BILL ANALYSIS Ó
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|Hearing Date:January 13, 2014 |Bill No:AB |
| |759 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Ted W. Lieu, Chair
Bill No: AB 759Author:Daly
As Amended:January 6, 2014 Fiscal: Yes
SUBJECT: Alarm companies.
SUMMARY: An urgency measure expanding the locksmith license exemption
to include a person registered with the Bureau of Security and
Investigative Services (BSIS) as an employee of an alarm company, if
the duties of the person that constitute locksmithing are ancillary to
the primary duties of installing, maintaining or monitoring the alarm
system.
Existing law:
1)Licenses and regulates alarm companies and employees, locksmith
companies and locksmiths, security guards, proprietary private
security employers and officers, private investigators, private
patrol operators, and repossession agencies and their employees by
the BSIS within the Department of Consumer Affairs (DCA).
2)Licenses and regulates locksmiths and registers employees of
locksmiths by the BSIS. (Business and Professions Code (BPC),
Division 3, Chapter 8.5, commencing with § 6980)
a) Defines "locksmith" to mean any person who, for any
consideration or compensation, engages in the business of
rekeying, installing, repairing, opening or modifying locks, or
who originates keys for locks, including electronic cloning of
transponder keys and any other electronic programming of
automotive keys and electronic operating devices, such as key
fobs, door and ignition key devices, and successive electronic
and other high-security key technology. A "locksmith" does not
mean a person whose activities are limited to making a duplicate
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key from an existing key. (BPC § 6980 (j))
b) Prohibits a person from engaging in the activities of a
locksmith unless he or she holds a valid locksmith license, is
registered under the locksmith law, or is exempt from the
provisions of the locksmith law. (BPC § 6980.10)
c) Exempts from locksmith licensing and regulation certain
individuals and practices, including, as specified: tow truck
operators, retail services limited to rekeying and recombination
of locks, law enforcement officers, firefighters, emergency
medical personnel, and new motor vehicle dealers. (BPC 6980.12)
d) Further exempts from locksmith licensing a person registered
with the BSIS as an employee of a repossessor, if the duties
constituting locksmithing are ancilliary to the primary duties
and functions of the person's position. (BPC § 6980.12 (e))
3)Licenses and regulates repossession agencies, repossessors, and
repossessor qualified managers by BSIS under the Collateral Recovery
Act. (BPC § 7500 et seq.)
a) Defines "repossession agency" to mean any person who, for any
consideration, engages in business or accepts employment to
locate or recover collateral, whether voluntarily or
involuntarily, including vehicles. (BPC § 7500.2)
4)Licenses and regulates alarm companies and alarm company managers and
employees under the Alarm Company Act (BPC, Division 3, Chapter
11.6, commencing with § 7590).
a) Defines "alarm company operator" to mean any person who, for
any consideration, engages in business or accepts employment to
install, maintain, alter, sell, monitor, or service alarm
systems, or who responds to alarm systems, except for any alarm
agent, as specified. (BPC § 7590.2)
b) Provides that a "person" under this Act means any individual,
firm, company, association, organization, partnership, limited
liability company, or corporation. (BPC § 7590.1)
This bill:
1)Expands the locksmith license or registration exemption to include a
person registered with the BSIS as an employee of an alarm company
if the duties of the person that constitute locksmithing are
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ancillary to the primary duties and functions of installing,
maintaining or monitoring the alarm system.
2)Declares that the bill is to take effect immediately as an urgency
statute.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by ADT Security Services (Sponsor)
in order to reflect new technologies in the field of home security
systems, and to modernize the day to day operations of an alarm
company by exempting alarm operators from having to become licensed
as a locksmith through the state.
According to the Author, alarm company operators and locksmiths are
licensed and regulated by the Bureau of Security and Investigative
Services. Current statue relating to alarm companies does not
reflect the emerging home automation security market. Home
automation security systems include the ability to control locks,
turn off lights remotely, open and close window blinds, and adjust
room temperature. Installation and altering of locking mechanisms
is a major service component of these security systems.
The Author states, that whereas locksmiths must be licensed by the
state, certain professions such as tow truck operators and
repossessors are not required to do so. This bill will exempt alarm
companies from being required to obtain a locksmith license if
locksmithing is part of its service model.
2.Background. The current issue in this bill relating to alarm
companies carrying out certain locksmithing functions was raised
late in the first year of this Session by the Sponsor of this bill.
In 2012, SB 1077 (Price, Chapter 291, Statutes of 2012) was carried
by the then Chair of this Committee to authorize an alarm company to
be organized and licensed by BSIS as a limited liability company
(LLC).
In applying this new business structure, licensed alarm companies have
ran into difficulty because of the crossover between the practice of
locksmithing and alarm companies in installing and monitoring
electronic surveillance systems that monitor door locks and allow
the alarm company and/or the owner to remotely lock and unlock the
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doors of a building. Under the provisions of the Locksmith Act,
only a licensed locksmith can install and maintain such a system.
Therefore, in order for a licensed alarm company to install door
locking devices in an alarm system, the alarm company must either
obtain a locksmith license or employ or hire a licensed locksmith to
carry out those activities. Initially, alarm companies licensed as
LLCs, sought to become licensed as locksmiths; however, it was found
that licensed locksmiths are not allowed to be organized as LLCs
under the law. In addition, since the practice of locksmithing and
alarm companies are both licensed and regulated by BSIS, both types
of licensees must undergo criminal background checks by the BSIS.
