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New Year Ushers In New Slate of State Contractor Laws

CSLB gets help from governor, lawmakers to take action against unlicensed contractors

SACRAMENTO – Licensed contractors on public works projects, unlicensed ones who advertise to perform more services than legally allowed, and persons who wanted to become licensed previously but could not will all be affected by new contracting laws that took effect January 1, 2015.

Perhaps the most far-reaching new law was created by Senate Bill (SB) 315, which gives CSLB a new tool to target unlicensed operators.

Business and Professions Code (BPC) section (§) 7027.2 was revised to allow CSLB to pursue civil sanctions against unlicensed contractors who advertise contracting services that clearly exceed the $500 limit for combined labor and material costs for any job. These ads frequently appear in online bulletin boards such as craigslist. Although the operator may note in their online ad that they are not licensed, many offer to take on major projects, such as kitchen and bathroom remodeling, that typically can cost thousands of dollars and requires a contractor license.

SB 315 also authorizes CSLB enforcement representatives to issue written notices to appear in court, and allows them continued access to job sites when working with the Joint Enforcement Strike Force on the Underground Economy (BPC § 7011.4). This new law also confirms that an individual who is contracting with a suspended license for an outstanding tax or civil liability is subject to the same disciplinary action as an individual contracting without a license; and provides additional time for CSLB to pursue disciplinary action against a licensed contractor as a result of a referral from the Labor Commissioner for a Labor Code violation (BPC § 7110.5).

A new law that expands CSLB licensing procedure is SB 1159 (BPC § 135.5). Contractor license applicants who do not have a Social Security number can now list an IRS-issued individual taxpayer identification number (ITIN) instead on their application forms. SB 1159 requires CSLB and other state licensing offices governed by the Department of Consumer Affairs (DCA) to accept an ITIN as an identification alternative to the SSN. Affected DCA boards and bureaus have until January 1, 2016, to implement this law. CSLB forms have been updated to reflect this change.

Assembly Bill 2396 (BPC § 480) is another law that affects DCA licensing boards such as CSLB. Under this new law, DCA boards including CSLB cannot deny a license based solely on a conviction that has been dismissed under certain provisions of existing law.

Other new laws primarily deal with contractors who undertake public works projects.

  • AB 26 (Labor Code § 1720) revises the definition of “construction” to include post-construction phases and cleanup work at a job site; and expands the definition of “public works” regarding the payment of prevailing wages to include any task relating to the collecting or sorting of refuse or recyclable metals.
  • AB 1705 (Public Contract Code § 7201, 10261) allows entities that award public contracts to withhold a higher percentage of a retention payment to a prime contractor or subcontractor if a project is more “substantially complex” than those deemed routine or regular.
  • AB 1870 (LC § 1775.5) requires a contractor to whom a contract is awarded and who employs journeymen or apprentices, to contribute to the State Apprenticeship Council in an attempt to make grant distribution more equitable.
  • AB 1939 (LC § 1784) allows contractors to recover from a contracting entity any increased costs, including labor costs, penalties, and legal fees, incurred as a result of any decision by the Department of Industrial Relations, the Labor and Workforce Development Agency, or a court that classifies a project as a public work.


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