from Abdulaziz, Grossbart & Rudman Newsletter
The Contractors' License Law, as it is known, includes a number of provisions pertaining to contractors who have been disciplined. Once a contractor's license has been suspended or revoked, that contractor cannot act as a qualifier of another company without the Board's approval and the posting of a disciplinary bond. Those same persons are also barred from being in any type of managerial position of another contractor. It is grounds for discipline for a contractor to employ a revoked contractor in any role other than what it defines as a "bona fide non-supervising employee." A revoked contractor can always do non-supervisory roles, or in many cases, be registered as a salesperson.
Many contractors who are ultimately revoked go to work for other contractors in non-management roles, rehabilitate themselves and become contractors again. But, there are others, who form a somewhat underground economy, where they buy existing contracting businesses and work behind the scenes; in some cases, these persons form new companies and hire people to act as their qualifiers. This activity certainly is a violation of the License Law. But, about two years ago the Contractors' Board and a very aggressive district attorney began to criminally prosecute several individuals, including sales representatives, qualifiers on licenses, and a revoked contractor who was alleged to have acquired four separate licensed entities, alleging a conspiracy to allow an unlicensed person to act as a contractor.
The criminal action is something that we had never heard of being undertaken before. While certainly any qualifier who rented out their qualifying experience, or allowed a person who is not authorized to work to act in a managerial role, would be subject to discipline. But, it is doubtful that it ever crossed their mind that they could be subject to felony prosecution for their actions. The CSLB is continuing to take a very aggressive stance on this type of behavior.
For this reason, anyone who is considering allowing someone to "borrow" their license, or is considering acting as the qualifier for an entity that they are not going to personally be involved in, should strongly reevaluate that decision.
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