BILL ANALYSIS �
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UNFINISHED BUSINESS
Bill No: SB 315
Author: Lieu (D)
Amended: 7/2/14
Vote: 21
PRIOR VOTES NOT RELEVANT
ASSEMBLY FLOOR : 78-0, 8/14/14 (Consent) - See last page for
vote
SUBJECT : Contractors
SOURCE : Contractors State License Board
DIGEST : This bill clarifies advertising provisions for
unlicensed persons seeking work; extends the period during which
the Contractors State License Board (CSLB) must initiate
disciplinary action against a licensee upon a finding by the
Labor Commissioner of a willful and deliberate labor code
violation; and makes other changes to CSLB enforcement
provisions, as specified.
Assembly Amendments delete the Senate version of this bill
relating to civil actions and telephonic appearances, and insert
the current language.
ANALYSIS :
Existing law:
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1. Provides for the licensure and regulation of contractors
under the Contractors State License Law (Law), administered
by CSLB.
2. Exempts from licensure and regulation those who perform work
with an aggregate contract price under $500, but does not
exempt those who split work into multiple contracts to avoid
the $500 limit.
3. Authorizes unlicensed contractors to advertise for
construction work only if the advertisement states that
he/she is not licensed.
4. Authorizes CSLB enforcement representatives to enforce the
Law and issue notices to appear in court.
5. Provides that it is a misdemeanor to engage in the business
or act in the capacity of a contractor without a license,
unless exempted.
6. Requires CSLB to initiate a disciplinary action against a
licensee within 30 days of receipt of a certified copy of the
Labor Commissioner's finding of a willful or deliberate
violation of the Labor Code by a licensee.
7. Gives the Labor Commissioner, his deputies and agents free
access to all places of labor.
8. Establishes the Joint Enforcement Strike Force on the
Underground Economy (JESF) to coordinate efforts in targeting
tax evasion and cash-pay violations.
9. Authorizes the sharing of investigative and enforcement
capabilities between JESF participant entities.
10.Makes other technical, nonsubstantive changes.
This bill:
1.Prohibits an unlicensed person from advertising for
construction work exceeding the $500 aggregate contract price
cap, which includes the cost for labor, materials, and all
other items on a project.
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2.Provides that it is a misdemeanor for a person to engage in
the business or act in the capacity of a contractor if he/she
has a suspended license for failure to pay a civil penalty, to
comply with an order of correction, or to resolve all
outstanding liabilities, as specified.
3.Authorizes CSLB enforcement to have free access to all places
of labor when participating in the enforcement activities of
JESF.
4.Extends the time period, from 30 to 180 days after
notification of a Labor Code violation, as specified, in which
CSLB must initiate disciplinary action against a licensee.
5.Makes technical and clarifying changes.
Background
Disciplinary backlog . The Labor Commissioner is required to
send findings related to all willful or deliberate violations of
the Labor Code by licensed contractors to CSLB. Each year, over
100 of these violations are sent to CSLB, the majority of which
are related to the failure to pay wages. In most cases, CSLB
reports that it issues an automatic license suspension as a
result of the notification. However, if a contractor is
debarred or has created significant financial harm, CSLB must
initiate its own investigation in order to revoke a license.
Although CSLB is currently required to initiate disciplinary
action within 30 days of the notification, it may take four to
six months if an investigation is required before discipline may
be issued. This bill extends the period in which CSLB is
required to act to conform to their current capacity.
However, the extension of the statutory period will not
forestall communication of Labor Code violations to consumers.
CSLB has integrated into their public online licensure lookup
service public disclosures of violations identified by other
partner agencies, including the Labor Commissioner, with links
to the issuing agencies' Web site. This will allow consumers to
still be informed about violations by contractors while any
formal investigation takes place.
