BILL ANALYSIS Ó
SB 262
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Date of Hearing: June 11, 2013
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Richard S. Gordon, Chair
SB 262 (Monning) - As Amended: April 10, 2013
SENATE VOTE : 36-0
SUBJECT : Contractors.
SUMMARY : Deems a violation of provisions related to the
responsibilities of a qualifying person for construction
operations under the Contractors' State License Law
(Contractors' Law) to be punishable as a misdemeanor by
imprisonment, a fine in an amount between $3,000 and $5,000, or
both, and recasts existing provisions related to the qualifying
person's responsibility to provide direct supervision and
control of construction operations. Specifically, this bill :
1)Clarifies and recasts provisions requiring a qualifying person
for construction operations to exercise direct supervision and
control, as specified, of his or her employer's or principal's
construction operations.
2)Deems a violation of provisions related to the
responsibilities of a qualifying person, as specified, shall
be punishable as a misdemeanor by imprisonment in a county
jail, by a fine of not less than $3,000 but no more than
$5,000, or both.
3)Makes other technical and clarifying changes.
4)States that no reimbursement is required by this bill pursuant
to Section 6 of Article XIIIB of the California Constitution
because the only costs that may be incurred by a local agency
or a school district will be incurred because this bill
creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction
within the meaning of Section 17556 of the Government Code, or
changes the definition of a crime within the meaning of
Section 6 of Article XIIIB of the California Constitution.
EXISTING LAW :
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1)Provides for the licensure and regulation of contractors by
Contractors' State License Board (CSLB) within the Department
of Consumer Affairs pursuant to the Contractors' Law.
(Business and Professions Code (BPC) Section 7000 et seq.)
2)Provides that a person may qualify on behalf of an individual
or firm as a partner, responsible managing officer (RMO) or
responsible managing employee (RME). A "qualifier" is a
person who meets experience and examination requirements for
licensure, thereby meeting the "qualification" for a license
to be issued. (BPC 7068)
3)Requires a qualifier to be responsible for exercising direct
supervision and control of the licensee's construction
operation to secure full compliance with the Contractors' Law
and CSLB regulations. (BPC 7068.1)
4)Requires each individual applying as the qualifying individual
for a CSLB license to submit detailed information on his or
her duties and responsibilities for supervision and control of
a CSLB licensee's construction operations. (BPC 7068.1)
5)Deems that the performance by an individual, partnership,
corporation, limited liability company, firm, or association
of an act of omission constituting a cause for disciplinary
action, also constitutes a cause for disciplinary action
against a licensee who at the time that the act or omission
occurred was the qualifying individual of that individual,
partnership, corporation, limited liability company, firm, or
association, whether or not he or she had knowledge of or
participate in the prohibited act or omission. (BPC 7122.5)
6)Defines the following terms:
a) "Firm" means a partnership, a limited partnership, a
corporation, a limited liability company, or any other
combination or organization described in the Contractors'
Law, as specified; (BPC 7068.1)
b) "Person" means a natural person; (BPC 7068.1)
c) "Bona fide employee" of the applicant means an employee
who is permanently employed by the applicant and is
actively engaged in the operation of the applicant's
contracting business for at least 32 hours or 80% of the
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total hours per week, whichever is less; (16 California
Code of Regulations (CCR) 823) and,
d) "Direct supervision and control" means 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 providing direct supervision on
construction job sites. (16 CCR 823)
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . Every license issued by CSLB requires a
qualifying individual, or "qualifier," who is listed on CSLB
records as having demonstrated his or her knowledge and
experience in construction, possesses a contractor's license,
and is responsible for directing and supervising construction
operations. However, CSLB has found that many qualifiers do
not in fact exercise direct supervision and control of
construction operations as required. While the CSLB can take
disciplinary action against the qualifier for non-compliance
with the Contractors' Law and CSLB regulations, this bill
would make the failure of a qualifier to exercise direct
supervision and control of construction operations a
misdemeanor punishable by fine, imprisonment or both. This
bill is sponsored by CSLB.
2)Author's statement . According to the author, "SB 262 would
provide that the failure of the qualifying individual to
exercise direct supervision and control of a construction
project in accordance with statute and regulations adopted by
CSLB will constitute grounds for disciplinary action.
