BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 263|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: SB 263
Author: Monning (D), et al.
Amended: 4/22/13
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 10-0, 4/8/13
AYES: Price, Emmerson, Block, Corbett, Galgiani, Hernandez,
Hill, Padilla, Wyland, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Contractors: unlicensed activity
SOURCE : Contractors State License Board
DIGEST : This bill 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 entering into a
contract with any person when that contract is performed during
a period in which that person's license was inactive, expired,
revoked, or under suspension is a cause for discipline if the
purpose of the contract is for that person to perform an act
subject to licensure under the law. Defines "duly licensed" and
unlicensed person."
ANALYSIS :
CONTINUED
SB 263
Page
2
Existing law:
1.Provides for contractor licensing under the classification of
general engineering contractor (Class A license), general
building contractor (Class B license), and specialty
contractor (Class C license). In addition, there are 41
separate Class C license classifications for specialty
contractors whose construction work requires special skill and
whose principal contracting business involves the use of
specialized building trades or crafts.
2.Makes it a misdemeanor for an unlicensed contractor to
advertise for construction or work of improvements or act in
the capacity of a contractor. Imposes specified civil
penalties, including fines and imprisonment against the
unlicensed contractor, and authorizes the Contractors State
License Board (CSLB) to cite the unlicensed contractor.
3.Defines "licensee" under the Contractors State License Law
(Contractors Law) to include an individual, partnership,
corporation, limited liability company, joint venture, or any
other authorized combination, and to also include any named
responsible managing officer, responsible managing manager,
responsible managing member, or personnel who is the qualifier
for purposes of issuing the contractor license.
4.Provides that aiding or abetting an unlicensed person to evade
the Contractors Law, or allowing one's license to be used by
an unlicensed person, or acting as a partner with an
unlicensed person with the intent to evade the law,
constitutes a cause for disciplinary action.
5.Provides that it is a cause for disciplinary action for a
person licensed pursuant to the Contractors Law to enter into
a contract with a contractor while the contractor is not
licensed.
This bill:
1.Revises and 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
CONTINUED
SB 263
Page
3
under suspension for any reason.
2.Provides that entering into a contract with any person when
that contract is performed during a period in which that
person's license was inactive, expired, revoked, or under
suspension is a cause for discipline if the purpose of the
contract is for that person to perform an act subject to
licensure under the law.
3.Revises and recasts the provisions which make it a cause for
disciplinary action to aid or abet an unlicensed person to
evade the Contractors Law, and defines "unlicensed person" for
these purposes as a person who has never been licensed under
the Contractors Law, or who has acted with an inactive,
expired, revoked license or a license suspended for any
reason.
4.Defines "duly licensed" or "duly licensed to act in the
capacity of a contractor" under the Contractors Law if (a) the
act was performed under a board-issued license during a period
in which the license was not inactive, expired, revoked, or
under suspension for any reason; and (b) the person was
authorized to engage in work in that license classification.
Comments
The author's office states that the CSLB and its industry
partners are aware that contractors with suspended licenses are
continuing to enter into contracts and creating a public safety
risk. Many of these licenses were suspended due to failure to
pay a civil judgment pursuant to BPC Section 7071.17, where such
judgments were usually for unsatisfactory workmanship or
unscrupulous business practices. During 2012 alone, CSLB
suspended 1,843 licenses for outstanding civil judgments, with a
combined total of $115,546,000 in judgments owed to consumers
and other contractors.
Additionally, the CSLB works with partnering agencies, including
the Franchise Tax Board and the Employment Development
Department, to identify contractors who have outstanding tax
liens against them, and to suspend their licenses pursuant to
BPC Section 7145.5. During calendar year 2012, CSLB suspended
877 licenses for outstanding tax liabilities for a combined
total of $25,832,000 owed to the state.
CONTINUED
SB 263
Page
4
According to the author's office, administrative sanctions are a
deterrent for most contracting violations, but it can take up to
two years to implement once an offense is identified. Stronger,
more clearly defined criminal sanctions would provide CSLB with
an additional and more immediate enforcement tool to use against
unscrupulous contractors.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/13/13)
Contractors State License Board (source)
California Association of Specialty Contractors
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Spa & Pool Industry Education Council
California State Association of Electrical Workers
California State Pipe Trades Council
Construction Employers' Association
National Electrical Contractors Association, California Chapter
Western States Council of Sheet Metal Workers
ARGUMENTS IN SUPPORT : The bill's sponsor, the CSLB, states
that this bill clarifies, for purposes of possible criminal
prosecution, the definition of "unlicensed" contractor. This
clarification is primarily intended to address contractors who
have had their licensed suspended either for failure to pay an
outstanding civil judgment or for an outstanding tax liability.
Making this change in the law will allow CSLB to pursue criminal
charges when appropriate against a contractor who continues to
contract for work while holding a license suspended for
outstanding civil judgments or tax liabilities.
The California Spa & Pool Industry Education Council states that
charging contractors who continue to do business with a
suspended license with a misdemeanor will help keep the
underground economy from growing.
MW:nld 5/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
CONTINUED
SB 263
Page
5
**** END ****
CONTINUED