BILL ANALYSIS Ó
AB 759
Page 1
Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 759 (Daly) - As Amended: March 28, 2014
SUBJECT : Alarm companies.
SUMMARY : Exempts licensed alarm company operators and agents
from locksmith license and registration requirements under
limited conditions, as specified. Specifically, this bill :
1)Exempts any person licensed, certified, or registered with the
Bureau of Security and Investigative Services (BSIS) under the
Alarm Company Act from locksmithing requirements, as
specified, if the duties of that person's position are
performed in combination with the installation, maintenance,
moving, repairing, replacing, servicing, or reconfiguration of
an alarm system, and limited to work on electronic locks or
access control devices that are controlled by an alarm system
control device, including the removal of existing hardware.
2)Makes technical and conforming changes.
3)Declares that the bill is to take effect immediately as an
urgency statute.
EXISTING LAW :
1)Generally licenses and regulates locksmith companies and
locksmiths, repossession agencies and their employees, alarm
companies and employees, private investigators, proprietary
private security employers and officers, private patrol
operators and security guards, and alarm companies by the BSIS
within the Department of Consumer Affairs (DCA). (Business
and Professions Code (BPC) Section 6980 et seq., 7500 et seq.)
2)Licenses and regulates locksmiths and registers employees of
locksmiths under the locksmith law. (BPC6980 et seq.)
3)Defines "locksmith" to mean any person who, for any
consideration or compensation, engages in the business of
rekeying, installing, repairing, opening or modifying locks,
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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, and does not include a
person whose activities are limited to making a duplicate key
from an existing key. (BPC 6980 (j))
4)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)
5)Exempts from locksmith licensing requirements certain
individuals and practices, including 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)
6)Further exempts from locksmith licensing requirements a person
registered with BSIS as an employee of a repossessor, if the
duties constituting locksmithing are ancillary to the primary
duties and functions of the person's position. (BPC 6980.12
(e))
7)Licenses and regulates alarm company operators and certifies
and registers employees of alarm companies, including alarm
agents, under the Alarm Company Act. (BPC 7590 et seq.)
8)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)
9)Defines "alarm agent" to mean a person employed by an alarm
company operator whose duties include selling on premises,
altering, installing, maintaining, moving, repairing,
replacing, servicing, responding, or monitoring an alarm
system, or a person who manages or supervises a person
employed by an alarm company to perform any of those duties or
any person in training for any of those duties. (BPC
7590.1(o))
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FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of the bill . This bill exempts an alarm company
operator or employee from locksmith license requirements if
the locksmithing duties of that person are performed in
combination with the installation or maintenance of an alarm
system By authorizing alarm companies to install and maintain
locks that are part of an alarm system and for which they have
special expertise, the author aims to do away with the need
for dual licensure or the use of an outside professional to
install their own technology, which would in turn reduce the
cost of providing the service. The bill is sponsored by ADT
Security Services.
2)Author's statement . According to the author, "Currently,
[some] alarm companies are required by law to undergo two
background checks by the Bureau of Security and Investigative
Services (BSIS) as both alarm companies and as locksmiths.
Since some security systems allow the ability to remotely lock
and unlock doors, BSIS has determined that alarm companies
must obtain a secondary locksmith license to continue business
operations.
"Current [statutes] relating to alarm companies [do] 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. Whereas locksmiths must be licensed by the state,
certain professions such as tow truck operators and
re-possessors are not required to do so. [This bill]
streamlines state law on locksmith licensing requirements, as
well as reflects technological advances in home security
systems, by exempting alarm companies from locksmith licensing
requirements if the management of locks is part of their
service models. Recent Senate [amendments] further clarified
the conditions upon which an exemption would apply for alarm
companies."
3)Similar licensure requirements apply to locksmith and alarm
companies . A locksmith operates a business that installs,
repairs, opens or modifies locks, or that originates keys for
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locks. An alarm company is a business that sells (at the
consumer's home or business), installs, monitors, maintains,
services, or responds to alarm systems or supervises such
actions. Licensure requirements for both locksmiths and alarm
companies are nearly identical.
