of monitoring equipment for underground storage tanks, and whether or not the performance of work herein described involves the addition to, or fabrication into, any structure, project, development or improvement herein described of any material or article of merchandise. “Contractor” includes subcontractor and specialty contractor. “Roadway” includes, but is not limited to, public or city streets, highways, or any public conveyance. (BPC § 7026)
- States that it is a misdemeanor for any contractor, whether licensed or unlicensed, to perform or engage in asbestos-related work without certification, as specified. (BPC § 7028.1)
- States that no person engaged in the business or acting in the capacity of a contractor may bring or maintain any action, or recover in law or equity in any action, in any court in California, for the collection of compensation for the performance of any act or contract where a license is required without alleging that they were a duly licensed contractor at all times during the performance of that act or contract regardless of the merits of the cause of action brought by the person, unless specifically exempted. (BPC §7031(a))
- States that the CSLB may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which the they are classified, as defined in the license law. (BPC § 7059(a))
- Requires for the purpose of public works contracts, the awarding authority to determine the license classification necessary to bid and perform the project; and, prohibits the awarding authority from awarding a prime contract to a specialty contractor whose classification constitutes less than a majority of the project, as specified. (BPC § 7059(b))
- States that contractor’s licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies (LLCs). (BPC § 7065(b))
- Requires an applicant for a contractor’s license to show the degree of knowledge and expertise in the classification applied for, and the general knowledge of the building, safety, health, and lien laws of the state and of the administrative principles of the contracting business that the CSLB deems necessary for the safety and protection of the public; and an applicant can qualify in regard to their experience and knowledge in, in one of the following ways:
- If an individual, that individual or a responsible managing employee (RME) shall meet the qualifications for the license classification.
- If a partnership, a general partner or RME shall meet the qualifications for the license classification.
- If a corporation, or any other combination or organization, a responsible managing officer or RME shall meet the qualifications for the license classification. (BPC 7068)
- Requires the individual who meets the qualification for licensure to be held responsible for exercising direct supervision and control over the operation of the contractor business in order to ensure full compliance with the license law, as specified. (BPC § 7068.1(a))
- Requires every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations, including, but not limited to, an employment duty statement prepared by the qualifier’s employer or principal, and the failure of an applicant or licensee to provide the required information constitutes a violation. (BPC § 7068.1(d))
- Requires a contractor licensee to maintain the requisite bond, as executed by an admitted surety insurer, or cash or a cashier’s check deposited with the registrar, authorized pursuant to the Code of Civil Procedure (CCP) § 995.710(a). (BPC § 7071.4)
- Requires the CSLB to promulgate regulations covering the assessment of civil penalties that give consideration to the appropriateness of the penalty with respect to the following factors:
- The gravity of the violation;
- The good faith of the licensee or the applicant for licensure being charged; and,
- The history of previous violations. (BPC § 7099.2(a))
- Prohibits a civil penalty from being assessed in an amount greater than $8,000, and further prohibits a civil penalty from being assessed in amount greater than $30,000 for a violation of specified building laws of the state, aiding and abetting an unlicensed person, entering into a contract with an unlicensed person, and filing a false workers’ compensation exemption. (BPC § 7099.2(b))
This bill:
- Extends the sunset of the CSLB, and its authority to appoint a registrar until January 1, 2029.
- Deletes the current fee for scheduling an examination and instead requires the fee to be no greater than the actual cost of the of the administration of the examination and requires the fee to be paid to the examination administrator by the applicant, as specified.
- Requires the CSLB to require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report, as specified, to pay those reasonable fees that are necessary to cover the costs of that investigation in accordance with the following:
- Fees must be fixed in an amount not to exceed the CSLB’s cost of contracting for the investigation or inspection and report, except that the minimum fee is to be $100 for each investigation and may not be increased to more than $1,000, as specified;
- The fee is only to be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation, as specified;
- The full amount of the fee shall be added to the fee for the active or inactive renewal, as specified.
- Clarifies that in public works contracts, the awarding authority shall determine the license classifications necessary to bid the projects in accordance with the classifications specified in the contractor license law.
- States that nothing in 4) above authorizes an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting; and, nothing deprives the registrar of the authority to investigate complaints.
- Authorizes the CSLB to issue a license to a federally recognized tribe, as specified, and exempts the requirement that a federally recognized tribe or business that is chartered under tribal or federal law from the requirement to be registered in good standing with the secretary of state for purposes of licensure.
- Delays, until January 1, 2028, the requirement that a licensee without any employees be required to comply with the workers’ compensation licensure coverage requirements, as specified.
FISCAL EFFECT:
Unknown. This bill is keyed fiscal by the Legislative Counsel.
