BILL ANALYSIS Ó
SB 465
Page 1
Date of Hearing: August 24, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
SB 465(Hill) - As Amended August 19, 2016
SENATE VOTE: 40-0 [vote not reflective of this bill version]
SUBJECT: Building construction: contractors: discipline:
reporting: building standards.
SUMMARY: Requires the Contractors State Licensing Board (CSLB)
to enter into an interagency agreement with state or local
agencies, as necessary, to ensure that specified disciplinary
information relating to a contractor is timely reported to the
board; requires a licensee to report to the CSLB the occurrence
of any conviction of any felony or crime, as specified; requires
the California Building Standards Commission (Commission) to
convene a specified working group and recommend any statutory
changes or changes to the California Building Standards Code
(CBSC); and requires the CSLB to report the results of a study
to determine if the CSLB's ability to protect the public would
be enhanced by specified regulations.
EXISTING LAW:
1)Provides for the licensure and regulation of more than 300,000
contractors under the Contractors' State License Law by the
CSLB within the Department of Consumer Affairs (DCA). The
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CSLB is under the direction of the registrar of contractors
(Registrar). (Business and Professions Code (BPC) Section
7000 et seq.)
2)Requires licensees to notify the Registrar in writing of any
unsatisfied final judgment imposed on the licensee, and
authorizes the Registrar to automatically suspend the license
on the date the Registrar is informed of an unsatisfied final
judgment if the licensee failed to notify the Registrar in
writing within 90 days of that judgment, as specified. (BPC
Section 7071.17(b))
3)Provides that a conviction of a crime, substantially related
to the qualifications, functions and duties of a contractor,
constitutes a cause for disciplinary action, and that the
record of the conviction shall be conclusive evidence thereof.
(BPC Section 7123)
4)Provides that a plea or verdict of guilty, or a conviction
following a plea of nolo contendere, is deemed to be a
conviction, and that the CSLB may order a license to be
suspended or revoked, or may decline to issue a license, when
the time for appeal has elapsed, or the judgment of conviction
has been affirmed on appeal, as specified. (BPC Section 7124)
5)Requires the Registrar to make available to the public the
date, nature, and status of all complaints on file against a
licensee that do either of the following:
a) Have been referred for accusation; or,
b) Have been referred for investigation, after a
determination by CSLB enforcement staff, that a probable
violation has occurred, and have been reviewed by a
supervisor, and involve allegations that if proven would
present a risk of harm to the public and would be
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appropriate for suspension or revocation of the
contractor's license or criminal prosecution. (BPC Section
7124.6 (a))
6)Requires the CSLB to create a disclaimer that shall accompany
the disclosure stating that it is an allegation and any other
information the CSLB determines would be relevant to a person
evaluating the complaint. (BPC Section 7124.6 (b))
7)Provides that a complaint resolved in favor of the contractor
shall not be subject to disclosure. (BPC Section 7124.6(c))
8)Requires the Registrar to make available to the public the
date, nature, and disposition of all legal actions, subject to
the following:
a) Limits the disclosure of legal actions for citations
from the date of issuance for five years after the date of
compliance if no additional disciplinary actions have been
taken against the licensee during that period;
b) Limits the disclosure of accusations that result in
suspension, stayed suspension, or stayed revocation of the
contractor's license from the date accusation is filed for
seven years if no additional disciplinary actions have been
taken against the licensee during that period; and,
9)All revocations that are not stayed shall be disclosed
indefinitely from the effective date of the revocation. (BPC
Section 7124.6(e))
THIS BILL:
10)Requires the CSLB, by January 1, 2018, to enter into an
interagency agreement with the Division of Occupational Safety
and Health (DOSH) to ensure that specified administrative
information relating to a licensed contractor is timely
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reported to the CSLB; requires, at that time, the CSLB to
enter into an interagency agreement with any other state or
local agency the CSLB deems to be in possession of information
relevant to its priority to protect the public.
11)Requires a licensee to report to the registrar of the CSLB in
writing within 90 days after the licensee obtains knowledge of
the occurrence of a conviction of any felony or a conviction
of any crime that is substantially related to the
qualifications, functions, and duties of a licensed
contractor..
12)Requires the Commission to convene a working group to
investigate existing building standards associated with the
construction, inspection, and maintenance of exterior elevated
elements and requires the working group to report to the
Commission any findings and possible recommendations for
statutory changes or changes to the CBSC. By January 1, 2018,
the bill would also require the working group to provide that
report to the Senate Committee on Business, Professions, and
Economic Development.
