BILL ANALYSIS Ó
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|Hearing Date:April 8, 2013 |Bill No:SB |
| |261 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 261Author:Monning
As Introduced: February 13, 2013 Fiscal:Yes
SUBJECT: Contractors: fraudulent use of license.
SUMMARY: Authorizes the Contractors State License Board to take
administrative action against a licensed or unlicensed person who
misuses or misrepresents a contractor license or aids and abets
another person to do so.
Existing law:
1)Provides for the licensing and regulation of more than 100 business
and 200 professional categories and various professions by some 23
boards, six bureaus, four committees, two programs and one
commission in the Department of Consumer Affairs (DCA) under various
licensing acts within the Business and Professions Code (BPC).
2)General provisions of the BPC makes it misdemeanor (crime) for any
person to: (BPC § 119)
a) Display, permit to be displayed or have in his or her
possession, a cancelled, revoked, suspended or altered license or
a fictitious license or document simulating a license.
b) Lend or knowingly permit his or her license to be used by
another.
c) Display or represent any license not issued to him or her as
being his or her license.
d) Fail or refuse to surrender to the issuing board or bureau,
upon a lawful written demand, any license, registration, permit,
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or certificate which has been suspended, revoked, or canceled.
e) Knowingly permit an unlawful use of a license issued to him or
her.
f) Photograph, duplicate, manufacture, or in any way reproduce a
license in a manner that it could be mistaken for a valid
license, or display or have in their possession a photograph
duplicate, reproduction, or copy unless authorized by the BPC.
g) Buy or receives a knowingly fraudulent, forged, or counterfeit
license.
3)Licenses and regulates more than 300,000 contractors under the
Contractors State License Law (Contractors Law) by the Contractors
State License Board (CSLB) within the DCA.
The CSLB is under the direction of the registrar of contractors
(Registrar)
4)Authorizes the Registrar to issue a citation, instead of initiating
disciplinary proceedings, to a licensee when there is probable cause
to believe that the licensee has committed acts in violation of the
Contractors Law. The citation may include an order for payment by a
licensee of a specified sum to an injured party. (BPC § 7099)
5)Establishes grounds for disciplinary action for a licensed contractor
to aid or abet an unlicensed person to evade the Contractors Law, or
to allow an unlicensed person to use his or her license, or to act
in the capacity of a contractor under an inactive or suspended
license. (BPC § 7114)
6)Establishes grounds for disciplinary action for a person to act in
the capacity of a contractor under an inactive or suspended license.
(BPC § 7117.5)
7)Provides that any person who willfully and intentionally uses, with
intent to defraud, a contractor license number that does not
correspond to the number on a currently valid contractor's license
held by that person, is punishable by a fine of up to $10,000 or by
imprisonment of up to 1 year, or by both fine and imprisonment.
(BPC § 7027.3)
8)Authorizes the Registrar to issue a citation which may include an
order of abatement and a civil penalty to an unlicensed individual
acting as a licensed contractor. (BPC § 7028.7)
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This bill:
1)Provides under the Contractor Law that any licensed or unlicensed
person who commits any violation of BPC § 119 with respect to a
contractor license is subject to the administrative remedies
authorized by the Contractors Law.
2)Provides that, unless otherwise expressly provided, the
administrative remedies shall be separate from, and in addition to,
all other available civil or criminal remedies.
FISCAL EFFECT: Unknown. This bill has been keyed "fiscal" by
Legislative Counsel.
COMMENTS:
1.Purpose. This bill is sponsored by the Contractors State License
Board (Sponsor) to authorize CSLB to take administrative action for
violations of BPC §119. According to the Author, this would allow
CSLB to issue administrative citations whether or not these
violations are pursued by a district attorney, thereby enabling the
CSLB to establish a relevant record against licensees and
non-licensees.
2.Background. General provisions of the Business and Professions Code
make it a misdemeanor (crime) for the misuse of a license issued by
any of the regulatory boards or bureaus in the Department of
Consumer Affairs. BPC § 119, makes it a crime to display or possess
a cancelled, revoked, suspended, altered or fictitious license or a
license not issued to that individual. The law additionally
prohibits a licensee from lending or permitting another person to
use his or her license. The law further prohibits copying or
photographing a license
to represent it as an actual license or to buy or receive a fraudulent
or forged license from another person.
With regard to contractors, the Author states that individuals who
commit violations listed in BPC §119 represent a risk to the public
and to legitimate licensed contractors. Under existing law, CSLB
does not have administrative authority to impose discipline upon
licensed or unlicensed persons for violations of BPC § 119.
Furthermore, prosecutors routinely refuse to charge licensees who
violate these provisions unless they are included with other
criminal charges, i.e. elder abuse, grand theft, etc.
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The Author indicates that workload considerations and budgetary
constraints often preclude DAs from pursuing criminal charges
against unlicensed individuals for such violations. For those cases
accepted by a DA for filing, the BPC §119 violation is not a
stand-alone charge, and always accompanies other violations of the
law, including violations such as: contracting without a license
(BPC §7028), grand theft (Penal Code (PC) §487); construction theft
(PC § 484b) or elder abuse (PC § 368).
