New, Revised Laws Affect State Contracting Practices

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SACRAMENTO – The broadly used term “consultant” as it relates to building and construction work becomes more clearly defined now that Assembly Bill 2237 took effect on January 1, 2013. The new law, sponsored by the Contractors State License Board (CSLB), states that anyone who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a project is, in fact, acting in the capacity of a contractor and must be state-licensed. In California, a state contractors license is required for any project that is more than $500 in combined labor and material costs.

“AB 2237 is a valuable consumer protection measure and will place project responsibility where it belongs,” said CSLB Registrar Steve Sands. “All too often, people who don’t have a state contractor license call themselves construction consultants and encourage property owners to take on a home improvement project as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability.”

Owner-builders that employ workers must be registered as an employer with the Employment Development Department and must have protective measures in place for workers, including workers’ compensation insurance in the event of an onsite injury. The homeowner becomes responsible for all phases of a project and its integrity, including pulling project permits, requesting inspections, and making sure local and state building codes are met. The new law clearly defines when someone is a contractor and discourages unscrupulous individuals from working under a fraudulently obtained owner-builder permit.

Another CSLB-sponsored bill strengthens enforcement authority over contractors who violate state contracting laws. AB 2554 amends Business and Professions Code sections 7011.4 and 7106.5 to enable the CSLB Enforcement division and its representatives to issue notices to appear in court related to disciplinary actions against a license.

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