Public Works Contracting Tips & Prosecution Strategies David Fogt, Registrar Contractor State License Board

CSLB Mission Statement To protect consumers by regulating the construction industry through policies that promote the health, safety, and general welfare of the public in matters relating to construction.

CSLB Fast Facts Intake, Administrative Actions, Criminal Referrals CA Department of Consumer Affairs (Est. 1929) 15 Member Board / Public Meetings HQ & 12 Field Offices (Northern & Southern CA) Approximately 400 Employees 44+ Licensed Trade Classifications\ Approx. 300,000 Licensed Contractors Approx. 14,000 Registered HIC Salespersons License Administration & Discipline Consumer Complaints Intake, Administrative Actions, Criminal Referrals Statewide Investigative Fraud Team (SWIFT) Fraud Investigations for Enforcement Referrals Proactive “Stings” & “Sweeps

Topics for Discussion Licensing Violations & Fraud Labor Protection Issues Enforcement Approaches Administrative Remedies

Contractor License Requirement Business and Professions Code (BPC) 7026 Contractor is synonymous with “builder” Undertakes, or offers to undertake a construction project Includes subcontractor and specialty contractor

BPC 7026.1 (2) (A) Any person, consultant to an owner-builder, firm, association, organization, partnership, business trust, corporation, or company, who or which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to construct any building or home improvement project, or part thereof.

Consultant License Requirement When is a construction consultant required to be licensed?

BPC 7028.7 Penalty $200 to $15,000 civil penalty Compensation Prohibited

Licensing Violations Contracting without a license is illegal in CA Misdemeanor punishable by 6 months jail and/or $5k fine (first offense); 90 days jail to 1 year and $10k or 20% contract value (2x offenders or revoked / suspended prior licensees); 90 days jail to 1 year and $5k to $10k fine or 20% contract value (3x+), cumulative to all other (admin) penalties provided by other laws. Business & Professions Code Section 7028

Common License Violation Examples Disaster Area Soliciting / Contracting w/o License Illegal in CA Felony / Misdemeanor - B&P Code 7027.3 Fraudulent Use of Contractor License # of Another

Common License Violation Examples Continued Misusing Licenses / Illegal Partnerships Illegal in CA Misdemeanor – B&P 119, 7028, 7027.3, 7153, et.al. Advertising Violations Misdemeanor - B&P Code 7027.1

Responsibility of Awarding Agency Pre Qualify Bidders – Public Works Tool Kit Confirm Personnel of Record Verify License Status of Prime and Subcontractors Public Officer Subject to Fine for Contracting with Unlicensed Person

B&PC 7059 (b) In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project.

License Classifications A General Engineering B General Building C-2 Insulation & Acoustical C-4 Boiler, Hot Water, Heating System Fitting C-5 Framing & Rough Carpentry C-6 Cabinet, Millwork & Finish Carpentry C-7 Low Voltage Systems C-8 Concrete C-9 Drywall C-10 Electrical C-11 Elevator C-12 Earthwork & Paving C-13 Fencing C-11 Elevator C-12 Earthwork & Paving C-13 Fencing C-15 Flooring & Floor Covering C-16 Fire Protection C-17 Glazing C-20 Warm Air, Heating Ventilation & Air Conditioning C-21 Building Moving/Demolition C-23 Ornamental Metal C-27 Landscaping

License Classifications C-28 Lock & Security Equipment C-29 Masonry C-31 Construction Zone Traffic Control C-32 Parking & Highway Improvement C-33 Painting & Decorating C-34 Pipeline C-36 Plumbing C-38 Refrigeration C-39 Roofing C-42 Sanitation System C-43 Sheet Metal C-45 Electrical Sign C-46 Solar C-47 General Manufactured Housing C-50 Reinforcing Steel C-53 Swimming Pool C-54 Tile (Ceramic & Mosaic) C-55 Water Conditioning C-57 Well Drilling C-60 Welding C-61 Limited Specialty Classifications

Instant License Check Feature to review contractors credentials More than 100,000 hits

Instant License Check Allows consumers to search for licensed contractors by classification within a specific geographic area based on city or zip code Consumers can search for a licensed contractor, contractors to identify potential sub-contractors and awarding agencies to identify potential bidders for contracts

Instant License Check

CSLB Public Works Enforcement License Requirements Failure to Pay for Material or Services Civil Wage and Penalty Assessment Certified Payroll Inaccuracies Electrician Certification

Public Works Enforcement Continued Responsible Persons not on License 7117a Suspended License 7117.5 Workers Compensation Insurance Violations LC 3700 Egregious Labor Code Violations LC 1776, 1815, etc. Illegal Substitution of Subcontractor (PCC 4107)

Enforcement Approaches

Administrative Remedies

Labor Protection Issues

Labor Protection Issues Worker Compensation Insurance Labor Wage Enforcement Workplace Safety Regulations Fair Competition Practices Project Bonds & Trade Experience

Workers Compensation Insurance Requirement Business and Professions Code 7125 The board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name.

Business and Profession Code 7125.4. (a) The filing of the exemption certificate prescribed by this article that is false, or the employment of a person subject to coverage under the workers’ compensation laws after the filing of an exemption certificate… or the employment of a person subject to coverage under the workers’ compensation laws without maintaining coverage for that person, constitutes cause for disciplinary action.

Workers Compensation Insurance Statistics 57% of licensees have an exemption from WC. How many public works contractors have filed an exemption?

BPC 7125.4 Continued (b) Any qualifier for a license who, under Section 7068.1, is responsible for assuring that a licensee complies with the provisions of this chapter is also guilty of a misdemeanor for committing or failing to prevent the commission of any of the acts that are cause for disciplinary action under this section.

CSLB Workers’ Compensation Enforcement CSLB Stop Order Contractor considered unlicensed (Isaac vs. Wright) and not entitled to payment pursuant to BPC 7131 Labor Code 3700.5 provides for misdemeanor charges

Failure to Pay Employees Labor Code Section 218.7 (3)(b)(1) The Labor Commissioner may enforce against a direct contractor the liability for unpaid wages created by subdivision (a) pursuant to Section 98 or 1197.1, or through a civil action. The direct contractor’s liability shall be limited to unpaid wages, including any interest owed.

BPC 7113 Failure in a material respect on the part of a licensee to complete any construction project or operation for the price stated in the contract for such construction project or operation or in any modification of such contract constitutes a cause for disciplinary action.