BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 561| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 561 Author: Monning (D), et al. Amended: 6/17/15 Vote: 21 SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/27/15 AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/18/15 AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen SENATE FLOOR: 38-0, 5/22/15 AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski, Wolk NO VOTE RECORDED: Fuller ASSEMBLY FLOOR: 79-0, 7/16/15 (Consent) - See last page for vote SUBJECT: Contractors: home improvement salespersons SOURCE: Author DIGEST: This bill 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 SB 561 Page 2 contractors; and authorizes the CSLB to adopt regulations providing for the electronic transmission of initial and renewal applications for HIS registration and for a contractor license, including the acceptance of a digital or electronic signature. Assembly Amendments (1) authorize CSLB to implement a system, through regulations, that provides for the electronic transmission of a contractor's license application, as specified, and acceptance of a digital or electronic signature as part of the filing of those applications; and (2) make technical changes to the definition of a "home improvement salesperson". ANALYSIS: 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 CSLBwithin 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) Provides that HIS registrations expire subject to board determination. (BPC § 152.6) 3) Defines "home improvement salesperson" as a person employed by a home improvement contractor licensed under the Contractors Law to solicit, sell, negotiate, or execute SB 561 Page 3 contracts for home improvements, for the sale, installation 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 an 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 three 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 an HIS, is subject to disciplinary action. (BPC § 7154) This bill: 1) Authorizes CSLB to implement a system, through regulations, that provides for the electronic transmission of a contractor's license application, as specified, and acceptance of a digital or electronic signature as part of the filing of those applications. 2) Makes technical changes to the definition of a "home improvement salesperson". 3) Deletes the requirement that an HIS have a registration for each contractor by whom he or she is employed and instead requires the HIS to register with CSLB in order to engage in SB 561 Page 4 the business of an HIS. 4) Specifies that an HIS registration expires two years from the last day of the month in which the registration was issued, or two years from the date on which a renewed registration last expired. 5) Requires a licensed home improvement contractor to notify the CSLB registrar about the employment of a registered HIS, as specified, and to also notify the CSLB when a registered HIS ceases to be employed by the contractor. 6) Specifies that a contractor who employs a registered HIS, but fails to comply with the CSLB notification requirements, is subject to disciplinary action. 7) Authorizes CSLB to implement a system, through regulations, that provides for the electronic transmission of an initial or renewal application for HIS registration, and for transmission of contractor notices. 8) Makes other technical and clarifying changes. Background A "home improvement salesperson" is defined 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 or furnishing of home improvement goods or services, or of swimming pools, spas, or hot tubs. 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 CSLB registration for each of the home improvement contractors by whom he or she is employed. A home improvement contractor who employs a person to sell home improvement contracts while that person is not registered with CSLB is subject to disciplinary action. According to CSLB, there are currently approximately 11,170 active HIS registrants, nearly 5,500 expired registrants, and SB 561 Page 5 almost 85,000 invalid registrants. In the 2013-14 fiscal year, CSLB received approximately 800 HIS applications a month, a 40% increase over the previous three years. This significant increase has led to a backlog of applications and processing delays. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes According to the Assembly Appropriations Committee, this bill creates one-time costs to the Contractors License Fund for CSLB programming and IT costs in the range of $110,000 to $130,000 in 2015-16 to provide for the changes to HIS registration and contractor notification requirements. This bill will also result in minor and absorbable costs to CSLB in 2016-17 to adopt regulations. SUPPORT: (Verified8/4/15) Contractors State License Board (source) California Fence Contractors California Solar Energy Industries Association Flasher Barricade Association Gallagher's Plumbing, Heating, and Air Conditioning OPPOSITION: (Verified8/4/15) None received ARGUMENTS IN SUPPORT: Supporters believe that the change proposed by this bill will improve the current registration process and provide increased flexibility for HIS registrants. ASSEMBLY FLOOR: 79-0, 7/16/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, SB 561 Page 6 Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NO VOTE RECORDED: Gordon Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-1868 8/13/15 13:07:52 **** END ****