In 2012, CSLB referred 1,099 unlicensed practice cases to local
prosecutors, according to the Author, and 50 of those cases included
a violation of B&P §119.
3.Administrative Citations Issued to Unlicensed Persons. The CSLB has
had the authority to issue administrative citations to unlicensed
persons who act as a contractor or engage in the business of a
contractor for a number of years. In 2012, CSLB issued 803
administrative citations to unlicensed persons in lieu of criminal
referrals.
Since many jurisdictions lack the resources to criminally prosecute
unlicensed practice cases, the Author indicates that CSLB must rely
upon administrative action to take discipline. Many of the
unlicensed persons cited committed violations listed in B&P §119;
however, because current law does not provide CSLB the authority to
impose administrative discipline for this type of violation,
individuals who have, in fact, violated the law avoid any discipline
and thus avoid making any history of the violations.
4.Violations by Licensed Contractors. In 2012, CSLB suspended 877
licenses for more than $25 million in outstanding tax liability. In
addition, CSLB suspended 1,843 licenses for outstanding civil
judgments with a combined total, exceeding 11 million dollars.
According to the Author, many of these licensees continue to
contract under a suspended license and violate BPC § 119 by
misleading their customers regarding the status of their license.
5. Related Legislation. SB 262 (Monning), which will also be heard in
this Committee on
April 8, requires the person qualifying on behalf of a contracting
firm to be responsible for exercising direct supervision and
control in order to secure full compliance with the Contractors
Law. Provides that failure to exercise direct supervision and
control shall constitute a cause for disciplinary action and shall
be punishable as a misdemeanor by imprisonment in county jail, by a
fine of not less than $3,000, but not to more than $5,000, or by
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both a fine and imprisonment.
SB 263 (Monning) which will also be heard in this Committee on April
8, clarifies the misdemeanor penalty for a person engaging in the
business or acting in the capacity of a contractor to also include
a person who has never been a licensed contractor, or a person who
was licensed but who acts under a license that is inactive,
expired, revoked, or under suspension for any reason. Provides
that a contractor may pursue payment for any work on the contract
while duly licensed, but precludes payment for work performed in a
classification in which the contractor was not licensed, or was
under license suspension, or under an expired or inactive license
when the work was performed.
6.Arguments in Support. California State Council of Laborers states
that the bill adds to the enforcement tool box a mechanism to ensure
fair and safe working conditions are in place in all California
workplaces and levels the playing field for employers through the
enforcement of state laws.
Construction Employers' Association supports the bill's additional
penalties for unlicensed activity in the construction industry.
Spa & Pool Industry Education Council (SPEC) states that contractors
who are not licensed routinely go under-ground to work on a cash
basis, and thus break laws. SPEC believes that individuals who
commit violations listed in BPC § 119 are a risk to the public and
legitimate licensees and states that the bill will ensure that the
CSLB has the authority to issue citations to these individuals.
Western Electrical Contractors Association (WECA), Air Conditioning
Trade Association (ACTA) and Plumbing-Heating-Cooling Contractors
Association of California (CA PHCC) supports the bill writing that
making licensed or unlicensed persons subject to administrative
remedies for the improper use of a license would allow the CSLB to
take administrative action for these types of violations and thus
establish a relevant record against such violators.
California Professional Association of Specialty Contractors states
that its contractor members and the public have been victimized by
persons who fraudulently use license numbers and other contractor
information and that SB 261 would strengthen the ability of
California to penalize these fraudulent parties.
American Subcontractors Association California supports the bill
arguing that aside from criminal prosecution, some administrative
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action is needed in order to establish a record against licensed and
unlicensed individuals who misuse or misrepresent license
information and aid unlicensed individuals to evade the licensing
requirements.
California Landscape Contractors Association states that some
violations of the law such as aiding and abetting an unlicensed
person to engage in contracting work or misrepresenting license
information can only be punished as misdemeanors, and because of the
time it takes for prosecutors to build a case, a person can continue
to engage in unlawful conduct for some time, and harm consumers and
compete unfairly with licensed contractors. SB 261 would address
this problem by allowing CSLB to pursue more timely administrative
remedies for such violations and more quickly stop illegal conduct.
SUPPORT AND OPPOSITION:
Support:
Contractors State License Board (Sponsor)
Air Conditioning Trade Association
American Subcontractors Association California
California Chapter of the National Electrical Contractors Association
California Landscape Contractors Association
California Legislative Conference of the Plumbing Heating and Piping
Industry
California Professional Association of Specialty Contractors
California State Council of Laborers
Construction Employers Association
Northern California Tile Industry Joint Labor-Management Cooperation
Trust
Plumbing-Heating-Cooling Contractors Association of California
Spa & Pool Industry Education Council
United Contractors
Western Electrical Contractors Association
Opposition:
None received as of April 2, 2013
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Consultant:G. V. Ayers