By Shauna Krause, President, Capitol Services
Contractor regulation is complicated, but when you add layers of people to licensing it’s doubling down on complexity, yet offers greater opportunity for all. Partnerships are also dependent on people, and when unexpected loss strikes everyone involved feels it and must act quickly to survive…
Q: We recently added a new Responsible Managing Employee (RME) to our license and now that he’s officially qualified, he’s asking if he can transfer his license to his new EIN/LLC. But if he were to do that, wouldn’t that make him ineligible to act as our license Qualifier?
A: He could obtain a license for his LLC if he has it issued Inactive and keeps it that way until he is no longer acting as your Qualifying Individual. But you are correct, he would not be able to qualify for both active licenses without any ownership in your company.
Q: Our RME’s license is set to expire at the end of the month, it’s currently Inactive. Do we need to renew it for him to keep him as our company’s RME? What is the benefit to him having an Inactive license vs. an Expired license?
A: You do not need to renew the license for him to continue as your RME. If he plans to remain as RME for your company license for at least next five years, there isn’t really a need to renew the personal license. I would suggest you make him aware if he doesn’t renew it Inactive within five years, he would have to reapply for the license and request the number back. No testing would be required though!
Q: My Partner recently passed away. I have read that a Partnership license is cancelled upon the death or Disassociation of one of the General Partners. I plan to apply for a new license, but I know that takes some time. We have quite a bit of work in progress. Is it possible to request that the CSLB hold off on cancelling the license until we finish the work in progress?
A: I’m sorry for your loss. B&P Code Section 7076 allows for the remaining General Partner or Partners to request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time, which will be determined by the CSLB. This request must be made in writing within 90 days of his death.
Q: If we set up a corporation, and I become an RME (employee, not RMO), can I still RMO up to two additional businesses?
A: An RME can only Qualify one Active license at a time, unless there is some common ownership between the two licensees, meaning one company would need to own at least 20% of the other. You can give my office a call for further clarification if needed.
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While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call 866-443-0657, email info@cutredtape.com, or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA 95827. Search past columns at www.cutredtape.com