Applicants for both types of licensure must complete an
application that provides specified business information and
identifies who will manage the business on a day-to-day
business, and each individual applicant, partner, or corporate
officer must undergo a background check. Locksmith and alarm
company employees must also register with BSIS and obtain
criminal background checks.
There are no education or examination requirements to obtain a
license as a locksmith company or an alarm company, or to
register as a locksmith or alarm company employee. However,
alarm companies are required to have a qualified manager who
is in charge of the day-to-day business operations, and that
qualified manager is required to have at least two years of
alarm company experience and must pass an examination that
requires knowledge of alarm systems and alarm company laws.
4)Locks and alarm systems . Many alarm companies incorporate the
use of electronic surveillance systems that monitor door locks
and allow the alarm company or the owner to remotely lock and
unlock doors of a building. Under existing law, 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.
SB 1077 (Price) (Chapter 291, Statutes of 2012) authorized alarm
companies to be organized and licensed by BSIS as a limited
liability company (LLC). Initially, alarm companies licensed
as LLCs sought to become licensed as locksmiths. However,
alarm companies licensed as LLCs may not be licensed as
locksmiths because the licensed locksmiths are not authorized
to organize as LLCs. This bill seeks to address this issue by
exempting all alarm companies from locksmith license
requirements when they are installing and working on their own
locks.
In addition, since locksmith and alarm companies are both
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licensed and regulated by BSIS, the proponents of this bill
contend that requiring an alarm company to also be licensed as
a locksmith is unnecessary and duplicative, since both are
under the jurisdiction of BSIS and have similar licensure
requirements.
5)Similar business conduct requirements apply to locksmith and
alarm companies . Both locksmith and alarm companies are,
among other things, required to be responsible for their
employees, prohibited from aiding or abetting an unlicensed
person in any activity for which a license is required, and
prohibited from willfully or deliberating disregarding any
building or safety laws. In addition, both types of licensees
are prohibited from failing in any material respect to
complete an installation, whether of a lock or an alarm
system, and may be suspended for certain unlawful acts.
BSIS is authorized to take action against all licensees, and
required to gather evidence of all violations by unlicensed
persons and to furnish that evidence to prosecuting officers,
and to initiate and conduct investigations into business
operations if a licensee is not operating in accordance with
applicable laws or if there is a complaint. BSIS is also
authorized to investigate relevant records of a licensee to
determine compliance with applicable laws.
While the locksmith law requires some verification of client
identification, these requirements only apply when a person
makes keys, and as a result, would not apply to the exemption
this bill seeks to create. In addition, while locksmiths are
required to keep records when they knowingly and willfully
open a residence or commercial establishment by any method
involving an onsite inspection, this would also not apply to
the exemption this bill would create because doors with alarm
company locks would be opened remotely.
The most notable difference between locksmith law and the Alarm
Company Act is the difference in fines, which are up to
$10,000 under the locksmith law and up to $1,000, except as
specified, under the Alarm Company Act. The $10,000 maximum
fine for locksmith law violations, including for unlicensed
activity, was created by AB 2592 (Ma) (Chapter 679, Statutes
of 2008), which increased the fine so that there would be a
strong disincentive for unlicensed activity. Under this bill,
any person who engaged in any locksmithing activities beyond
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the limited exemption would be subject to those increased
fines.
6)Exempt activities under this bill . Some alarm companies like
ADT develop their own access control devices that are part of
an overall alarm system. These are proprietary devices that
are only provided and installed in conjunction with their
alarm system security services, and "speak back" to the alarm
system over Wi-Fi. These locks may be accessed remotely, but
also work with a key and can be manually overridden. They are
made for use on various doors that are commonly found in
residences and small businesses, and according to the
sponsors, installing or replacing these locks is similar to a
consumer who replaces the lock on his or her front door with
one from a local home improvement store.
