BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1874| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: AB 1874 Author: Wood (D) Amended: 6/14/16 in Senate Vote: 21 SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 9-0, 6/20/16 AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 ASSEMBLY FLOOR: 76-0, 4/28/16 (Consent) - See last page for vote SUBJECT: Structural pest control SOURCE: Author DIGEST: This bill requires a licensed "qualifying manager" to be physically present at the licensee's principal office or branch office location for a minimum of nine days every three consecutive calendar months, and requires that the days be documented and provided to the Structural Pest Control Board upon request. ANALYSIS: Existing law: 1)Establishes the Structural Pest Control Board (SPCB) under the Department of Consumer Affairs (DCA) to regulate the practice of structural pest control. AB 1874 Page 2 (Business and Professions Code (BPC) §§ 8500 - 8697.4) 2)Defines "structural pest control," with respect to household pests and wood destroying pests or organisms, as performing or offering to perform any of the following: (BPC § 8505) a) Identification of infestations or infections. b) The making of an inspection or inspections for the purpose of identifying or attempting to identify infestations or infections of household or other structures by those pests or organisms. c) The making of inspection reports, recommendations, estimates, and bids, whether oral or written, with respect to those infestations or infections. d) The making of contracts, or the submitting of bids for, or the performance of any work including the making of structural repairs or replacements, or the use of pesticides, or mechanical devices for the purpose of eliminating, exterminating, controlling or preventing infestations or infections of those pests, or organisms. 3)Defines "registered company" as a sole proprietorship, partnership, corporation, or other business organization that is registered with the SPCB to engage in the practice of structural pest control. (BPC § 8506.1) 4)Defines "qualifying manager" as the licensed operator or operators designated by a registered company to supervise the daily business of the company and to be available to supervise AB 1874 Page 3 and assist the company's employees. (BPC § 8506.2) 5)Defines "structural pest control operator" as any individual licensed by the SPBC to practice structural pest control. (BPC § 8506) 6)Requires every company that engages in the practice of structural pest control, as a sole proprietorship, partnership, corporation, or other organization or any combination thereof, to be registered with the SPCB. (BPC § 8610(a)) 7)Requires each registered company to designate an individual or individuals who hold an operator's license to act as its qualifying manager or managers. The qualifying manager or managers must be licensed in each branch of pest control in which the company engages in business. The designated qualifying manager or managers shall supervise the daily business of the company and shall be available to supervise and assist all employees of the company, in accordance with regulations which the board may establish. (BPC § 8610(c)) This bill: 1) Redefines "qualifying manager" as the licensed operator or operators designated by a registered company to supervise the daily business of the company and to be physically present at the principal office or branch office location for a minimum of nine days every three consecutive calendar months to supervise and assist the company's employees 2) Requires the qualifying manager to document the days and provide the documentation to the SPCB upon request. Background In California, a "registered company" is defined as any business AB 1874 Page 4 organization, such as a sole proprietorship or corporation. In order to provide structural pest control services as a registered company, a business organization must register with the SPCB and designate a "qualifying manager." The qualifying manager must be a structural pest control operator, an individual who is licensed by the SPCB and is responsible for supervising the daily business of the organization. Currently, the qualifying manager must "be available to supervise and assist the company's employees." However, "be available to supervise and assist" is not defined. The sponsor states that the lack of a definition has resulted in a loophole where licensed operators are "renting" their licenses to a registered company that needs to designate a qualifying manager. Because there is no language specifying that a licensed operator has to be physically available, many simply charge a registered company a recurring fee to use their license number with minimal involvement in the company. The SPCB also reports that many individuals sell their license number on online ads. According to the sponsors, bad actors are able to argue that they can satisfy the availability and supervision requirements over the phone or through video conferencing. Therefore, this bill seeks to impose a minimum physical presence requirement on operator licensees of nine days in a three-consecutive-month period. Although the bill does not specify how the nine days must be divided, the intent was to allow the qualifying manager flexibility to do so. The goal of the requirement is to deter the practice of using the loophole to avoid having to actually supervise. The change this bill seeks to make was approved by the SPCB's Act Review Committee, which reviews the structural pest control practice act and recommends changes to the full SPCB. This nine day requirement was worked out with industry stakeholders. The approval was adopted by the SPCB last year at its January 14, 2015 meeting. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes AB 1874 Page 5 SUPPORT: (Verified8/2/16) Pest Control Operators of California (source) Newport Exterminating Omega Termite Control Inc. Orkin Pest Control The Structural Pest Control Board Western Exterminator Company OPPOSITION: (Verified8/2/16) None received ARGUMENTS IN SUPPORT: The Structural Pest Control Board writes, "Through enforcement activity, the SPCB has become aware of the practice of operators 'renting' their license. When this occurs, a registered company will pay a recurring fee to an individual licensed as an operator and in return that individual will serve as the company's 'qualifying manager' without ever having any actual involvement with the company. This results in registered companies practicing structural pest control absent of the necessary supervision?The Board feels the amendments proposed in AB 1874 will address this issue and strengthen consumer protection by helping to ensure that all registered companies are operating under the necessary levels of qualified supervision." ASSEMBLY FLOOR: 76-0, 4/28/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger AB 1874 Page 6 Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Chávez, Daly, Mathis, Olsen Prepared by: Mark Mendoza / B., P. & E.D. / (916) 651-4104 8/4/16 9:15:00 **** END ****