BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair AB 2237 (Monning) - Contractors: definition. Amended: April 9, 2012 Policy Vote: B,P&ED 8-0 Urgency: No Mandate: No Hearing Date: July 2, 2012 Consultant: Bob Franzoia This bill does not meet the criteria for referral to the Suspense File. Bill Summary: AB 2237 would define the term consultant for purposes of the definition of a contractor to include a person who provides a bid, or who arranges for and sets up work schedules and maintains oversight of a construction project, with respect to a home improvement contract. Because consultants who provide the above described services would be required to pay license fees which are deposited into the Contractors' License Fund, a continuously appropriated fund, this bill would make an appropriation. Fiscal Impact: Unknown, likely minor annual increase in penalty revenue to the Contractors' License Fund. Unknown, likely minor increased workload associated with increased licensing and enforcement. Background: The Contractors' State License Board (board) protects consumers by licensing and regulating California's construction industry. There are about 300,000 licensed contractors in the state, in 43 different licensing classifications. In addition to educating consumers about contractors and construction law, board activities include administering examinations to test prospective licensees, issuing licenses, investigating complaints against licensed and unlicensed contractors, issuing citations, suspending or revoking licenses, and seeking administrative, criminal, and civil sanctions against violators. As noted in the policy committee analysis, in 2008, the board adopted Precedential Decision No. 1, establishing that someone acting in the capacity of a swimming pool consultant is a contractor. In 2009, the Appellate Court decision The Fifth Day v. Bolotin found that someone acting in the capacity of a AB 2237 (Monning) Page 1 construction manager is not required to be licensed as a contractor. The Fifth Day v. Bolotin decision undermined the board's Precedential Decision, and the board thinks the law should be amended to clarify that a person performing these services is required to be licensed as a contractor and comply with the law. The board further indicates that recently, an unlicensed contractor facing criminal prosecution for violating Business & Professions Code 7028 (engaging in business of a contractor without a license) claimed to have been a project coordinator and asserted exemption from licensure, citing The Fifth Day v. Bolotin decision. Although the unlicensed contractor was not overseeing a contract between the project owner and a general contractor as in the Fifth Day v. Bolotin case, the defense strategy was nonetheless of concern to the prosecutor and ultimately resulted in a plea bargain dismissing the charge, according to the board. Proposed Law: This bill would define consultant for the purposes of the definition of a contractor to include a person who meets either of the following criteria as it relates to work performed pursuant to a home improvement contract: (1) Provides or oversees a bid for a construction project. (2) Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project.