This bill would only authorize alarm companies to engage in
locksmithing activities that are performed in combination with
the installation or maintenance of an alarm system, and
limited to work on electronic locks or access control devices
that are controlled by an alarm system control device. By
only authorizing those activities, the exemption does not
authorize general locksmithing practices. All other
locksmithing activities, such as originating keys or rekeying
locks for those locks, or working on any other locks, would
not be exempt.
In addition, under the Contractors' State License Law, anyone
who contracts to perform work, which may include constructing,
altering, or repairing any part of a building or other
structure that is valued at $500 or more for labor and
materials must be licensed as a contractor, or be an employee
of a licensed contractor. As a result, this exemption would
not authorize alarm companies to perform major modifications
to doors or locks which would require licensure as a
contractor.
7)BSIS would maintain regulatory authority over these exempted
locksmithing activities . This bill would establish an
exemption to the locksmith licensing and regulation
requirements that would apply only to alarm companies that are
already licensed under BSIS. As a result, exempt persons
would still be under the regulatory authority of BSIS. By
including the locksmithing exemption in the Alarm Company Act,
BSIS could either take action against an alarm company for
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unlicensed activity under the locksmith provisions or take
action under the Alarm Company Act if an alarm company
violated those locksmithing provisions.
8)Arguments in support . According to ADT, "Advances in
technology have allowed traditional alarm companies to expand
their system capabilities to include additional features.
Alarm companies can now offer customers the ability to receive
text and video alerts from their homes, view real time video,
remotely adjust and monitor the heating and air conditioning
systems for comfort or energy efficiency, and control lighting
and door locks as part of the overall alarm system.
"Recently, it has come to our attention, and that of BSIS, that
alarm companies be licensed and background checked as both
alarm companies and as locksmiths due to the fact that some
security systems include the ability to remotely lock and
unlock doors. This double-licensure is required despite the
fact that these locks are ancillary to the work alarm
companies perform. Licensing requirements and other
regulations should be commensurate with the responsibilities
performed. In this case, requiring alarm companies to also
hold locksmith licenses is duplicative and unnecessary.
"[This bill] builds on an existing exemption within the
Locksmith law that was provided to the repossessor industry.
The door locks that are included in this exemption are as much
a part of the alarm system as all the components that make up
that system, and [the] recent amendments make it clear that
the exemption is only for locks that are part of an overall
alarm system. Alarm companies will 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."
9)Arguments in opposition . According to the California
Locksmith's Association (CLA), "While the March 28 amendments
to AB 759 replace the 'ancillary exemption' provision, the new
paragraph would enable alarm companies to engage in
locksmithing that involves door hardware essential for the
protection of individuals, which CLA believes is best
preserved in the California Locksmith Act [Act]. There are
5,783 locksmiths registered under the Act.
"The AB 759 amendments include undefined terms that would enable
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alarm companies to provide locksmithing on residential and
commercial doors where the state codes mandate specific locks
on doors to preserve the ability to leave buildings without
delay or obstruction especially when there is a fire or
emergency. In these situations, a locksmithing license is
essential. The law must be specific to ensure public safety
and consumer protection.
"It is important to preserve the integrity of the Act in order
to protect consumers. Plans are being made to enhance the Act
to place our state at the forefront of consumer protection by
establishing proficiency requirements for all licensees. It is
critical that professional training requirements apply
across-the-board to those who are providing locksmith services
to consumers. AB 759 would accomplish the opposite by
providing an exemption for over 20,000 alarm technicians from
the Act."
10)Previous legislation . SB 1077 (Price), Chapter 291, Statutes
of 2012, authorized a licensed alarm company to be organized
as an LLC until January 1, 2016, and authorized BSIS to cite
unlicensed alarm company operators.
REGISTERED SUPPORT / OPPOSITION :
Support
ADT Security Services (sponsor)
California Alarm Association
California Cable and Telecommunications Association
Opposition
California Locksmiths Association
Analysis Prepared by : Eunie Linden / B.,P. & C.P. / (916)
319-3301