BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 561          Hearing Date:    April 27,  
          2015
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          |Author:   |Monning                                               |
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          |Version:  |April 20, 2015                                        |
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          |Urgency:  |No                     |Fiscal:    |Yes              |
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          |Consultant|Mark Mendoza                                          |
          |:         |                                                      |
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                      Subject:  Home improvement salespersons.


          SUMMARY:  Eliminates the requirement that a home improvement salesperson  
          separately needs to register to work for each contractor; allows  
          a properly registered home improvement salesperson to utilize a  
          single, individual registration with one or more licensed  
          contractors; requires a contractor to notify the Contractors  
          State License Board when employing a home improvement  
          salesperson; requires reporting guidelines for a home  
          improvement salesperson and home improvement contractors.

          Existing law:
          
          1) Provides for the licensure and regulation of more than  
             300,000 contractors under the Contractors State License Law  
             (Contractors Law) by the Contractors State License Board  
             (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) Provides that HIS registrations expire subject to board  
             determination.  (BPC § 152.6)

          3) Defines "Home improvement salesperson" (HIS) as a person  
             employed by a home improvement contractor licensed under the  
             Contractors Law to solicit, sell, negotiate, or execute  
             contracts for home improvements, for the sale, installation  







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             or furnishing of home improvement goods or services, or of  
             swimming pools, spas, or hot tubs.  (BPC § 7152)

          4) Provides that it is a misdemeanor for any person to engage in  
             the occupation of salesperson for one or more home  
             improvement contractors within this state without having a  
             registration issued by the Registrar for each of the home  
             improvement contractors by whom he or she is employed as a  
             HIS. (BPC § 7153)

          5) Provides that an application for renewal of registration is  
             delinquent if the application is not postmarked by the date  
             on which the registration would otherwise expire.  (BPC §  
             7153.3(a))

          6) Authorizes a registration to be renewed at any time within 3  
             years after its expiration upon the filing of an application  
             for renewal on a specified form, the payment of the renewal  
             fee, and a delinquent renewal penalty in the amount of $25. 
          (BPC § 7153.3(a))

          7) Provides that a home improvement contractor who employs a  
             person to sell home improvement contracts while that person  
             is not registered by the Registrar as a HIS, is subject to  
             disciplinary action.  (BPC § 7154)

          This bill:

          1) Allows a HIS to register once and utilize a single,  
             individual registration with one or more licensed  
             contractors. 

          2) Provides that it is a misdemeanor for any person to engage in  
             the occupation of HIS for one or more home improvement  
             contractors without having, at the time of the sales  
             transaction, a current and valid registration.

          3) Defines that it is a misdemeanor for any person to engage in  
             the occupation of salesperson of home improvement goods or  
             services within this state without having a, at the time of  
             the sales transaction, a current and valid HIS registration  
             issued by the Registrar.

          4) Provides that these registrations expire 2 years from the  








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             last day of the month in which the registration was issued,  
             or 2 years from the date on which the renewed registration  
             last expired.

          5) Requires a home improvement contractor to notify the  
             Registrar in writing about the pending employment of a  
             registered HIS.

          6) Requires a home improvement contractor to notify the  
             Registrar when a registered HIS ceases to be employed by the  
             contractor.

          7) Subjects a home improvement contractor to disciplinary action  
             if they fail to report employment information.

          8) Provides that it is a misdemeanor and cause for disciplinary  
             action for any HIS who fails to account for, or to remit to,  
             his or her employing contractor, any payment received in  
             connection with any home improvement transaction or any other  
             transaction involving a work of improvement.

          9) Makes other technical and conforming changes.
          
          FISCAL  
          EFFECT:  Unknown.  This bill has been keyed "fiscal" by  
          Legislative Counsel. 
          
          COMMENTS:
          
          1. Purpose.  This bill is sponsored by the  Contractors State  
             License Board (CSLB)  .  According to the Author, "Under  
             existing law, a HIS is required to register separately with  
             the CSLB to work for each individual contractor.  However, a  
             HIS often works for more than one contractor, which  
             necessitates multiple registrations.  The CSLB currently has  
             approximately 11,300 active registrants and more than 85,000  
             invalid registrants.  The large number of invalid  
             registrations is due in significant part to salespersons  
             registering with a new employer."

          2. Backlog in Registering HIS.  Last year, the California Solar  
             Energy Industries Association sent a letter to the Governor  
             that was forwarded to the CSLB for response, expressing  
             concern about the amount of time it took to register new HIS  








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             program participants and the impact on the industry due to  
             the wait times of 4-5 weeks for the CSLB to approve a new  
             registration.  

             In the 2013-14 fiscal year CSLB received approximately 800  
             HIS applications a month, an increase of 40% over the prior 3  
             years.  The number of applications received per month has  
             continued to grow since then while the number of staff to  
             process these requests has not increased, thus the processing  
             time for requests has increased.  At the time the letter was  
             received in the Governor's office, CSLB was already reviewing  
             the HIS program and the new application processing delays.  

          3. Arguments in Support.  According to the  Contractors State  
             License Board  , 
          "With this change, the licensed contractor that employs a HIS  
             would be required to notify CSLB about the pending employment  
             of any registered HIS, prior to him or her beginning work for  
             the contractor.  Currently, CSLB has approximately 11,170  
             active HIS registrants, nearly 5,500 expired registrants, and  
             almost 85,000 invalid registrants.  The change proposed by  
             this bill will improve the current registration process and  
             provide increased flexibility for HIS registrants."

             The  California Fence Contractors  ,  Flasher Barricade  
             Association  , and  Gallagher's Plumbing, Heating, and Air  
             Conditioning  highlight that "this redundancy within the  
             current law is costing these companies and their new  
             salespeople literally thousands of dollars in lost revenue as  
             they cannot legally go to work until their registration  
             application is processed through the CSLB?All of this can and  
             will be solved simply by approving SB 561 (Monning)." 

             According to the  California Solar Energy Industry  
             Association  , "As the solar industry ramps up our work to help  
             the state meet its clean energy goals, it is imperative that  
             we reduce soft costs wherever and whenever we can. The  
             current delays in hiring and employing salespersons is adding  
             to the cost of going solar. Streamlining and modernizing the  
             process, while maintaining critically important consumer  
             protections, is a significant step in the right direction of  
             lowering the cost of solar power for all California  
             consumers."
          








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          SUPPORT AND OPPOSITION:
          
           Support:  

          Contractors State License Board (Sponsor)
          California Fence Contractors 
          California Solar Energy Industry Association (CALSEIA)
          Flasher Barricade Association
          Gallagher's Plumbing, Heating, and Air Conditioning.

           Opposition:  None on file as of April 21, 2015.

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