COMMENTS:
- Purpose. This bill is one of five sunset bills sponsored by the Author. According to the Author, “this bill is necessary to make changes to the CSLB in order to improve oversight of oversight of the regulated professions under the jurisdiction of the CSLB.”
- Oversight Hearings and Sunset Review of Licensing Boards and Programs. In early 2024, the Senate Business, Professions and Economic Development Committee and the Assembly Committee on Business and Professions (Committees) began their comprehensive sunset review oversight of 10 regulatory entities including the CSLB. The Committees conducted three oversight hearings in March of this year. This bill and the accompanying sunset bills aim to implement legislative changes as recommended by staff of the Committees, which are reflected in the Background Papers prepared by Committee staff for each agency and program reviewed this year.
- Background on Contractors State License Board. The CSLB is responsible for the implementation and enforcement of the laws and regulations related to the licensure, practice and discipline of the construction industry in California. All businesses and individuals who by themselves or through others construct, alter, or repair, or offer to construct, alter, or repair, any building, highway, road, parking facility, railroad, excavation, or other structure in California must be licensed by the CSLB if the total cost, including both labor and materials of one or more contracts on the project is $500 or more. The CSLB oversees approximately 285,000 licensed contractors and over 25,000 home improvement salespersons. The CSLB was last reviewed by the Legislature as part of the Committee’s joint sunset review process in 2019, and at that, time received a four-year extension. Do to the circumstances of the COVID-19 pandemic, the CSLB was granted an additional one-year extension without legislative review. Since 2012, this is the CSLB’s third joint sunset review. As currently drafted, this bill proposes statutory changes to the operations of the CSLB as identified in those issues raised in the background paper and raised during the CSLB’s joint sunset review hearing on March 11, 2024.
a) Issue #1. Industry Experts.
Background. For those complaints that cannot be resolved through the mediation process, the CSLB may refer the case for a field investigation. These field investigations can increase costs for the CSLB, as greater resources are utilized to conduct investigations. As noted by the CSLB, when a complaint is referred for a field investigation, the investigation is likely to result in a settlement, citation, letter of admonishment, or arbitration none of which provide a mechanism for cost recovery of the CSLB’s work including staff-time or other resources necessary to investigate and resolve these complaints. According to the CSLB, to resolve a workmanship dispute, CSLB must evaluate the work that needs to be completed for a project to meet industry standards and any associated costs to complete that work. In order to make the proper assessment of workmanship and costs of a construction-related project, the CSLB must rely on the expertise of industry experts (IEs) and contracts with IEs as part of the investigation and enforcement process. Per BPC § 7019, if funding is made available, the CSLB may contract with other licensed professionals including architects, engineers and geologists as appropriate, for the site investigation of the consumer complaint; however, the CSLB does not have the authority to obtain reimbursement from the contractor whose work is subject to the need for an IE. The registrar is responsible for determining the rate of reimbursement for the IE. This bill authorizes the CSLB to establish a fee for the cost of an IE inspection or investigation and report, and sets the floor at $100, and a maximum at no more than $1,000.
b) Issue #3. Implementation of SB 216 (Dodd, Chapter 978, Statutes of 2022)
Background. To address concerns that some applicants or licensees were providing a certification of exemption of employees in order to avoid obtaining the required workers’ compensation insurance, SB 216 (Dodd, Chapter 978, Statues of 2022) expanded the license classifications required to have a Certificate of Workers’ Compensation Insurance on file with the CSLB to include the (C-8 Concrete), (C-20 HVAC,) (C-22 Asbestos Abatement), (D-49 Tree Service) regardless if the contractor has employees. Prior to the passage of SB 216, only a C-39 Roofing contractor was required to have workers’ compensation insurance regardless of whether or not they had any employees. Beginning January 1, 2026, all licensure classifications under the jurisdiction of the CSLB, regardless of whether or not they have employees, must obtain workers’ compensation insurance. The requirements in SB 216 stemmed from work conducted by the CSLB in 2017, as it reviewed strategies to combat workers’ compensation insurance avoidance. The CSLB reported that between January 2018 and March 2020, CSLB issued 500 stop work orders to licensed contractors on job sites for failure to secure workers’ compensation and further made 342 legal actions against licensed contractors for workers’ compensation insurance violations. SB 216 provided a delayed implementation for all licensure classifications to meet the workers’ compensation mandate. However, as noted in the CSLB’s 2023 Sunset Review Report, there are concerns that the implementation of SB 216 will have a greater impact on CSLB’s workload than anticipated and could potentially increase license-processing times. The CSLB is currently researching additional mechanisms to address the potential licensing challenges, including requesting new staff through the budget change proposal process. This bill delays the implementation of the requirement that all licensees obtain workers compensation coverage until January 1, 2028.
c) Issue #7. Examination Fee Restructure.
