BILL ANALYSIS Ó
SB 177
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Date of Hearing: July 8, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 177
(Wieckowski) - As Amended May 5, 2015
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill extends the authorization of the Bureau of Security
and Investigative Services (Bureau) to issue an alarm company
operator license to a limited liability company (LLC) from
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January 1, 2016, to January 1, 2019.
FISCAL EFFECT:
On-going annual costs to the Bureau in the range of $22,000 to
$35,000 (Private Security Services Fund) to issue alarm company
operator licenses to LLCs beyond the January 1, 2016, sunset
date. This fund is self-supporting with fee revenue.
COMMENTS:
1)Purpose. According to the author, "When the state first
authorized businesses to incorporate as LLCs, alarm companies
were one of the businesses prohibited from forming or
operating a LLC due to consumer protection concerns. The
prohibition was originally targeted at keeping law firms and
accounting firms from becoming LLCs. Those professions are
now allowed to become Limited Liability Partnerships (LLP).
Subsequently, other industries were statutorily authorized to
form LLCs as well. Today, [nearly] all other states allow
alarm companies to organize as LLCs. This bill extends the
sunset date until 2019 to allow alarm companies to continue to
organize as LLCs."
2)Background. Unless expressly authorized, boards and bureaus
under the Department of Consumer Affairs (DCA) are prohibited
from issuing a license, certification or registration to an
entity organized as an LLC. The rationale is to ensure that
service providers who harm others by their misconduct,
incompetence, or negligence should not be able to limit their
liability by operating as an LLC.
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In 2004 the Attorney General (AG) concluded that a business
that provides services requiring a license, certification, or
registration pursuant to the Business and Professions Code may
conduct its activities as an LLC if the services rendered
require only a nonprofessional, occupational license. Since
this AG Opinion was released, several statutory changes have
been made to incorporate LLCs into the licensure provisions of
boards and bureaus regulated by the DCA.
In 2012, when alarm companies were first allowed to operate as
LLCs, the bill included a three year sunset date to ensure
that the required liability insurance levels were sufficient
to cover the potential number of claims. Because there is
still insufficient data on insurance levels, this bill also
contains a three-year sunset date. Of the 2,000 licensed alarm
companies, approximately 70 are LLCs.
3)Current Legislation.
a) SB 284 (Cannella), pending in this committee, extends
the sunset provisions on professional engineer and land
surveyor LLPs to January 1, 2019.
b) SB 468 (Hill), pending in the Assembly Business and
Professions Committee, among other provisions, imposes
training, psychological evaluation, and training duties on
various security forces, and subjects the Bureau to review
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by the appropriate policy committees of the legislature.
1)Prior Legislation.
a) AB 1608 (Olsen), Chapter 669, Statutes of 2014, among
other provisions, authorized the Bureau, until January 1,
2016, to issue a private investigator's license to LLCs.
b) SB 1077(Price), Chapter 291, Statutes of 2012, among
other provisions, authorized LLCs, until January 1 2016, to
be issued to alarm company operator licenses if specified
liability insurance requirements are met.
c) SB 469 (Beverly and Killea), Chapter 1200, Statutes of
1994, prohibited a foreign or domestic LLC from rendering
professional services in this state unless expressly
authorized under applicable provisions of law.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081
SB 177
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