Capitol Connection #1012
By Shauna Krause, President, Capitol Services, Inc.
Still have not seen a Sasquatch, but urban legend says it’s out there. What you hear or believe may not always be the right answer as our Delaware contractor learns. We ‘shock’ a Nevada contractor and help another in California understand why two ‘rights’ written in the rules make one wrong…
Q: If my past customers like my work and refer me to one of their friends and I end up closing a sale, it appears that I can pay them a referral fee of let’s say 500.00; because they are not under any licensing authority and not another contractor. I just want to make sure this is ok. While B&P Code Section 7157(d) clearly states that it is not legal for one contractor to pay any type of inducement (i.e. kickback) to another contractor, the law apparently does not include non-contractors.
A: You are correct that referral fees, sometimes called inducements or kickbacks, are not permitted from one contractor to another. However that being said #1, if you refer to the rest of Code Section 7157, specifically 7157(a), a contractor cannot give compensation or reward of any kind (except as referred to in subsection (b)) to an owner for referring sales involving Home Improvement Contracts. #2, Subsection (b) allows a contractor or salesperson to give “tangible items to prospective customers for advertising or sales promotion purposes where the gift is not conditioned upon obtaining a contract for home improvement work if the gift does not exceed a value of five dollars ($5) and only one such gift is given in connection with any single transaction.” Therefore, the scenario you suggested in which you give your customers compensation of $500 for referring your services is wrong and not permitted.
Looking To Obtain A California License
Q: We are a Delaware Limited Liability Company (LLC) looking to obtain a California license. Being that we are not at all familiar with California’s licensing requirements, we contacted our attorney for more information and he informed us that even if you hire somebody who has the requisite license (we are looking at the “B” General Building license), you have to go the Secretary of State and the State Licensing Board, and go through what sounds like a 6-8 month qualification program, which would include financial auditing of the company, before the State will recognize the license as being credited to the company. After further research, I found your website and just wanted to confirm my attorney is giving us correct information.
A: It is true that even if you have an employee who has the appropriate license, you will still register with the Secretary of State and apply with the Contractor’s State License Board (CSLB). While it’s possible for the licensing process to take 6-8 months for various reasons, the standard process usually takes closer to 2-3 months. Further, the CSLB does not perform any financial auditing of the company when you apply for a Contractor’s License.
Erecting Cell Towers In California
Q: In Nevada, my company holds an “A-17” (Lines to Transmit Electricity) license. What type of license is required for erecting cell towers in California?
A: The “A” or General Engineering classification would be the most appropriate license for installing cell towers in California.
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 email@example.com, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at www.cutredtape.com.