Winter 2012      |      Stephen P. Sands, Registrar      |      Edmund G. Brown Jr., Governor


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Responsibility of Qualifying Individuals

"R" Stands for "Responsible"

CSLB licenses and regulates California's construction industry, but its public mandate puts consumer protection above any individual interest.

As a state-licensed contractor, you know that every license requires a qualifying individual, or "qualifier," who is the person listed in CSLB's personnel of record, has demonstrated his or her knowledge and experience through the application process, and holds one or more license classification. (A license qualifier may be a Sole Owner, Qualifying Partner, Responsible Managing Employee (RME), Responsible Managing Officer (RMO), Responsible Managing Manager, or Responsible Managing Member.)

Qualifiers must exercise direct supervision and control of construction operations. Construction performed by unqualified individuals who illegally obtain a license by using an absentee qualifier is a threat to the public. Consumers are put at risk when substandard work is performed by unskilled individuals; the cost to correct deficient work can be exorbitant, often exceeding the original contract amount.

CSLB is aware of "retired" licensees who are serving as RMOs of corporate licenses for a monthly fee, but do not have direct involvement in the construction and business activities. With consumer risk in mind, CSLB is aggressively and stringently taking enforcement actions against those involved in this trend, and is in the process of legislatively enhancing violations to make them a criminal offense.

Many absentee qualifiers are older individuals who are seeking to supplement their retirement income by qualifying licenses, and are unaware of deficiencies and illegal acts performed by those who run the day-to-day operations until CSLB takes formal disciplinary action against their license. Whether the absentee qualifier is 18 or 80, CSLB will hold him or her to answer.

Being the qualifier on a license can be a huge risk and liability. Under existing law (Business and Professions (B&P) Code section 7122.5), if the performance of an act or omission by the license constitutes a cause for disciplinary action, it also is a cause for disciplinary action against the qualifier, regardless of his or her knowledge and participation.

The duties and responsibilities of a qualifier are defined in B&P Code section 7068.1 and the California Code of Regulations (CCR), Title 16, Division 8, Article 2, section 823.

B&P Code section 7068.1 states, in part:
The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising that direct supervision and control of his or her employer's or principal's construction operations as is necessary to secure full compliance with this chapter and the rules and regulations of the board relating to the construction operations.
CCR section 823 further defines a "bona fide employee" and "direct supervision and control" as follows:
(a) For purposes of Section 7068 of the Code, "bona fide employee" of the applicant means an employee who is permanently employed by the applicant and is actively engaged in the operation of the applicant's contracting business for at least 32 hours or 80% of the total hours per week such business in operation, whichever is less.

(b) For purposes of 7068.1 of the Code, "direct supervision and control" includes any one or combination of the following activities: supervising construction, managing construction activities by making technical and administrative decisions, checking on jobs for proper workmanship, or direct supervision on construction sites.
See B&P Code section 7068 for additional information.

Protect your license and avoid the risk of violating state law. If you are qualifying a license, make sure you are aware of all contracting activity and that your involvement in business operation meets state requirements.