BILL ANALYSIS �
AB 2237
Page 1
ASSEMBLY THIRD READING
AB 2237 (Monning)
As Amended April 9, 2012
Majority vote
BUSINESS & PROFESSIONS 8-1APPROPRIATIONS 16-0
-----------------------------------------------------------------
|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Fuentes, Harkey, |
| |Allen, Butler, Eng, Hill, | |Blumenfield, Bradford, |
| |Ma, Smyth | |Charles Calderon, Campos, |
| | | |Davis, Gatto, Hall, Hill, |
| | | |Lara, Mitchell, Nielsen, |
| | | |Norby, Solorio, Wagner |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Hagman | | |
| | | | |
-----------------------------------------------------------------
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).
AB 2237
Page 2
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 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.
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 an owner or 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 : According to Assembly Appropriations Committee,
minor increase in revenue for the CSLB due to requiring
additional persons to obtain licenses. This revenue would
offset the minor and absorbable workload associated with
increased licensing and enforcement.
AB 2237
Page 3
COMMENTS : 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
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."
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.
Analysis Prepared by : Angela Mapp / B.,P. & C.P. / (916)
319-3301
FN: 0003662
AB 2237
Page 4