BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: SB 465 Hearing Date: August 31,
2016
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|Author: |Hill |
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|Version: |August 29, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Building construction: contractors: discipline:
reporting: building standards
SUMMARY: 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 (Commission) to
convene a specified working group and recommend any statutory
changes or changes to the California Building Standards Code
(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.
NOTE : The Assembly amendments constitute a rewrite and this
measure has been referred to this Committee pursuant to Senate
Rule 29.10 (d) for consideration. The Committee may, by a
vote of the majority, either: (1) hold the bill, or (2)
return the bill to the Senate floor for consideration of the
bill as amended in the Assembly.
Existing law:
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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
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)
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))
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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
indefinitely from the effective date of the revocation.
(BPC § 7124.6(e))
9)Provides that the Division of Occupational Safety and Health
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 the California Building Standards Commission under
the Department of General Services. Provides that the
Commission review the standards of adopting state agencies and
approve, return for amendment with recommended changes, or
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reject building standards submitted to the Commission for its
approval, as provided. (Health and Safety Code § 18912;18931)
This bill:
11)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.
12)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.
13)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
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.
14)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.
15)Requires the Commission 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.
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16)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.
17)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.
18)Requires that if, at any time, it is determined by the
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.
19)Sunsets the composition and duties of the working group on
January 1, 2018.
20)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.
21)Provides that, by allowing records and documents exempt from
disclosure to be shared with the Contractors' State License
Board 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
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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.
FISCAL EFFECT: According to the Assembly Committee on
Appropriations analysis on August 10, 2016, 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 analysis notes
that the bill will also result in annual ongoing costs to the
Commission of approximately $193,000 for the development and
ongoing maintenance required of additional building standards.
COMMENTS:
1. Purpose. The Author is the sponsor of this bill. 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."
2. 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 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
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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.
3. Complaint Investigation Process. The Registrar of the CSLB
is required to make available to the public complaints if
those complaints are referred for investigation to the
Attorney General. These complaints typically present a risk
of harm to the public and would be appropriate for suspension
or revocation of the licensee, or criminal prosecution. This
process is further detailed in BPC § 7124.6.
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 licensee has a history of complaints or discipline.
Licensees are required to report unsatisfied final judgments
to the CSLB (BPC § 7071.17) 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.
4. 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.
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5. 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 (BPC § 5588). 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.
Similar reporting requirements exist for other licensed
professionals, including engineers (BPC § 6770), land
surveyors (BPC § 8776), medical professionals
(BPC § 801), and accountants (BPC § 5063).
6. 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
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conversations and the inclusion of all interested
stakeholders.
7. 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]."
SUPPORT AND OPPOSITION:
Support:
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:
None on file as of August 29, 2016.
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