BILL ANALYSIS �
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|Hearing Date:June 6, 2011 |Bill No:AB |
| |1091 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS
AND ECONOMIC DEVELOPMENT
Senator Curren D. Price, Jr., Chair
Bill No: AB 1091Author:Morrell
As Introduced: February 18, 2011 Fiscal:Yes
SUBJECT: Contractors.
SUMMARY: Revises and recasts requirements for a contractor license to
notify the Contractors State License Board when a licensed qualifier
disassociates from a contractor's license.
Existing law:
1) Licenses and regulates more than 300,000 contractors under the
Contractors State License 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).
2) Provides that a person may qualify on behalf of an individual or
firm as a partner, responsible managing officer or responsible
managing employee (qualifier). A qualifier is a person who meets
the experience requirement and the requirement of passing the
licensing examination, thereby meeting the "qualification" for a
license to be issued. A qualifier is responsible for exercising
direct supervision and control of the licensee's construction
operation to secure full compliance with the CSLB law. (Business
and Professions Code (BPC) �� 7068, 7068.1)
3) Requires a licensee or qualifier to notify CSLB in writing and
replace the disassociating qualifier within 90 days from the date
of disassociation. Upon failure to replace the qualifier within 90
days, the license shall be automatically suspended or the
classification removed at the end of those 90 days. (BPC � 7068.2)
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4) Authorizes the Registrar to review and accept the petition of one
90-day extension of a licensee who disputes the date of
disassociation or who has failed to notify and replace the
qualifier within 90 days, upon a showing of good cause by the
contractor. Requires that this petition be received within 90 days
from CSLB's notice that the license will be suspended if the
qualifier is not replaced. The Registrar may grant only one 90-day
extension to replace the qualifier. (BPC � 7068.2)
This bill:
1) Revises and recasts provisions requiring a licensed contractor to
notify the CSLB and replace a qualifier within 90 days after a
qualifier disassociates from a contractor's license.
2) Specifies that the disassociating qualifier is responsible for the
licensee's construction operations until the date of disassociation
or the date the CSLB receives the written notification of
disassociation, whichever is later.
3) Authorizes the CSLB registrar, upon a showing of good cause by the
licensee, to review and accept a petition for one 90-day extension
to replace the qualifier immediately following the initial 90-day
period only under the following circumstances:
a) If the licensee is disputing the date of disassociation.
b) If the responsible managing officer, employee, member, or
manager has died.
c) If there has been delay in processing the application to
replace the qualifier that is out of the applicant's control and
CSLB or another state or federal agency is responsible.
4) Requires the petition for one 90-day extension to be received
within 90 days after the date of disassociation or death or delay,
and requires the petition to be considered only if an application
to replace the qualifier is on file with CSLB.
5) Clarifies that the licensee shall have no more than a total of 180
days after the date of disassociation or death in which to replace
the qualifier.
FISCAL EFFECT: The Assembly Appropriations Committee analysis, dated
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May 4, 2011, states that costs are minor and absorbable within
existing CSLB resources.
COMMENTS:
1. Purpose. This bill is sponsored by the Contractors State License
Board (Sponsor) to modify and clarify the requirements for
licensees to notify the CSLB when a qualifier disassociates from a
license.
According to the CSLB, "Existing law creates an inequity between the
treatment of licensees who comply with and those who do not comply
with the 90-day notification requirement inadvertently providing
more time for those who do not comply. For example, if a licensee
notifies CSLB that their qualifier disassociated one year prior,
their license is suspended immediately upon that notification, but
they would have already had one year of active license status
without the qualifier in place and they would have had one year of
opportunity to replace that qualifier.
"There is little to discourage a licensee from failing to notify the
CSLB in a timely manner when the qualifier disassociates, and it
has the potential to cause consumer harm. If the license is
suspended for lack of a qualifier and the licensee has a project in
the works a consumer could be harmed; i.e. the project would have
to stop or if work continued it would technically be by an
unlicensed contractor. Further, if the license was suspended while
a project was underway and a consumer had a problem and made a
claim against the bond, the bonding company may reject the claim
since the contractor was not properly licensed."
2. Background. When a qualifier (the qualifying individual(s), or
qualifier, is the person listed in the CSLB records who meets the
experience and examination requirements for the license)
disassociates from a contractor's license, the qualifier or the
licensee is required to notify CSLB within 90 days after the
disassociation date. The licensee, then has 90 days after the
disassociation date in which to replace the qualifier or the
license is suspended by operation of law. If the qualifier and
licensee fail to notify CSLB of the disassociation within the
90-day deadline, the license will be suspended upon written
notification of the disassociation.
This bill clarifies the timeframe in which the contractor licensee
must submit petitions for a one-time 90-day extension to replace a
qualifier. The bill also specifies the circumstances when CSLB
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will review and accept a petition, and that licensees only have up
to 180 days after the date of disassociation or death of a
qualifier to replace the qualifier.
3. Related Legislation. AB 397 (Monning) requires a licensed
contractor with an exemption for workers' compensation insurance to
recertify the exemption upon license renewal or provide proof of
workers' compensation insurance coverage. That bill is set for
hearing by this Committee on June 6, 2011.
SB 865 (Negrete McLeod) requires the CSLB to provide legal
representation to any person hired to provide expertise in a
licensing or disciplinary matter when, as a result of providing
that expertise, that person is named as a defendant in a civil
action, and requires the CSLB to indemnify the expert for any
judgment rendered against him or her. That bill passed this
Committee 8-0 on April 4, 2011, and is now awaiting hearing in the
Assembly Business, Professions and Consumer Protection Committee.
4. Arguments in Support. The Contractors State License Board (CSLB)
along with the California Fence Contractors Association , the
California Chapter of the American Fence Association , the
Engineering Contractors Association , the Flasher Barricade
Association , and the Marin Builders Association indicates that the
bill will create equity between contractors who comply with the
90-day notification requirement and those contractors who do not
comply with the requirement, and helps to create an incentive for
contractors to comply with the law regarding timeframes for
replacing a disassociated qualifier on the CSLB's licensing
records.
5. Clarifying Amendment. As currently drafted, the bill could be
interpreted to require each of the circumstances to exist (the date
of disassociation is disputed, the qualifier has died, and the
application to replace the qualifier has been delayed by the board)
in order for the Registrar to grant a 90-day extension of the time
to replace a disassociated qualifier on the license. In order to
clarify that only one of those circumstances must exist in order to
grant the extension, Committee staff recommends the following
amendment:
On page 3, line 8, after "under" insert: "one or more of"
SUPPORT AND OPPOSITION:
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Support:
Contractors State License Board (Sponsor)
California Fence Contractors Association
California Chapter of the American Fence Association
Engineering Contractors Association
Flasher Barricade Association
Marin Builders Association
Opposition:
None received as of June 1, 2011
Consultant:G. V. Ayers