SBE News

Capitol Connection #1050

We often work with attorneys on behalf of contractors and industry clients, so you can probably guess we get a lot of ‘what if’ questions in the office. Here’s one for you! We qualify three questions with one answer and another contractor answers his own question…

Shauna Krause, writer of Capitol ConnectionQ:  We need to obtain a new license for a new entity we are forming in California.  We will be using one of our employees to act as the RME (Responsible Managing Employee).  I know there are rules about an RME only Qualifying one license at a time.  Does this apply from State to State as well?  In other words, can we use the same person to Qualify our licenses for Arizona and Nevada?

A:  Yes, you can use the same Qualifying Individual for Arizona and Nevada.  While you are required to list your licenses in other States on the applications, they do not have a rule as to how many licenses you can Qualify outside of Nevada and Arizona.

Q:  You had informed me that when a Responsible Managing Officer (RMO) is on three active licenses at the same time, he has waited a full year from the time he Disassociates from one of them to be added to another.

What about if someone is on three active licenses and wants to Disassociate from all three and act as the RME on another?  Is that allowed?  Or does he also have to wait a year?

A:  He would also have to wait a full year.  The statute applies regardless of whether an individual is an RMO or RME.

Q:  We are a product manufacturer who would like to derive some money from the installation of our product.  We are thinking of setting up a group of “preferred installers” who we could refer customers to.  Is that permissible and are there any rules about what referral fees we might be able to charge?

A:  B&P Code Section 7157(d) states that is not legal for one contractor to pay any type of inducement (referral fee) to another contractor.  The law does not apply to non-contractors.  While the CSLB generally frowns upon “kickbacks”, the scenario you suggested where a contractor pays a supplier/manufacturer a fee for referrals doesn’t violate the law.  There is no statutory requirement limiting the amount they can charge.  The law only applies to licensed contractors.

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, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at