BILL ANALYSIS Ó
SB 561
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Date of Hearing: June 23, 2015
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Susan Bonilla, Chair
SB 561(Monning) - As Amended June 17, 2015
SENATE VOTE: 38-0
SUBJECT: Contractors: home improvement salespersons.
SUMMARY: Eliminates the requirement that a home improvement
salesperson (HIS) register separately with the Contractors State
License Board (CSLB) for each home improvement contractor he or
she works for, and instead allows an HIS to utilize a single
registration with one or more licensed contractors.
EXISTING LAW:
1)Provides for the licensure and regulation of contractors,
including home improvement contractors, under the Contractors'
State License Law (Contractors 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)Defines a 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,
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for the sale, installation or furnishing of home improvement
goods or services, or of swimming pools, spas, or hot tubs,
except as specified. (BPC § 7152)
3)Provides that it is a misdemeanor for any person to engage in
the occupation of a 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)
4)Provides that HIS registrations expire subject to board
determination. (BPC § 152.6)
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)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)
7)Requires that every application form for an original
contractor license, for renewal thereof, for reinstatement or
for reissuance, including both active and inactive licenses,
shall be signed by both the applicant and by the person
qualifying on behalf of an individual or firm, as specified.
(BPC § 7067.6)
THIS BILL:
8)Specifies that it is no longer a misdemeanor for a person to
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engage in the occupation of a salesperson for one or more home
improvement contractors 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 and instead requires a
HIS to have, at the time of the sales transaction, a current
and valid home improvement salesperson registration issued by
the Registrar.
9)Provides that these registrations expire two years from the
last day of the month in which the registration was issued, or
two years from the date on which the renewed registration last
expired.
10)Requires a home improvement contractor to notify the
Registrar, in writing, about the employment of a registered
HIS prior to his or her employment, including his or her name
and HIS registration number, and when that HIS ceases to be
employed by the contractor, as specified, and subjects a home
improvement contractor to disciplinary action if he or she
fails to report that information.
11)Authorizes the CSLB to implement a system, by regulation,
which provides for the electronic transmission of an initial
application or renewal application for HIS registration and
electronic transmissions of specified notices.
12)Authorizes the CSLB to implement a system, by regulation,
which provides for the electronic transmission of an initial
application or renewal application for a contractor license
and the acceptance of a digital or electronic signature as
part of the filing of that application.
13)Makes other clarifying and conforming changes.
FISCAL EFFECT: According to the Senate Appropriations Committee
analysis dated May 18, 2015, this bill will result in:
"One-time CSLB programming costs in the range of $110,000 to
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$130,000 in 2015-16 to provide for the changes to the HIS
registration and contractor notification requirements.
Estimated CSLB costs of up to $50,000 in 2016-17 to adopt
regulations regarding electronic submission of HIS
registration applications and contractor notifications. The
CSLB indicates it can regulatory absorb costs within existing
resources."
COMMENTS:
Purpose. This bill is sponsored by the CSLB . According to the
author, "[This bill] streamlines the HIS registration process
and provides a registration system that makes it easier for an
HIS to work for multiple contractors while continuing to be in
good standing with the [CSLB]."
Background. A HIS is a person employed by a home improvement
contractor licensed by the CSLB who is registered to solicit,
sell, negotiate, or execute contracts for home improvements on
behalf of the contractor. Existing law requires that a HIS
apply for, and be separately registered for each distinct
contractor for which he or she works. Because HISs often work
for more than one contractor, the HIS is required to register
multiple times with the CSLB.
In the 2013-14 fiscal year (FY), the CSLB received 9,522 HIS
registration applications, or approximately 800 applications per
month, representing a nearly 30% increase from FY 2012-13, and a
nearly 40% increase from FY 2011-12. According to the author,
the number of applications received per month has continued to
grow while the number of staff to process these requests has not
increased, leading to longer processing times. The average
processing time for a HIS registration has grown from 22 days in
FY 2011-12, to 64 days in FY 2012-13, to 77 days in FY 2013-14,
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according to the 2014 CSLB Sunset Review Report.
As of June, 2015, the CSLB has over 12,600 active registrants,
over 5,700 registrants that are expired but eligible to be
renewed, and over 85,000 invalid registrants (or registrations
that are expired and no longer eligible to be renewed). The
number of invalid registrations is due in large part to
salespersons registering with new employers, and also represents
a high turnover in the industry. Roughly 10% of the active
registrants hold multiple registrations.
This bill would streamline the registration process for a HIS
and eliminate the requirement that an HIS separately register to
work for each contractor. Instead, a HIS would only have to
register with the CSLB one time, and any home improvement
contractor who employs the HIS would have to notify the CSLB
about a HIS's pending employment, including his or her name and
registration number, and when his or her employment ceases. In
addition, this bill would allow the CSLB to implement a system
to provide for the electronic transmission of applications for a
HIS registration, and also for contractor licenses, which should
further improve processing times and increase efficiency.
Prior Related Legislation. AB 2457 (Nakanishi), Chapter 106,
Statutes of 2006, exempted from HIS registration a general
partner of a licensee and would make the exemption, as it
applies to such a general partner or a corporate officer or
qualifying person, applicable only in specified circumstances.
SB 364 (Figueroa), Chapter 789, Statutes of 2003, delayed until
July 1, 2004, the requirement that an applicant for registration
as a HIS furnish a full set of fingerprints to the CSLB.
SB 1953 (Figueroa), Chapter 744, Statutes of 2002, required all
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applicants for a HIS license to submit a set of fingerprints to
the CSLB with his or her application and requires the CSLB to
obtain and receive criminal history information from the
Department of Justice and the Federal Bureau of Investigation
for a criminal history records check.
AB 2544 (Bill Campbell), Chapter 372, Statutes of 2002, required
the CSLB to post specified information on its website each week
regarding HIS registration applications.
ARGUMENTS IN SUPPORT:
According to the CSLB , "This bill eliminates the requirement
that a[n]?HIS separately register to work for each contractor
and, instead, allows a properly registered HIS to utilize his or
her individual registration with one or more licensed
contractors. With this change, the licensed contractor that
employs an HIS would be required to notify CSLB about the
pending employment of any registered HIS, prior to him or work
beginning work for the contractor?. The change proposed by
this bill will improve the current registration process and
provide increased flexibility of HIS registrants."
According to the California Fence Contractors and the Flasher
Barricade Association , "Many?members employ [HIS] in their
construction companies. They are a critical component of these
companies' operations and generate a significant portion of
their sales. Unfortunately, current law requires that each and
every salesperson who comes to work for a member company must
re-register with the [CSLB] again even though most are already
registered in good standing with the Board. 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 new registration
application is processed through the CSLB. With the economy
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finally starting to pick-up significantly, hundreds of
salespeople statewide are all attempting to register with new
contractors at the same time?.This measure will eliminate the
need to re-register every time a salesperson goes to work for
another contractor."
According to the California Solar Energy Industries Association ,
"[This bill] promises to reduce the amount of time and paperwork
needed to properly comply with the state's [HIS] licensing
procedure at the [CSLB]?.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 costs 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."
ARGUMENTS IN OPPOSITION:
None on file.
REGISTERED SUPPORT:
Contractors State License Board (sponsor)
California Fence Contractors
California Solar Energy Industries Association
Flasher Barricade Association
Gallagher's Plumbing, Heating, and Air Conditioning
REGISTERED OPPOSITION:
SB 561
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None on file.
Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301