BILL ANALYSIS �
AB 2237
Page 1
Date of Hearing: April 17, 2012
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 2237 (Monning) - As Amended: April 9, 2012
SUBJECT : Contractors: definition.
SUMMARY : Clarifies the definition of "contractor" as it
applies to home improvement projects to include consultants who
provide or oversee bids, or arrange for and set up work
schedules and maintain oversight of a project. Specifically,
this bill :
1)Defines the term "consultant" for purposes of the definition
of a contractor to include a person, other than a public
agency or an owner of privately owned real property to be
improved, who meets either of the following criteria as it
relates to work performed pursuant to a home improvement
contract, as specified:
a) Provides or oversees a bid for a construction project;
or,
b) Arranges for and sets up work schedules for contractors
and subcontractors and maintains oversight of a
construction project.
EXISTING LAW
1)Licenses and regulates contractors, under the Contractors
State License Law by the Contractors' State License Board
(CSLB) within the Department of Consumer Affairs (DCA).
2)Makes it unlawful to act as a contractor without a license.
3)Defines the term "contractor" to include, among others, any
person, consultant to an owner-builder, firm, association,
organization, partnership, business trust, corporation, or
company, who or which undertakes, offers to undertake,
purports to have the capacity to undertake, or submits a bid
to construct any building or home improvement project, or part
thereof.
AB 2237
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4)Defines "home improvement contract" to mean an agreement,
whether oral or written, or contained in one or more
documents, between a contractor and an owner or between a
contractor and a tenant, regardless of the number of residence
or dwelling units contained in the building in which the
tenant resides, if the work is to be performed in, to, or upon
the residence or dwelling unit of the tenant, for the
performance of a home improvement, as specified, and includes
all labor, services, and materials to be furnished and
performed thereunder. "Home improvement contract" also means
an agreement, whether oral or written, or contained in one or
more documents, between a salesperson, whether or not he or
she is a home improvement salesperson, and (a) an owner or (b)
a tenant, regardless of the number of residence or dwelling
units contained in the building in which the tenant resides,
which provides for the sale, installation, or furnishing of
home improvement goods or services.
5)Defines "home improvement" to mean the repairing, remodeling,
altering, converting, or modernizing of, or adding to,
residential property and shall include, but not be limited to,
the construction, erection, replacement, or improvement of
driveways, swimming pools, including spas and hot tubs,
terraces, patios, awnings, storm windows, landscaping, fences,
porches, garages, fallout shelters, basements, and other
improvements of the structures or land which is adjacent to a
dwelling house. "Home improvement" also means the
installation of home improvement goods or the furnishing of
home improvement services.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author, "In 2008, the
CSLB adopted Precedential Decision No. 1, establishing that
someone acting in the capacity of a swimming pool consultant is
a contractor. In 2009, the Appellate Court decision The Fifth
Day v. Bolotin found that someone acting in the capacity of a
construction manager is not required to be licensed as a
contractor. The Fifth Day v. Bolotin decision undermines CSLB's
Precedential Decision.
"Recently, an unlicensed contractor facing criminal prosecution
for violating Business & Professions Code Section 7028 (engaging
AB 2237
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in business of a contractor without a license) claimed to have
been a project coordinator and asserted exemption from
licensure, citing The Fifth Day v. Bolotin decision. Although
the unlicensed contractor was not overseeing a contract between
the project owner and a general contractor as in the Fifth Day
v. Bolotin case, the defense strategy was nonetheless of concern
to the prosecutor and ultimately resulted in a plea bargain
dismissing the 7028 charge."
Background . The CSLB licenses and regulates California's
construction industry. Anyone performing construction work in
California that totals $500 dollars or more in labor and
materials must be licensed by CSLB. There are about 300,000
licensed contractors in the state, in 43 different licensing
classifications.
According to CSLB, unlicensed contracting is part of
California's estimated annual $60 to $140 billion dollar
underground economy. It is illegal for an unlicensed person to
perform contracting work on any project valued at $500 or more
in labor and materials. Besides being illegal, unlicensed
contractors lack accountability and have a high rate of
involvement in construction scams. They also are unfair
competition for licensed contractors who operate with bonds,
insurance and other responsible business practices.
CSLBs Statewide Investigative Fraud Team (SWIFT) is set up to
monitor and combat illegal activity. SWIFT has teams around the
state that conduct stings on a regular basis and sweep
construction sites. SWIFT also conducts joint operations and
sweeps with other state agencies dedicated to combating
underground activity. The partnerships with other agencies
raise the penalties and fines for violators by increasing the
scope of violations to include taxes, illegal payrolls, workers
compensation and worker safety.
CSLB, the sponsor of this measure, states, "CSLB's April 24,
2008 Precedential Decision No. 1 establishes that someone acting
in the capacity of a swimming pool consultant is a contractor.
However, the March 27, 2009, Appellate Court decision The Fifth
Day v. Bolotin found that someone acting in the capacity of a
construction manager is not required to be licensed as a
contractor. CSLB believes we need to clarify that an
individual performing these services is required to be licensed
and comply with the law.
AB 2237
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"The intent of this proposal is not to license consultants or
construction managers but to protect the public from persons
presenting themselves as 'consultants' but acting in the
capacity of a contractor by scheduling subcontractors and
exercising responsibility for the construction project."
REGISTERED SUPPORT / OPPOSITION :
Support
Contractors State License Board (sponsor)
Building Owners and Managers Association of California
California Building Industries Association
California Business Properties Association
California Chapter of the American Fence Association
California Fence Contractors' Association
California Landscape Contractors Association
California Spa and Pool Industry Education Council
Construction Industry Legislative Council
Engineering Contractors' Association
Flasher/Barricade Association
Marin Builders' Association
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301