Additionally, the violations will be punishable as a
misdemeanor. CSLB has determined that a number of qualifiers
do not perform the direct supervision, control, and duties as
required under the law. Some of them are '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."
3)A qualifier's responsibilities . Under the laws and
regulations administered by CSLB, all contractors must have a
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person who acts as the qualifier for licensure. The qualifier
is responsible for the employer's or principal's construction
operations and for assuring that construction work performed
by the licensed contractor complies with all relevant laws and
building codes. A qualifier is required for every
classification on every license issued by CSLB. The qualifier
for a license can be one of the following:
a) The Sole Owner himself/herself;
b) An officer named on a corporate license (i.e., a RMO);
c) A RME;
d) One of the Partners on a Partnership license (aka
Qualifying Partner or QP); or,
e) A Responsible Managing Manager, or a Responsible
Managing Member.
4)Consumer issues related to qualifiers . CSLB has determined
that a number of qualifiers do not supervise and control
construction operations as required under the law. According
to CSLB, it has encountered several cases in which a "retired"
licensee acts as a qualifier by serving as a RMO on a
corporate license for a monthly fee, but has no direct
involvement in the construction and business activities.
CSLB investigations determined that the RMOs were unaware of
the projects as well as the illegal and fraudulent acts being
committed by the officers running the corporations. CSLB
points out that there have been several cases of consumer harm
and financial injury that far exceeded the $12,500
contractor's bond and for which CSLB has filed a formal
accusation against the contractor to revoke or suspend his or
her license. This bill makes a qualifier's violation of the
Contractors' Law a misdemeanor subject to a fine ranging from
$3,000 to $5,000, imprisonment of unspecified length, or both.
5)Suggested Committee Amendments . This bill deletes the
requirement that qualifiers exercise direct supervision and
control of construction operations and instead references a
regulation that defines the responsibilities of a qualifier.
However, the CSLB regulation referenced does not list what a
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qualifier shall be responsible for; the regulation only
defines what a "bona fide employee" and "direct supervision
and control" are. This is problematic and confusing because a
qualifier should be responsible for the action, not the
definition, of direct supervision and control of construction
operations. The following clarifying amendments address that
problem by returning that particular section to existing law.
On page 2, line 5 strike "be responsible for meeting the
requirements of" and strike all of line 6
On page 2, line 7 strike "respect to" and insert "exercise
that direct supervision and control of"
On page 2, line 8 after "operations" insert "as is
necessary" and after "chapter" insert "and the rules and
regulations of the board relating to the construction
operations"
This bill also does not specify the maximum amount of time a
qualifier may be imprisoned if he or she is convicted of
failing to exercise supervision and control of construction
operations. The following amendment would rectify that error
and specify that the misdemeanor is punishable by imprisonment
in a county jail for up to six months.
On page 3, line 13 after "jail" insert "for a term not to
exceed six months"
6)Arguments in support . According to the sponsor, "Under
existing law, if successful in proving the qualifier's failure
to comply with his/her statutory duty, CSLB can take
disciplinary action against the license but does not have
authority to take any action directly against the qualifier
who has failed to exercise his/her duties. The authority
provided by this bill will enhance consumer protection and
ensure that licensees are fulfilling their supervision
requirements."
According to the California Spa & Pool Industry Education
Council, "SB 262 would amend BPC 7068.1 to authorize the
misdemeanor prosecution and administrative discipline of a
qualifier who fails to comply with the specified supervision
and control requirements. This bill provides CSLB with the
needed authority to take action directly against a qualifier
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who has failed to exercise their duties. The law currently
only permits administrative action against the
licensee?Consumers need to know that they can trust the
contractor they hire to do the job properly. The consumer
will be confident if they know 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."
7)Related legislation . SB 261 (Monning) of 2013 would authorize
CSLB to take administrative action against an individual who
commits a misdemeanor for the improper use of a contractor's
license, as specified. This bill is pending in the Assembly
Business, Professions and Consumer Protection Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Contractors' State License Board (sponsor)
Associated General Contractors
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 Pipe Trades Council
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
United Contractors
Western States Council of Sheet Metal Workers
Opposition
None on file.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
SB 262
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