BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 465| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 465 Author: Hill (D) and Hancock (D) Amended: 8/29/16 Vote: 21 PRIOR VOTES NOT RELEVANT SENATE BUS., PROF. & ECON. DEV. COMMITTEE: (pursuant to Senate Rule 29.10) (ROLL CALL NOT AVAILABLE) ASSEMBLY FLOOR: 62-0, 8/31/16 (ROLL CALL NOT AVAILABLE) SUBJECT: Building construction: contractors: discipline: reporting: building standards SOURCE: Author DIGEST: This bill permits the Contractors State Licensing Board (CSLB or Board) to enter into an interagency agreement with state or local agencies to ensure that the Board receives specified disciplinary information relating to a contractor in a timely manner; 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 (CBSC) to convene a specified working group and recommend any statutory changes or changes to CBSC; requires the Division of Occupational Safety and Health (Division), after consultation with the CSLB, to transmit to the CSLB copies of any citations or other actions taken by the Division against a contractor, as defined; 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. SB 465 Page 2 Assembly Amendments delete the Senate version of the bill, dealing with the sunset extension of the CSLB, and instead add the current language. ANALYSIS: 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. The CSLB is under the direction of the Registrar of Contractors (Registrar). (Business and Professions Code (BPC) § 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 § 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 § 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 § 7124) SB 465 Page 3 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 appropriate for suspension or revocation of the contractor's license or criminal prosecution. (BPC § 7124.6 (a)) 6) Requires the CSLB to create a disclaimer to 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 § 7124.6 (b)) 7) Provides that a complaint resolved in favor of the contractor shall not be subject to disclosure. (BPC § 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, c) All revocations that are not stayed shall be disclosed SB 465 Page 4 indefinitely from the effective date of the revocation. (BPC § 7124.6(e)) 9) Provides that the Division has the power, jurisdiction, and supervision over every employment and place of employment in this state, which is necessary to adequately enforce and administer all laws and lawful standards and orders, or special orders requiring such employment and place of employment to be safe, and requiring the protection of the life, safety, and health of every employee in such employment or place of employment. (Labor Code § 6307) 10)Creates CBSC under the Department of General Services. Provides that CBSC review the standards of adopting state agencies and approve, return for amendment with recommended changes, or reject building standards submitted to CBSC for its approval, as provided. (Health and Safety Code § 18912;18931) This bill: 1) Permits the CSLB to enter into an interagency agreement with any state or local agency the CSLB deems to be in possession of information relevant to its priority to protect the public. 2) 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. 3) Requires CSLB to consult with licensees, consumers, and other interested stakeholders in order to prepare a study of judgments, arbitration awards, and settlements that were the result of claims for construction defects for rental residential units and, by January 1, 2018. Requires the CSLB SB 465 Page 5 to report to the Legislature, by January 1, 2018, the results of this study to determine if the Board's ability to protect the public would be enhanced by regulations requiring licensees to report judgments, arbitration awards, or settlement payments of those claims. 4) Requires that the records or documents obtained by the Board during the course of performing the study that are exempt from public disclosure under the California Public Records Act remain exempt from disclosure. 5) Requires CBSC to convene a working group to study recent exterior elevated element failures in California and requires the working group to report to the appropriate policy committees of the Legislature, by January 1, 2018, containing any findings and possible recommendations for statutory changes or changes to the CBSC. 6) Requires the working group to 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. 7) Requires the working group to 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 industries, and any other interested parties. 8) Requires that if, at any time, it is determined by the SB 465 Page 6 working group that one or more changes to the CBSC are needed as soon as possible in order to protect the public, the working group will submit the recommended changes to the appropriate state agency or agencies for consideration as soon as possible. 9) Sunsets the composition and duties of the working group to January 1, 2018. 10)Requires the Division, after consultation with the CSLB, to transmit to the CSLB copies of any citations or other actions taken by the Division against a contractor as defined in the Contractors State License Law. 11)Provides that, by allowing records and documents exempt from disclosure to be shared with the CSLB and remain nonpublic under the Public Records Act, this act would encourage private individuals and entities to provide the Board with information that is vital to the success of its study and report to determine whether additional regulations are appropriate. Provides that this act properly balances the public's right to access to public records in the possession of the Board with the need for the state to obtain otherwise private information. Background According to the author, "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, 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." SB 465 Page 7 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 was unaware of these 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. Informational hearing. On April 26, 2016, the Senate Committee on Business, Professions, and Economic Development held an informational hearing on the Berkeley Balcony Collapse and discussed what next steps the Legislature should take to ensure the public's protection against shoddy workmanship. While the hearing discussed a broad range of issues, it was agreed upon that this issue of reporting requirements for contractors required additional conversations and the inclusion of all interested stakeholders. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee, this bill would result in 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. The bill will also result in annual ongoing costs to CBSC of approximately $193,000 for the development and ongoing maintenance required of additional building standards. SB 465 Page 8 SUPPORT: (Verified8/30/16) California Newspaper Publishers Association Center for Public Interest Law City of Berkeley, Office of the Mayor Consulate General of Ireland The Conference of California Bar Associations Victims' Families OPPOSITION: (Verified8/30/16) None received 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]." Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104 SB 465 Page 9 8/31/16 21:29:58 **** END ****