13)Requires the working group to include, but not be limited to,
representatives from state government entities, building
officials, engineers, construction industry, and any other
interested parties.
14)Requires the working group to review related documents and
reports, including, but not limited to, forensic reports
related to exterior elevated element failures in California,
reports and studies used in the development of national and
state building codes, and any other material deemed relevant
to determine if any changes need to be made to the
construction specifications or inspection requirements,
excluding routine inspections that occur after project
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completion, contained within the CBSC and requires the working
group to submit any changes that are needed as soon as
possible to the Commission for consideration as soon as
possible.
15)Requires the CSLB, by January 1, 2018, to report to the
Legislature the results of a study to determine if the CSLB's
ability to protect the public would be enhanced by regulations
requiring licensees to report judgments, arbitration awards,
or settlement payments of those claims over a certain amount
as determined by the CSLB. This bill would require the CSLB
to consult with licensees, insurers, consumers, and other
interested parties during the development of the study.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, this bill will result in:
1) Total costs of approximately $540,000 in 2017-18 and
$490,000 ongoing to the CSLB for enforcement staffing costs,
Attorney General referral costs, and reporting costs
necessary to implement the requirements of this bill.
2) Annual ongoing costs to the Commission of approximately
$193,000 for the development and ongoing maintenance required
of additional building standards.
COMMENTS:
Purpose. This bill is sponsored by the author. According to
the author, this bill is needed to amend state law because,
"Currently, state law does not require contractors to report
defect settlement cases to the CSLB. Such disclosure
requirements are routine for such professionals as doctors,
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architects, and engineers. This bill would empower the CSLB,
like other boards, to be made aware of licensee behavior for
which they may need to take swift action to promote public
health and safety. The bill additionally increases transparency
so that consumers have the tools necessary to make an informed
decision about the quality of the contractor they hire."
Background. According to the author, this bill establishes
greater accountability for contractors by ensuring the public
has critical disciplinary information about licensees. As an
example of this need for transparency, the author notes the
tragic Berkeley, California balcony collapse, which killed six
people. According to the San Francisco Chronicle, the company
responsible for that project reportedly paid out $26.5 million
in construction defect settlements in just three years, yet the
CSLB remained ignorant of such settlements because licensees are
not required by law to report to the registrar the result of
settlements that are not handled directly by the CSLB. As a
result, information that can be used to help consumers protect
themselves from possible fraud or misrepresentation is not
known.
Complaint Investigation Process. The registrar of the CSLB is
required to make available to the public civil action
settlements, binding arbitration awards, and administrative
actions that are required to be reported to the CSLB if the CSLB
refers those settlements or arbitration awards for investigation
that a probable violation has occurred and involves allegations
that, if proven, would present a risk of harm to the public and
would be appropriate for suspension or revocation of the
licensee, or criminal prosecution.
Similar to other regulatory entities, in order to determine
whether a complaint is appropriate for investigation, the CSLB
reviews information on a case-by-case basis, looking at such
factors as the severity of the allegations, and whether a
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licensee has a history of complaints or discipline. Licensees
are required to report unsatisfied final judgments to the CSLB,
and are required to disclose convictions when applying for
licensure. For licensees that have already been fingerprinted
by the CSLB, the CSLB will receive notifications from the
Department of Justice when that licensee is the subject to
additional criminal action; however, not all licensees have
submitted their fingerprints to the CSLB.
California Building Standards Commission (Commission). The
Commission is responsible for developing building standards for
state owned buildings, including University and State College
buildings, and for developing green building standards for most
buildings except for housing, public schools, and hospitals.
The Commission publishes the CBSC every three years and its
supplements, such as the California Green Building Standards
Code, in intervening years.
Similar Reporting Requirements Exist for Other Professions.
Architects, and the companies that insure them, are required to
report to the California Architects Board, any civil action
judgment, settlement, arbitration award, or administrative
action resulting in a judgment, settlement, or arbitration award
against the licensee in any action alleging fraud, deceit,
negligence, incompetence, or recklessness by the licensee in the
practice of architecture if the amount or value of the judgment,
settlement, or arbitration award is five thousand dollars
($5,000) or greater. The report is made within 30 days of
payment of all or any portion of the action. This requirement
also applies if a party to these actions is or was a sole
proprietorship, partnership, firm, corporation, or state or
local governmental agency in which a licensee is or was an
owner, partner, member, officer, or employee and is or was a
licensee in responsible control of that portion of the project
that was the subject of the action(s). The licensee will not be
found to have violated a confidential settlement agreement or
other confidential agreement by providing a report to the CSLB.