Background. In July of 2022, the CSLB entered into a master contract held by the DCA, joining several boards and bureaus who contract to administer licensing examinations through a third-party vendor. Prior to CSLB joining that contract, it was responsible for scheduling, creating, developing and administering its own examinations. Because the CSLB was involved in all aspects of the examination process, any fees associated with examinations were set in statute and paid directly to the CSLB by the applicant. However, since the transition to PSI Exams, the existing fee structure for applicant examinations are be outdated. Because of current statute, applicants are paying examination fees directly to the CSLB instead of the examination vendor, PSI Exams. Current law (BPC § 7137) specifies the fees applicants are required to pay the CSLB directly for examinations. CSLB then pays the vendor to administer the examination. The vendor in turn charges CSLB for each examination administered. This is a costly duplication of effort and paperwork for all parties involved. This bill revises how the examination fee is collected and requires the applicant pay the examination provider directly.
d) Issue #8. Issuing Licenses to Tribes and tribally owned Businesses.
Background. According to information in the CSLB’s 2023 Sunset Review Report, the CSLB has found that current law does not provide a pathway for a federally recognized tribe, seeking to operate as a licensed contractor outside of its tribal boundaries, to obtain a contractor license. Unlike many other license types in California, which are issued to the individual, (i.e., a nurse, a veterinarian, a physician and surgeon, a funeral director, or a cosmetologist), a contractor license is issued to the “business.” A CSLB license may be issued to a variety of business types including individual owners, partnerships, corporations, and limited liability companies. As noted in the CSLB’s 2023 Sunset Review Report, several tribes have attempted to apply for a contractor license, but denied, as there is no authority in current law to issue a license to a tribe. The License Law authorizes licenses to be issued to individual sole proprietorships or entities that are registered with the Secretary of State. BPC § 7026, defines a contractor as, “…a person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, …” The term “person” in the definition of a contractor is defined in BPC § 7025(b), as “an individual, a firm, partnership, corporation, limited liability company, association or other organization, or any combination thereof,” BPC § 7065(b) specifies that contractor licenses are to be issued to individual owners, partnerships, corporations, and limited liability companies. This creates a barrier for tribes, which are distinctly not any of the above entities. Further, BPC 7076.2 requires licensed contractors that do business as a 30 corporation or limited liability company to register with the Secretary of State, and maintain good standing, failure to do so results in suspension. This bill creates a pathway for federally recognizes tribes to obtain a contractors license.
e) Issue #12. Contractor Classifications and Public Works Projects.
Background. The various classifications of contractor work in which licensees operate are consistent amongst all types of projects on which a contractor may engage. Regardless of the scope or size of a project, or who hires the licensed contractor (a private or public entity), a contractor must abide by all parameters of the License Law, including contracting for work within the licensee’s classification. With respect to larger public works projects, BPC § 7059 requires in public works contracts that the awarding authority determines the classification necessary to bid and perform the project, and prohibits the awarding authority from issuing a contract to a specialty contractor whose classification constitutes less than a majority of the project. Stakeholders have noted that current law may lead to confusion for awarding agencies when determining the appropriate classification as BPC § 7059 specifies the awarding authority determines the classification necessary without specifying that those classifications should be consistent with the classifications specified in the License Law. This bill clarifies that the awarding authority for a public works contract is to award contracts in accordance with the licensing classifications specified in the License Law.
f) Issue #17. Technical Changes.
Background. Since the CSLB’s last sunset review in 2019, the CSLB has sponsored or been impacted by numerous pieces of legislation which address all or parts of the CSLB’s duties, oversight authority, licensing requirements, examination standards, among others. As a result, there may be a number of non-substantive and technical changes to the License Law to correct deficiencies or other inconsistencies in law. Because of numerous statutory changes and implementation delays, code sections can become confusing, contain provisions that are no longer applicable, make references to outdated report requirements, and cross-reference code sections that are no longer relevant. The Board’s sunset review is an appropriate time to review, recommend, and make necessary statutory changes.
Prior to the change in AB 830 (Flora, Chapter 376, Statutes of 2021), the CSLB had existing authority to collect detailed information on the qualifying individual’s duties and responsibilities, including a duty statement when warranted. Unfortunately, the implementation of AB 830, by requiring a duty statement in all cases to establish a qualifier’s responsibility to exercise supervision and control over the applicant’s projects, has inadvertently led to industry confusion. AB 830 created an additional, unnecessary workload and added a burden to employers who believe they must create a separate duty statement document to satisfy this requirement. To address the potential confusion with how the duty statement may be utilized as part of the application process, this bill will delete the requirement that an applicant provide an employment duty statement in applicant information submitted to the CSLB. The CSLB’s requested change aims to be technical and clarifying.
g) Issue #18. Extension of the CSLB.