The proponents of this bill contend that requiring an alarm company to
also be licensed as a locksmith, or to use a licensed locksmith is
unnecessary and duplicative, since both are under the jurisdiction
of the BSIS. In addition, proponents would suggest this bill
narrowly addresses the issue by authorizing only those locksmithing
functions that are ancillary to the primary duties and functions of
the alarm company practice.
3.Prior Versions of This Bill. Prior versions of this bill related to
private patrol operators and changed the terminology from "private
patrol operators" to instead refer to "private security
contractors," specify what a security guard's distinctive uniform
may include, and revise the requirements for a qualifying manager to
a private security contractor. The January 6, 2014 amendments
remove the prior contents of the bill and insert the current
language relating to alarm companies.
4.Prior Legislation. SB 1077 (Price, Chapter 291, Statutes of 2012)
authorized a licensed alarm company to be organized as a limited
liability company (LLC) until January 1, 2016, and authorized the
Bureau of Security and Investigate Services (BSIS) to cite
unlicensed alarm company operators.
SB 791 (Hagman, Chapter 340, Statutes of 2013) prohibited a repossessor
from selling repossessed collateral or accepting payment from a
debtor in lieu of repossession, forbid a repossession agency from
disclosing personal employee information, and authorized a
repossessor to wear certain identification.
5.Arguments in Support. In sponsoring this bill, ADT Security Services
argues: "Licensing requirements and other regulations should be
commensurate with the responsibilities performed. In this case, we
believe requiring alarm companies to also hold locksmith licenses is
duplicative and unnecessary. AB 759 builds on an existing exemption
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within the Locksmith Law that was provided to the repossesser
industry, because their work with locks is ancillary to their
primary duties, just as they are for alarm companies. Alarm
companies should continue to be fully licensed as alarm companies,
but we do not believe that they should need a second, duplicative
license from the BSIS to offer their products within the State of
California."
The California Alarm Association states: "The security industry is
advancing in leaps and bounds. Many new security systems allow
homeowners and businesses to control their security systems from
their phones or other remote devices. Alarms systems, lights,
climate controls, and door locks can now all be controlled remotely.
Installing these new technologically advanced systems requires
alarm companies to install new door locks. Technically this work
could be construed to be locksmithing, which would require the alarm
company to get a locksmithing license. However, securing a second
license is redundant because both locksmiths and alarm companies are
licensed by the BSIS and undergo the same background checks and
other similar application processes. AB 759 would remove a costly
and burdensome redundancy in the licensing process by allowing alarm
companies to install new door locks as long as they are part of a
new security system."
6.Policy Issue : Will BSIS Have Sufficient Authority Over Locksmithing
Activities?
This bill would establish an exemption to the locksmith Licensing Act.
Over the years, the Legislature has been cautious about enacting
exceptions to licensing acts. The concern is with the unintended
consequences of such exemptions. Are those being granted the
exemption able to safely practice in the authorized area? Are there
unanticipated activities or areas of practice that would be granted
by the exemption? Are consumers adequately protected by the
exemption? Does the regulatory agency have adequate authority to
address issues that may be presented under the exemption? What is
the impact of the exemption on the regulatory agency, including the
operational and fiscal impact?
By narrowly crafting the exemption to only apply to alarm companies
already licensed by the BSIS, the bill keeps the exempt activities
within the regulatory authority of the BSIS. By only authorizing
those locksmithing activities that are ancillary to the primary
duties and functions of the alarm company, the exemption does not
authorize general locksmithing practices. Both of these issues are
important to addressing any concern with regard to adequate
protection of the consumer. Simply put, the BSIS maintains
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regulatory jurisdiction over the exempt activities.
While it is not the focus of this Committee, there will no doubt be
some fiscal impact upon the BSIS due to the loss of some locksmith
licensing revenue under the exemption. Fiscal issues will be dealt
with by the Appropriations Committee where the bill will be next
referred.
The remaining issue appears to be whether the BISIS has the adequate
regulatory authority to address issues which may occur under the
exemption. By only granting an exemption under the Locksmith Act
for alarm companies licensed under the Alarm Company Act, it appears
that if a problem were to occur with a licensed alarm company acting
under the exemption, the BISIS may be limited to taking action
against an alarm company for unlicensed locksmithing activity. This
issue may be addressed by reflecting the locksmithing exemption in
the Alarm Company Act (see suggested technical amendment below). In
this way, if there are violations by an alarm company relating to
the locksmithing provisions, the BISIS could either take action
under the Alarm Company Act or as unlicensed activity under the
Locksmith Act.
7.Suggested Technical Author's Amendment. In discussing this bill with
the Sponsor and interested parties, it has been pointed out that
although the bill addresses issues related to alarm companies, the
current bill only makes changes in the Locksmith Act. It would be
appropriate to make a corresponding change in the Alarm Company Act
to reflect the exemption which is being proposed to the Locksmith
Act. This would also allow the BSIS to take disciplinary action
against an alarm company for violations of this provision.
Therefore, the following technical amendment will be offered as an
Author's amendment in Committee.
Amend BPC § 7590.2 to add:
(c) Pursuant to paragraph (e) of section 6980.12, any person
licensed, certified, or registered under the Alarm Company Act is
exempt from locksmith licensing requirements if the duties
performed that constitute locksmithing are ancillary to the
primary duties and functions of an alarm agent.
SUPPORT AND OPPOSITION:
Support:
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ADT Security Services (Sponsor)
California Alarm Association
Opposition:
None received as of January 7, 2014
Consultant:G. V. Ayers