BILL ANALYSIS �
SB 1077
Page 1
SENATE THIRD READING
SB 1077 (Price)
As Amended June 27, 2012
Majority vote
SENATE VOTE :38-0
BUSINESS & PROFESSIONS 9-0 JUDICIARY 9-0
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|Ayes:|Hayashi, Bill Berryhill, |Ayes:|Feuer, Wagner, Atkins, |
| |Allen, Butler, | |Dickinson, |
| |Eng, Hagman, Hill, Ma, | |Gorell, Huber, Monning, |
| |Smyth | |Wieckowski, |
| | | |Bonnie Lowenthal |
|-----+--------------------------+-----+--------------------------|
| | | | |
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APPROPRIATIONS 17-0
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|Ayes:|Fuentes, Harkey, | | |
| |Blumenfield, | | |
| |Bradford, Charles | | |
| |Calderon, Campos, | | |
| |Davis, Donnelly, Gatto, | | |
| |Hall, Hill, | | |
| |Lara, Mitchell, Nielsen, | | |
| |Norby, | | |
| |Solorio, Wagner | | |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Authorizes a licensed alarm company to be organized as
a limited liability company (LLC) until January 1, 2016, and
authorizes the Bureau of Security and Investigate Services
(BSIS) to cite unlicensed alarm company operators.
Specifically, this bill :
1)Authorizes a licensed alarm company to be organized as an LLC
until January 1, 2016, and makes conforming changes to the
licensing provisions of the Alarm Company Act (Act).
2)Authorizes an alarm company to apply with the BSIS to assign
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the license to another business entity as long as the direct
and indirect owners are unchanged.
3)Establishes a processing fee not to exceed $125 for the
assignment of an alarm company operator license.
4)Establishes a comprehensive system for the BSIS to cite and
issue fines up to $5,000 to a person for unlicensed activity
under the Act.
5)Provides that a citation for unlicensed activity must be in
writing and meet the following criteria:
a) Describes the nature of the violation and the provision
of law violated;
b) Informs the cited person that he or she may, within 30
days, request a hearing to contest the citation;
c) Informs the cited person that he or she may, within 10
days, request an informal conference on the citation with
the BSIS chief;
d) Be served upon the cited person by certified mail; and,
e) Requires the BSIS to consider the following factors when
determining the amount of an administrative fine:
i) The good or bad faith exhibited by the cited person;
ii) The nature and severity of the violation;
iii) Evidence that the violation was willful;
iv) History of violations of the same or similar nature;
v) The extent to which the cited person has cooperated
with the BSIS;
vi) The extent to which the cited person has mitigated
or attempted to mitigate any damage or injury caused by
the violation; and,
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vii) Any other factors as justice may require.
6)Authorizes the BSIS to grant a probationary license,
certificate, registration, or permit for appealed decisions
relating to administrative fines and specified denials,
suspensions, and revocations of a license, certificate,
registration, or permit.
7)Requires that an alarm company applying for a LLC license
obtain and maintain a minimum of $1 million insurance policy,
plus an additional $100,000 per licensee in excess of five
employed by the LLC, up to $5 million in total insurance, and
provides that a LLC which does not maintain the sufficient
levels of insurance under law will be suspended, and that the
members of the LLC shall be personally liable up to $1 million
each for damages resulting to third parties in connection with
the company's performance, during the period of suspension, of
any act or contract where a license is required by the Act.
8)Makes technical corrections and conforming changes.
EXISTING LAW :
1)Provides for the licensure and regulation of alarm companies
and alarm company managers and employees by the BSIS within
the Department of Consumer Affairs (DCA) under the Act. The
BSIS further licenses and regulates security guards,
proprietary private security employers, proprietary private
security officers, private investigators, alarm companies,
locksmiths, private patrol operators, and repossession
companies and their employees.
2)Establishes the Beverly-Killea Limited Liability Company Act
(LLC Act), to provide for LLCs to organize and conduct
business in California, and allows foreign LLCs (any LLC
organized outside of California) to register to conduct
business in the state.
3)Provides that a LLC may engage in any lawful activity except
banking, insurance, or trust company operations or the
offering of professional services for which a license,
certificate, or registration is required, unless expressly
authorized.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)Costs associated with this legislation would be minor and
absorbable within existing BSIS resources.
2)Allowing BSIS to issue citations to unlicensed practitioners
would likely result in about $40,000 per year in increased
revenue. (Private Security Services Fund)
COMMENTS : The LLC Act established LLCs and excluded
professionals from organizing as a LLC to prevent service
providers harming others by their misconduct, incompetence, or
negligence from being able to limit their liability by operating
as a LLC and becoming judgment-proof. Based upon these
provisions of law, it has been commonly understood that the
boards and bureaus under the DCA are prohibited from issuing a
license, certification, or registration to an entity organized
as a LLC.
Recently, SB 392 (Florez), Chapter 698, Statutes of 2010,
authorized the Contractors' State License Board (CSLB) to issue
a contractor's license to a LLC, and incorporated the LLC
business structure into the contractor license provisions.
Thus, if a licensing law under the Business and Professions Code
specifically authorizes a LLC to hold a license, then a LLC may
obtain a professional license under that provision. This bill
seeks to make that same authorization for alarm companies.
Under existing law, the BSIS lacks the direct authority to
regulate unlicensed alarm companies. When BSIS discovers an
alarm company is operating illegally without a proper license,
the BSIS must rely on the local District Attorney (DA) to
enforce the Act. Securing the support of the local DA is
difficult, as they often have more pressing issues to deal with.
This bill grants the BSIS direct authority to deal with
unlicensed alarm companies more efficiently and effectively.
This bill also provides greater protection for consumers who may
be victimized by unscrupulous alarm companies operating without
a BSIS license or background check. Other boards, such as the
CSLB, can regulate unlicensed contractors. This bill seeks to
make that same authorization for alarm companies.
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Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0004728