Background. The safety and welfare of consumers persists under the presence of a strong licensing and regulatory structure to oversee the contractor profession. The CSLB’s focus is consumer protection, to that end, has demonstrated its commitment to ensuring a robust contractor marketplace. Although, there are places where the CSLB can improve, including fiscal prudence, strengthening its licensing and enforcement objectives and those respective programmatic units, and identifying legislative priorities sooner, the CSLB should continue with a four-year extension so that the Legislature may once again review whether the issues and recommendations in this Background Paper have been addressed. This bill extends the sunset date of the CSLB, by four years until January 1, 2029,
- Related Legislation. SB 1071 (Dodd of 2024) adds an additional exception to the requirement to obtain workers compensation insurance for applicants and licensees that have no employees, if the applicant or licensee provides both an affidavit to the CSLB affirming they have no employees and adequate proof, as provided for by the board, demonstrating they are operating without employees beginning, January 1, 2026. (Status: This bill is also pending in the Senate Committee on Business, Professions and Economic Development)
AB 2622 (Juan Carillo of 2024) would increase the current $500 licensing exemption and advertisement authorization to $ 5,000. (Status: this bill is pending in the Assembly Committee on Business and Professions)
SB 216 (Dodd, Chapter 978, Statues of 2022) expands the license classifications required to have a Certificate of Workers’ Compensation Insurance on file with the CSLB to include a Concrete contractor (C-8), a Warm-Air Heating, Ventilating and Air-Conditioning contractor (C-20,) an Asbestos Abatement contractor (C-22), and a Tree Service contractor (D-49) until January 1, 2026. Beginning January 1, 2026, extends that requirement to include all licensing classifications under the jurisdiction of the CSLB, regardless of whether or not they have employees.
AB 830 (Flora, Chapter 376, Statutes of 2021) makes various technical changes and noncontroversial reforms to laws governing professions regulated by boards and bureaus within the DCA.
AB 569 (Grayson, Chapter 94, Statutes of 2021) increases the maximum civil penalty CSLB can assess against a licensed contractor from $5,000 to $8,000 for most violations and from $15,000 to $30,000 for the most serious violations. This bill also authorizes CSLB to issue a Letter of Admonishment for more than one violation at a time.
AB 3087 (Brough, Chapter 295, Statutes of 2020) authorizes the CSLB registrar to contract with a public or private organization to administer, and provide services and materials for, CSLB’s contractor license exams.
SB 1189 (McGuire, Chapter 364, Statutes of 2020) creates a new “B-2 Residential Remodeling Contractor” license classification who may make improvements to, on, or in an existing residential wood frame structure that requires at least three unrelated building trades or crafts for a single contract (aside from framing). The bill also updates the definition of “home improvement” to add reconstruction, restoration, or rebuilding of residential property damaged or destroyed by a disaster for which either the governor or president has declared a state of emergency expands the type of construction activities in a declared disaster zone for which a person without a contractor license can be prosecuted.
SB 610 (Glazer, Chapter 378, Statutes of 2019) extends the CSLB sunset date from January 1, 2020, to January 1, 2024; required CSLB to study the efficacy of the $15,000 contractor license bond and report its findings to the legislature by January 2021; authorized CSLB to automatically suspend the license of a contractor who is subject to an unsatisfied construction-related civil judgment if that licensee is named in the civil action as either an individual or entity; and required collection of the C-10 electrical contractor renewal fee, at $20.
AB 3126 (Brough, Chapter 925, Statutes of 2018) Repeals the authority for the CSLB to accept a deposit in lieu of a bond, beginning January 1, 2019, unless the deposit is cash or a cashier's check, as specified, and requires all other existing alternatives for a deposit in a lieu of a bond to be replaced with a surety bond, cash or a cashier's check deposit by January 1, 2020.
- Suggested Author Amendment. To ensure that workers compensation requirements for all contractors, a condition of licensure under current law, will be successfully implemented, and in order to address any potential unintended consequences, the Author should amend the bill to establish a process and procedure, which may include an audit, proof, or other means to verify an applicant or licensee without an employee or employees is eligible for exemption from the workers compensation mandate pursuant to BPC 7125 no later than January 1, 2027.
SUPPORT AND OPPOSITION:
Support:
None received
Opposition:
None received
-- END --
Discussed in Hearing
1MIN
Assembly Floor
6MIN
Assembly Standing Committee on Business and Professions
4MIN
Senate Standing Committee on Business, Professions and Economic Development
22SEC
Senate Standing Committee on Business, Professions and Economic Development
20SEC
Senate Standing Committee on Business, Professions and Economic Development
Bill Author
Bill Co-Author(s):