BILL ANALYSIS �
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|Hearing Date: April 8, 2013 |Bill No:SB |
| |262 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: SB 262Author:Monning
As Amended:April 1, 2013 Fiscal:Yes
SUBJECT: Contractors.
SUMMARY: 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 both a fine and
imprisonment.
Existing law:
1)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 Department of Consumer Affairs
(DCA). The CSLB is under the direction of the registrar of
contractors (Registrar).
2)Provides that a person may qualify on behalf of an individual or firm
as a partner, responsible managing officer or responsible managing
employee (qualifier). A qualifier is a person who meets the
experience requirement and the requirement of passing the licensing
examination, thereby meeting the "qualification" for a license to be
issued. (Business and Professions Code (BPC) � 7068)
3)A qualifier is responsible for exercising direct supervision and
control of the licensee's construction operation to secure full
compliance with the Contractors Law and the CSLB regulations. (BPC
� 7068.1)
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4)Defines certain terms for purposes of these provisions.
a) "Firm" to mean a partnership, a limited partnership, a
corporation, a limited liability company, or any other
combination or organization described in the Contractors Law, as
specified.
b) "Person" to mean a natural person. (BPC � 7068.1)
1)Defines "direct supervision and control" to include any one or any
combination of the following activities: supervising construction,
managing construction activities by making technical and
administrative decisions, checking jobs for proper workmanship, or
direct supervision on construction job sites. (Title 16, California
Code of Regulations (CCR) � 823)
This bill:
1)Requires the person qualifying on behalf of a firm to be responsible
for meeting the requirements of exercising "direct supervision and
control" as defined in CSLB regulations to secure full compliance
with the Contractors Law.
2)Provides that a qualifiers failure to exercise direct supervision and
control shall constitute a cause for disciplinary action and shall
be punishable as a misdemeanor by imprisonment in the county jail,
by a fine of not less than $3,000, but not to more than $5,000, or
by both a fine and imprisonment.
3)Makes technical and conforming changes.
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 provide that failure of the qualifying individual
to exercise direct supervision and control of a construction
project, in accordance with Contractors Law and regulations adopted
by the CSLB, will constitute grounds for disciplinary action.
Additionally, the violations will be punishable as a misdemeanor.
2.Background. Under the laws and regulations administered by CSLB, all
contractors must have a person who acts as the qualifier for
licensure. The qualifier is the person who furnishes the knowledge
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and experience that is required for licensure and is responsible for
assuring that construction work performed by the licensee complies
with all relevant laws and building codes.
CSLB has determined that a number of qualifiers do not perform the
direct supervision and control duties as required under the law.
Some of them are, in fact, retired licensees who have "rented" their
qualifications for licensure. This has resulted in a number of
cases where construction work has not been properly completed,
causing considerable harm to the consumer.
Under existing law, the qualifier for a license can be one of the
following:
A sole owner.
An officer named on a corporate license (responsible
managing officer).
A responsible managing employee.
A partner on a partnership license (Qualifying Partner or
QP).
A responsible managing manager, or a responsible managing
member.
In order to take action when a qualifier is not fulfilling his or
her duties, the CSLB must prove that the qualifier did not provide
sufficient supervision and control and, in addition, that a
violation of Contractors Law occurred. If successful in proving the
qualifier's failure to comply with his or her statutory duty, CSLB
states that it can take disciplinary action against the license, but
does not have the authority to take any action directly against the
qualifier who has failed to exercise his/her duties, regardless of
the harm to consumers.
1.Related Legislation. SB 261 (Monning) ,which will also be heard in
this Committee on
April 8, 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.
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
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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.
2.Arguments in Support. In sponsoring the bill the Contractors State
License Board (CSLB) states that the authority provided by this bill
will enhance consumer protection and ensure that licensees are
fulfilling their supervision requirements.
Spa & Pool Industry Education Council (SPEC) recognizes that consumers
need to be able to trust the contractor they hire to do the job
properly. SB 262 will make changes to ensure consumer confidence,
according to SPEC, and the consumer will be sure that a qualifier is
ultimately responsible for job supervision, managing construction
activities, making technical and administrative decisions, checking
jobs for proper workmanship, and are directly supervising the work
site.
California Professional Association of Specialty Contractors (CALPASC)
states that it opposes those who would abuse the rules regarding
absentee qualifiers of a license. The CSLB has investigated
contractors where the absentee qualifier had no contact or
interaction with the contracting entity. This practice should be
stopped, and SB 262 takes a strong step forward to curbing these
practices, according to CALPASC.
3.Correcting Amendment. The CSLB has pointed out that the latest
amendments to the bill mistakenly deleted a sentence from BPC �
7068.1. The flowing amendment is recommended to correct this
drafting error:
On Page 2, at the end of line 19 insert: "This person shall not
act in the capacity of the qualifying person for an additional
individual or firm unless one of the following conditions
exists:"
SUPPORT AND OPPOSITION:
Support:
Contractors State License Board (Sponsor)
California Chapter of the National Electrical Contractors Association
California Legislative Conference of the Plumbing Heating and Piping
Industry
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California Professional Association of Specialty Contractors
Golden State Builders Exchanges
Northern California Tile Industry Joint Labor-Management Cooperation
Trust
Spa & Pool Industry Education Council
United Contractors
Opposition: None received as of April 2, 2013
Consultant:G. V. Ayers