Unfair advertisement . Existing law prohibits unlicensed persons
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from accepting projects which will cost in excess of $500,
including labor and materials. Unlicensed individuals are also
prohibited from breaking up larger projects into portions of
$500 or less. However, there is nothing explicitly prohibiting
them from advertising for large projects such as new home
construction, additions, or extensive remodel that are clearly
in excess of the $500 limit. While unlicensed persons must
state they are unlicensed, they do not have to state they cannot
legally complete the work they are advertising for. This leaves
a marketplace artificially bloated with actors that cannot
legally complete the solicited work, unduly increasing
competition with licensed contractors.
This bill prohibits unlicensed persons from advertising for work
that would cost in excess of the $500 limit. This will enable
consumers to be confident that they are contracting with actors
who can legally complete the advertised project, and will level
the playing field for licensed contractors.
This bill also makes it a misdemeanor for individuals whose
license is suspended for failure to pay a civil penalty, comply
with an order of correction, or to resolve any outstanding
liabilities, to act as a licensed contractor.
JESF . The current practice of CSLB's Statewide Investigative
Fraud Team (SWIFT) is to use proactive sting operations to find
unlicensed contractors. They partner with local sheriffs,
police departments and district attorney offices to stage
operations to lure unlicensed contractors. While this practice
does result in the discipline of numerous unlicensed
individuals, this is a small portion of the unlicensed
workforce. To extend their reach, CSLB joined JESF to further
enforce licensure, labor and safety laws.
JESF is a multi-agency strike force established in 1995 which
includes the Department of Justice, Board of Equalization, the
Internal Revenue Service, the Franchise Tax Board, Department of
Insurance, multiple divisions of the Department of Industrial
Relations, including the Division of Labor Standards Enforcement
(DLSE), and the Department of Consumer Affairs (including CSLB).
Each entity is charged with some aspect of enforcing
prohibitions on underground economic activity, and JESF
optimizes the combination of joint operations to achieve full
enforcement of the law.
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Member entities of JESF benefit during joint operations from
DLSE's statutory authority to enter all places of labor through
an authority sharing provision of the law. CSLB states,
however, that DLSE's limited enforcement availability hinders
JESF enforcement actions. Access to places of labor is a
critical need of CSLB as they regulate construction. This bill
grants CSLB the same strong authority to access places of labor
while working with JESF. By granting this clear authority, the
citations and notices issued during these operations will be
less vulnerable to challenges on the grounds of improper access.
Comments
According to the author, "This bill will address a few issues
CSLB has identified with existing law. Construction is the
number one trade contributing to the underground economy?. CSLB
is the appointed state agency responsible for regulating
construction and as such, needs clear statutory authority to
access business locations were labor is present when Division of
Labor Standards Enforcement [DLSE] is not readily available to
participate in joint efforts to combat underground economy
behavior?. Unlicensed contractors routinely use the exemption
provided in [current law] to openly advertise their services for
any and all construction services, including large-scale
projects that are clearly in excess of the $500 limit prescribed
by law.
"This [bill would] allow CSLB to pursue criminal charges when
appropriate against a contractor who continues to contract for
work while holding a license suspended for outstanding civil
judgments or tax liabilities? Finally, the bill would [also]
amend the existing requirement for CSLB to act on certain Labor
Code violations within 30 days, as CSLB does not have the
resources to meet that timeframe for all referrals."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/14/14)
Contractors State License Board (source)
Air Conditioning Sheet Metal Association
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Airconditioning and Refrigeration Contractors Association
American Subcontractors Association California, Inc.
California Landscape Contractors Association
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California Professional Association of Specialty Contractors
Masonry Industry Joint Labor-Management Cooperation Trust
National Electrical Association, California Chapters
Northern California Tile Industry Joint Labor-Management
Cooperation Trust
United Contractors
ARGUMENTS IN SUPPORT : According to CSLB, this bill,
"?provides CSLB clear statutory authority? CSLB does not have
the resources to meet [the 30 day] timeframe for all referrals.
To improve disclosure and enhance consumer protection in this
area CSLB recently initiated a new program? the CSLB website is
immediately updated to include a link [to violations]?"
ASSEMBLY FLOOR : 78-0, 8/14/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Roger Hern�ndez, Vacancy
MW:nl 8/14/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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