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 ----------------------------------------------------------------- |Author: |Monning | |----------+------------------------------------------------------| |Version: |April 20, 2015 | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Mendoza | |: | | ----------------------------------------------------------------- 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 SB 561 (Monning) Page 2 of ? 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 SB 561 (Monning) Page 3 of ? 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 SB 561 (Monning) Page 4 of ? 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." SB 561 (Monning) Page 5 of ? 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. -- END --