Issuing a License
46. To whom is a license issued?
A license may be issued to an individual, a partnership, a corporation, or a joint venture. The license belongs to the owner of an individual license, to the partnership, to the corporation as it is registered with the California Secretary of State, or to the combination of licensees who are party to the joint venture. The CSLB does not issue licenses to Limited Liability Companies (LLC's).
47. If the ownership of a business changes, is the contractor's license considered to be part of the purchase?
No, with the possible exception of a corporation, the license is not considered part of the business. If the corporation's registration number assigned by the California Secretary of State remains the same, the same license can be used if the license is current and active. The officers and the qualifying individual do not necessarily have to remain the same, although a qualifying individual must be in place in order for the license to be valid.
48. What is the difference between an active and an inactive license?
The holder of an active license is entitled to contract for work in the classifications which appear on the license. While the license is active, the licensee must maintain a current Contractor's Bond, a Bond of Qualifying Individual (if required), and Workers' Compensation Insurance coverage.
If a license is inactive, that is, currently renewed but on inactive status, the holder may not bid or contract for work. Neither the Contractor's Bond nor the Bond of Qualifying Individual is required for an inactive license. Also, a licensee does not need to have either the proof or exemption for workers' compensation insurance coverage on file with the CSLB while the license is inactive (see Question 59).
49. To whom does the term "qualifying individual" refer?
A qualifying individual, or simply "qualifier," is the person listed on the CSLB records who meets the experience and examination requirements for the license. A qualifying individual is required for every classification on each license issued by the CSLB.
50. What is the qualifying individual required to do?
The qualifying individual for a license is responsible for the employer's (or principal's) construction operations.
51. Can the same person serve as the qualifier for more than one license?
A person may act as a qualifying individual for more than one active license only if one of the following conditions exists:
||There is a common ownership of at least 20 percent of the equity of each firm for which the person acts as a qualifier;
||The additional firm is a subsidiary of or a joint venture with the first; or
||The majority of the partners or officers are the same.
Even if he or she meets the above conditions, A PERSON MAY SERVE AS THE QUALIFYING INDIVIDUAL FOR NO MORE THAN THREE FIRMS IN ANY ONE-YEAR PERIOD. If a qualifier disassociates from the third firm, he or she must wait one year before associating with a new third firm.
A Responsible Managing Employee (RME) can only act as a qualifying individual for one active license at a time.
52. Who can be a qualifying individual?
If you have an individual license, your qualifier may be either a Responsible Managing Employee (RME) or you.
If you have a partnership license, your qualifier may either be one of the general partners (who shall be designated as the qualifying partner) or the RME.
If you have a corporate license, your qualifier may be either one of the officers listed on the CSLB's records for your license (who shall be designated as the Responsible Managing Officer, or RMO), or an RME.
If your qualifying individual is a Responsible Managing Employee, he or she must be a bona fide employee of the firm and may not be the qualifier on any other active license. This means that the RME must be regularly employed by the firm and actively involved in the operation of the business at least 32 hours per week or 80 percent of the total business operating hours per week, whichever is less.
53. Will a conviction for a criminal offense prevent a person from being licensed as a contractor or from serving as a qualifying individual?
The CSLB’s applications and other forms include questions regarding criminal convictions. The CSLB may deny a license if the crime is substantially related to the duties, functions and qualifications of a contractor. Failure to disclose the requested information may, in and of itself, be grounds for denial of a license.
Even if a crime is found to be substantially related to the duties, functions and qualifications of a contractor, an individual may be licensed if he or she has demonstrated sufficient rehabilitation. See Rule 869 in Chapter 13 of the California Contractor’s License Law & Reference Book.
In 2003, the Legislature mandated that all applicants for licenses and home improvement salesperson registrations would be required to submit fingerprints with each application. All new applicants for licensure, including each officer, partner, owner and responsible managing employee; and all home improvement salespersons will have to submit fingerprints.
Fingerprints are not required for:
||Individuals who are currently licensed by the CSLB, as long as they do not apply for any changes to their licenses; and
||Applicants for joint venture licenses.
Please visit the CSLB's Web site for additional details.
54. Are there any financial requirements to meet in order to qualify for a contractor's license?
Yes. All applicants for a new contractor's license, other than those applying for a joint venture license, must have more than $2,500 worth of operating capital. Operating capital is defined as your current assets minus your current liabilities.
55. Are there any bond requirements for a contractor's license?
Yes. It is your responsibility to file a contractor's bond or cash deposit with the Registrar in the amount of $10,000. In addition, you must submit a separate Bond of Qualifying Individual or cash deposit in the amount of $7,500 for the Responsible Managing Employee (RME) or the Responsible Managing Officer (RMO). However, the CSLB may grant an exemption from the requirement to file a Bond of Qualifying Individual if the RMO certifies that he or she owns 10 percent or more of the voting stock or equity of the corporation for which he or she is to serve as the qualifying individual.
56. Where do I obtain bonds?
You may purchase bonds from your insurance agent or from one of the private holding companies licensed by the State Department of Insurance. The CSLB does not issue bonds. Information regarding bonds and cash alternatives to bonds is available from the CSLB Web site, the automated phone system, or by mail.
57. How long is a bond valid?
A bond may be issued for whatever length of time you and your insurance agent or bond company representative arrange. Most bonds are issued for a period of one to three years. At the end of that time, the bond may be canceled, or the bond company may request another premium to extend the life of the bond.
58. What is the total amount of the fees I must pay to obtain a contractor's license?
Fees are subject to change. Current fees are printed on the application forms and notices distributed to you. You may call the CSLB's automated phone system or check the Web site to verify the fees. Currently, it costs a total of $400 in fees to obtain a contractor's license for one classification. This amount includes both the non refundable application processing fee and the two-year initial license fee.
59. Do I need to be concerned about Workers' Compensation Insurance?
All contractors are required to present proof of workers' compensation insurance coverage as a condition of licensure, to maintain a license, to activate an inactive license, or to renew a license, unless they are exempt from this requirement. Contractors who do not have employees working for them are exempt from the requirement for workers' compensation insurance, but they will be required to file a certification of this exemption with the Registrar. If the license is qualified by a Responsible Managing Employee (RME), an exemption certificate cannot be submitted. Neither the proof of coverage nor the exemption is required for an inactive license (see Question 48).
60. How long is a license valid?
A contractor's license is initially issued for a two-year period. It will expire two years from the last day of the month in which it was issued. Licenses may be renewed for two years at a time if renewed on active status, or for four years if renewed on inactive status.