BILL ANALYSIS �
SB 261
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Date of Hearing: June 11, 2013
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Richard S. Gordon, Chair
SB 261 (Monning) - As Introduced: February 13, 2013
SENATE VOTE : 37-0
SUBJECT : Contractors: fraudulent use of license.
SUMMARY : Authorizes the Contractors' State License Board
(CSLB) to take administrative action against any licensed or
unlicensed person for the improper use of a contractor's
license, as specified. Specifically, this bill :
1)Authorizes the CSLB to take administrative action against any
licensed or unlicensed person for the improper use of a
contractor's license, as specified.
2)Specifies that any authorized administrative actions shall be
separate from, and in addition to, other civil or criminal
remedies, unless otherwise expressly provided.
EXISTING LAW :
1)Provides for the licensing and regulation of contractors by
the CSLB under the Department of Consumer Affairs (DCA)
pursuant to the Contractors' State License Law (Contractors'
Law). (Business and Professions Code (BPC) 7000 et seq.)
2)Specifies that improper use of a DCA-issued license is a
misdemeanor when an individual:
a) Displays, permits to be displayed or has in his or her
possession, a cancelled, revoked, suspended or fraudulently
altered license, or a fictitious license or document
simulating a license;
b) Lends or knowingly permits his or her license to be used
by another;
c) Displays or represents any license not issued to him or
her as being his or her license;
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d) Fails or refuses to surrender to the issuing board or
bureau upon a lawful written demand any license,
registration, permit, or certificate which has been
suspended, revoked, or canceled;
e) Knowingly permits any unlawful use of a license issued
to him or her;
f) Photographs, copies, duplicates, manufactures, or in any
way reproduces a license in a manner that it could be
mistaken for a valid license, or displays or has in their
possession a photograph, copy, duplicate, reproduction, or
facsimile unless authorized by the BPC; and,
g) Knowingly buys or receives a fraudulent, forged, or
counterfeit license. (BPC 119)
3)Makes it a misdemeanor for any person to advertise for
construction or work of improvement covered by the
Contractors' Law unless that person holds a valid contractor's
license in the classification advertised, except that a
licensed building or engineering contractor may advertise as a
general contractor. (BPC 7027.1)
4)Provides that the willful and intentional fraudulent use of a
contractor's license number is punishable by a fine up to
$10,000 or imprisonment in a county jail up to one year, or
both. (BPC 7027.3)
5)Provides that it is a misdemeanor for an individual to engage
in the business of a contractor without licensure, and
establishes a fine and imprisonment schedule based on
individual's record of previous violations. (BPC 7028)
6)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)
7)Authorizes the CSLB 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. Provides that the
citation may include an order for payment by a licensee of a
specified sum to an injured party. (BPC 7099)
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8)Authorizes CSLB to promulgate regulations covering the
assessment of civil penalties and prohibits a citation greater
than $5,000, unless otherwise provided for under the
Contractors' Law. (BPC 7099.2)
9)States that the following are grounds for disciplinary action
against a licensed contractor:
a) Aiding or abetting an unlicensed person to evade the
Contractors' Law;
b) Allowing an unlicensed person to use his or her license;
c) Acting in the capacity of a contractor under an inactive
or suspended license; or,
d) Conviction of a crime substantially related to the
qualifications, functions, and duties of a contractor. (BPC
7114, 7117.5, 7123)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . Currently, CSLB only has administrative
authority to enforce the Contractors' Law (commencing with BPC
7000). This bill expands CSLB's administrative authority to
include additional instances when a licensed or unlicensed
contractor has improperly or fraudulently used a contractor's
license, as specified in BPC 119. This bill is sponsored by
CSLB.
2)Author's statement . According to the author, "SB 261 would
add a new section to the Contractors' Law that would authorize
CSLB to take administrative action [against individuals] who
violate BPC 119. Individuals who commit BPC 119 violations
represent a risk to the public and legitimate licensees.
Under existing law, the CSLB does not have administrative
authority to impose discipline upon licensed or unlicensed
persons [for BPC 119] violations.
"Furthermore, prosecutors routinely refuse to charge licensees
who violate BPC 119 unless it is included with additional
criminal charges, i.e., elder abuse, grand theft, etc.
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Workload considerations and budgetary constraints preclude
some district attorneys (DAs) from pursuing criminal charges
against unlicensed individuals.
"This bill would allow CSLB to issue administrative citations
whether or not these violations are pursued by a DA, thereby
enabling the CSLB to establish a relevant record of [BPC 119
violations] for licensees and unlicensed individuals."
3)CSLB enforcement authority . CSLB licenses and regulates over
300,000 contractors in this state, and reviews and
investigates complaints made against contractors. Under
current law, CSLB can take action against a licensee who
violates the Contractors' Law, and against licensed and
unlicensed persons for unlicensed contracting activity and the
fraudulent use of a contractor's license. Depending on the
severity of the violation, CSLB may issue a warning letter, a
citation or fine, or it might even suspend or revoke a
contractor's license. This bill is intended to permit the
imposition of such sanctions for violation of the general
restrictions on license usage contained in BPC 119.
4)Additional authority under BPC 119 . According to CSLB, there
are instances in which an unscrupulous contractor whose
license has been suspended for failing to pay taxes fabricates
an active contractor's license and advertises and performs
construction work under that counterfeit license. While CSLB
can take action against the suspended contractor for
unlicensed activity, CSLB cannot take action against the
contractor for creating a counterfeit license. Under current
law, CSLB must refer all counterfeit license cases to the DA
to prosecute as a misdemeanor under BPC 119. CSLB contends
that the DA generally does not prosecute licensed or
unlicensed contractors under BPC 119 unless there are
additional charges and depending on workload and budget
considerations. This bill allows CSLB to take administrative
action by issuing a citation up to $5,000, or denying,
suspending or revoking a licensee against any person who
violates BPC 119 as it relates to contracting activity.
5)Arguments in support . According to the sponsor, CSLB,
"Existing law provides authority for only criminal misdemeanor
prosecution to discipline licensed and unlicensed individuals
for specified violations, such as misusing or misrepresenting
license information and aiding an unlicensed individual in
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evading the licensing requirements? SB 261 would allow CSLB
to take administrative action for these types of violations.
This change will enable the CSLB to establish a relevant
record against licensed and unlicensed individuals who commit
these egregious violations."
According to the California Spa & Pool Industry Education
Council, "One of the biggest challenges we face every day as
an industry is the underground economy and the lack of
enforcement against bad actors. Contractors who are not
licensed routinely go underground to work on a cash basis and
break laws. Without enforcement, law-abiding licensed
contractors are put at a serious competitive disadvantage and
put at risk of going out of business."
REGISTERED SUPPORT / OPPOSITION :
Support
Contractors' State License Board (sponsor)
Air Conditioning Trade Association
American Subcontractors Association California, Inc.
California Landscape Contractors Association
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Professional Association of Specialty Contractors
California Spa & Pool Industry Education Council
California State Association of Electrical Workers
California State Council of Laborers
California State Pipe Trades Council
Construction Employers' Association
Golden State Builders Exchange
National Electrical Contractors Association, California Chapters
Northern California Masonry Industry Joint Labor-Management
Cooperation Trust
Northern California Tile Industry Joint Labor-Management
Cooperation Trust
Plumbing-Heating-Cooling Contractors Association of California
United Contractors
Western Electrical Contractors Association
Western States Council of Sheet Metal Workers
Opposition
None on file.
SB 261
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Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301