SBE News

Capitol Connection #1120

We take ‘exemption’ with our first contractor, outline RMO ‘ownership’ and help another family concerned with losing the business after unexpected loss…

Q:  As you know, you are helping me with obtaining a new Limited Liability Company (LLC) Contractor’s license in order to replace my existing Corporate license.  Currently, while in the application process, we only have one Member and several Officers, but no employees.  Can we file the Exemption from Worker’s Comp for the time being, and once the license is issued, have our Corporate insurance policy immediately transferred to the LLC?    

Shauna Krause, writer of Capitol Connection

A:  As long as you currently have no California employees, you can file the Exemption from Worker’s Comp.  Once the license is issued, you can request that your insurance company transfer your policy to the new LLC, and you should notify the CSLB as soon as possible of the new insurance certificate.  The “insured” on the certificate should list your new LLC business name, and the Certificate holder should list the CSLB.

Q:  I’ve been reading your column/blog on your website, and it’s very helpful!  However, I’m confused about the ownership requirements for RMO’s.  I’m going to be buying a Contracting business where the seller will remain on the license as an RMO.  Is he required to have a certain percentage of ownership?  I’ve seen where you have implied that ownership is not a requirement, but also lots of mention of 20% of the shares of the corporation.

A:  RMO’s are not required to have any ownership.  The CSLB concerns themselves with an RMO’s ownership only with regards to: 1) whether a $12,500 Bond of Qualified Individual will be required, and 2) whether the RMO intends to act as the Qualifying Individual on more than one license at the same time.  If the RMO owns less than 10% of the company, a Bond of Qualified Individual is required.  If the RMO owns less than 20% of the company, they are only allowed to qualify one license at a time (except under rare occasions).

Q:  My brother passed away recently unexpectedly.  He has a Contractor’s license and I’ve worked for him for over 20 years.  I started out pushing a broom, and I’ve moved up the “ladder” and held several other positions from laborer to now senior estimator.  My Brother’s wife (my Sister-in-Law) wants nothing to do with the business, but the company has over 30 employees, and hundreds of thousands of dollars in contracts out there.  What are my options for taking over the business and ensuring the license doesn’t get cancelled, which would put all of us out of work?

A:  First of all, sorry to hear about your loss.  I looked up the license and it’s a corporation, so you have 90 days (from the date of his passing) to replace your brother as the qualifying individual.  If you’ve worked for the company for over five years in a supervisory capacity, you can request to waive the exams.  Please contact our office to discuss the process further and we would be happy to assist you. 

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