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New Year Means New Laws for Licensees

Licensure for LLCs among laws effective January 1, 2012

SACRAMENTO - Limited Liability Companies are now able to apply for contractor licenses in California, in compliance with Senate Bill 392 which was signed into law in 2010. LLC officers interested in obtaining a contractor license must fill out a form specific to LLCs to initiate the process. That form is now available on the CSLB website. This is one of the new laws that go into effect this weekend.

Starting January 1, 2012, Assembly Bill 397 requires a contractor who certifies that he/she has no employees and is exempt from carrying a workers’ compensation policy to submit a new certification, or proof of workers’ compensation insurance coverage or self-insurance, each time the license is up for renewal. C-39 Roofing contractors must still purchase workers’ compensation insurance coverage even if they certify they have no employees, as required by Business and Professions Code section 7125.

Assembly Bill 878 requires workers’ compensation insurers to report to CSLB if a licensee’s policy is cancelled as the result of a premium audit or investigation, or a misrepresentation that results in harm to the insurer without reimbursement being made. This legislation also states that disregard and violation of workers’ compensation insurance laws are cause for discipline by the CSLB Registrar.

Other laws passed this year may also impact contractors and their business operations. Laws with effective dates other than January 1, 2012 are noted in bold italics.

Employment and Payroll

Assembly Bill 551 increases the fines for contractors who fail to pay prevailing wage on public works projects and for failure to provide certified payroll records in a timely fashion. It also requires the Labor Commissioner to notify CSLB when it updates its lists for these violations, and to annually notify awarding bodies of the availability of debarred contractors.

Assembly Bill 766, a companion to Assembly Bill 551, requires that certified copies of the payroll records be made available to members of the Joint Enforcement Strike Force on the Underground Economy or other law enforcement on request. If such records are requested by the public, information on the employees would not be included.

Senate Bill 459 authorizes the Labor and Workforce Development Agency to issue fines for the willful misclassification of employees as independent contractors, and requires the agency to notify CSLB of violators who are licensees. The legislation also requires the board to initiate actions against such licensees.

State Taxes

Assembly Bill 1307 states that CSLB may discipline a license for failure to resolve outstanding final liabilities assessed by the Board of Equalization, in addition to the current disciplinary laws coordinated between CSLB and the Franchise Tax Board, Employment Development Department, and Department of Industrial Relations.

Assembly Bill 1424 requires CSLB to state on its applications that the law allows the Board of Equalization and Franchise Tax Board to share information with CSLB and that a license may be suspended for failure to pay state taxes.

Mechanic's Liens

Senate Bill 190 makes technical changes to the mechanic's lien overhaul legislation passed last year (SB 189) that is to take effect on July 1, 2012.

Senate Bill 424 enables a design professional lien to be converted to a mechanic's lien if the design professional lien expires and remains partially or fully unpaid.

Assembly Bill 456 clarifies that the proof of service affidavit that must accompany a mechanic’s lien filing to validate the lien must show the name of the property owner and the title or capacity in which the person or entity was served the claim of lien.

Indemnification Clauses

Senate Bill 474 restricts contractors from using indemnification clauses to pass through to subcontractors the liability for certain legal damages, beginning January 1, 2013. Subcontractors would not have to pay for either accidental or deliberate harm caused by contractors, other subcontractors, or other parties. The law does not apply to certain contracts such as those governing residential homes, public buildings, workers’ compensation agreements, and some insurance agreements.

Certification and Training

Senate Bill 56 changes some requirements for construction trade apprenticeship programs and the Division of Apprenticeship Standards responsibilities for oversight of such programs.

Assembly Bill 1346 requires those seeking electrical certification from the Division of Apprenticeship Standards to include an employment history report from the Social Security Administration when submitting an application for certification and examination.

Energy Efficiency

Senate Bill 454 authorizes the California Energy Commission to assess civil or administrative penalties for violating energy efficiency standards. It also prohibits public utility rebates or incentives unless the recipient certifies that the improvement or installation was completed by a licensed contractor and that required permits and inspections were obtained.

Environment and Safety

Assembly Bill 341 requires businesses that generate more than four cubic yards of commercial, solid waste per week to arrange for recycling services by July 1, 2012.

Senate Bill 341 requires that construction vehicles with a gross vehicle weight rating of 14,000 pounds or more be equipped an automatic backup alarm audible from 200 feet under normal conditions.

Small Claims

Senate Bill 221 raises small claims court jurisdiction from $7,500 to $10,000.

CSLB Licensing and Board Operations

Assembly Bill 1091 requires that CSLB be notified within 90 days of a Responsible Managing Officer's (RMO) or Employee's (RME) disassociation from the license. The bill also enables a 90-day extension in limited circumstances to replace the qualifier for the license.

Senate Bill 543 continues CSLB’s operation as a board until January 1, 2016.

Senate Bill 944 makes technical changes and updates to Contractor License Law.


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