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Similar reporting requirements exist for other licensed
professionals, including engineers (BPC Section 6770), land
surveyors (BPC Section 8776), medical professionals (BPC Section
801), and accountants (BPC Section 5063).
ARGUMENTS IN SUPPORT:
The California Newspapers Publishers Association writes in
support, "By requiring contractors to report this information,
[this bill] will improve oversight of these operations and
assist the public in identifying repeat offenders, or the
existence of unsafe and unsettling patterns and practices in the
industry."
The Center for Public Interest Law writes in support, "Whereas
in every other example, the requirements for self-reporting are
set by fiat, in statute, by the Legislature, the author has
amended SB 465 to empower the expert CSLB to simply to review
the issue and offer its nonbinding observations?"
The Conference of California Bar Associations writes in support,
"For far too long, contractors, builders and their lawyers, in
cooperation with plaintiffs and their lawyers, have been able to
keep the facts about substandard, dangerous and toxic conditions
secret from public view by agreeing to settlements in public
litigation that keep the facts of the case secret. [This bill]
would take a small but crucial step towards increased public
protection by laying the groundwork for prohibiting these
dangerous secrets relating to builders and contractors from
being hidden from the [CSLB]."
ARGUMENTS IN OPPOSITION:
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None on file.
AMENDMENTS:
To address implementation issues in this bill, the author should
amend this bill as follows:
1)On page 3, before line 1, insert:
Section 6313.5 of the Labor Code is amended to read:
6313.5. The division division, after consultation with the
Contractor's State License Board, shall transmit to the
Registrar of the Contractors Contractor's State License Board
copies of any reports made in any investigation conducted
pursuant to subdivision (a) of Section 6313, and may upon its
own motion or at the request of the Registrar of Contractors,
transmit copies of any other reports made in any investigation
conducted pursuant to subdivision (b) of Section 6313 involving
a contractor licensed pursuant to citations or other actions
taken by the division against a contractor as defined in the
Contractor's State License Law (Chapter 9 (commencing with
Section 7000) of Division 3 of the Business and Professions
Code).
2)On page 3, line 3, strike out "(a) By January 1, 2018, the
board shall enter into an", and strike out lines 4 through 7
inclusive.
3)On page 4, strike out lines 1 and 2, in line 3, strike out
"(b) By January 1, 2018, the board shall" and insert "The
board may"
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4)On page 4, line 17, strike out "licensees and consumers" and
insert "licensees, consumer, and other interested
stakeholders"
5)On page 5, in line 6, strike out "(a) The California Building
Standards Commission", strike out lines 7 to 9, inclusive, and
insert:
(a) By January 1, 2018, the working group formed by the
California Building Standards Commission to study recent
exterior elevated element failures in California shall submit
a report to the appropriate policy committees of the
Legislature containing any findings and possible
recommendations for statutory changes or changes to the
California Building Standards Code.
(b) The working group shall review related documents and
reports, including, but not limited to, any available forensic
reports related to exterior elevated element failures in
California, reports and studies used in the development of
national and state building codes, and any other material
deemed relevant to make recommendations to the appropriate
state agency or agencies for the development of proposed
building standards for exterior elevated elements.
6)On page 5, strike lines 10 through 18, inclusive, and insert:
(c)The working group shall solicit technical expertise as
appropriate from, but not limited to, representatives from the
Department of Housing and Community Development, the Division
of the State Architect-Structural Safety, the Office of the
State Fire Marshal, local building officials and plan
checkers, structural engineers, apartment owners and managers,
the building industry, the wood, steel and concrete
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industries, and any other interested parties.
7)On page 5, strike out lines 19 through 27, inclusive.
8)On page 5, strike out lines 28 through 33, inclusive.
9)On page 5, in line 34, strike "(2) Notwithstanding paragraph
(1)" and insert "(d) Notwithstanding the deadline in
subdivision (a),"
10)On page 5, strike lines 38 and 39, and insert:
Recommended changes to the appropriate state agency or
agencies for consideration as soon as possible according to
this part.
(e) This section shall remain in effect only until January 1,
2018, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2018, deletes or
extends that date.
11)On page 6, strike out lines 19-23, inclusive.
12)Make other technical and conforming changes.
REGISTERED SUPPORT:
California Newspapers Publishers Association
Center for Public Interest Law
Conference of California Bar Associations
REGISTERED OPPOSITION:
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None on file.
Analysis Prepared by:Gabby Nepomuceno / B. & P. / (916) 319-3301