Governor signs two bills to clamp down on unlicensed and improperly registered construction contractors

Among the flood of bills signed by the Governor this year to support workers’ rights and deal with problems related to the underground economy were two bi-partisan bills, Senate Bills 261 and 262. 

SB 261 enhances the ability of the Contractors State License Board (CSLB) to order administrative remedies against licensed or unlicensed contractors where there is probable cause to believe that the contractor has allowed an unlicensed person to use his or her license, or has acted as a contractor under an inactive or suspended license. Under prior law, a person engaged in these kinds of illegal acts is guilty of a crime. SB 261 allows the CSLB to impose administrative remedies whether or not criminal violations of the law have been pursued by a district attorney.

SB 262 addresses the problem of individuals who lend their names out to be listed as a responsible managing officer or other key employee, in order to qualify for a contractor’s license, but who don’t actually exercise direct supervision and control of the construction operations, as required by law. This bill makes the person who qualifies for the license directly responsible for compliance with legal requirements, i.e. that the responsible managing officer exercise direct supervision and control of the construction operations of the contractor. It makes a violation of these requirements grounds for disciplinary action, and a misdemeanor punishable by imprisonment for up to six months and a fine of $3000 - $5000.

Experts estimate that contractors who fail to abide by the law have a 15 to 20% advantage in being able to underbid honest contractors who are properly licensed and pay their workers in a manner that is consistent with the law.

By Nina Fendel | October 28, 2013

Legal Developments