SBE News

Capitol Connections 01/04/2021

LLC Registration, Bankruptcy, and Employee Theft

It’s just unfortunate our first contractor’s situation is dire, but as in many things, there is a ‘silver lining’ regarding their license status. Another contractor’s discovery is also ‘good news/ bad news’, actually, it’s all ‘sad’ at present. I am happy to end with better resolutions for two other licensed contractors…

Shauna Krause, writer of Capitol Connection

Q:  We are a ‘C’ Corporation with a current Contractor’s License in California.  We have recently had a lawsuit filed against us that is most likely going to create the need for us to file for Bankruptcy.  If that happens, what will happen to our Contractor’s License?

A:  Filing bankruptcy, in and of itself, does not affect the status of your Contractor’s License.  If there were a judgment or complaint filed against your license based on the lawsuit, that would be a different story.

Q:  Our company has unfortunately run in to a situation where our RME (Responsible Managing Employee) has been stealing from the company so we need to let him go.  He has agreed to stay on the license as the RME so that our license remains in good standing, however given the circumstances, we need to let him go sooner rather than later.  I understand we have 90 days to replace him on the license.  I have worked for the Company for over 10 years, but I’ve never actually been out in the field doing Construction work.  Would I be able to replace the RME and if so, would I have to take an exam?

A:  The requirement for acting as a Qualified Individual (RMO/RME) is you must document at least four years of work experience in the trade, with at least one of those years being hands-on, practical work experience.  So seeing that you have no hands-on work experience in the trade, you would not qualify to act in that capacity currently.  If you did have at least one year of hands-on experience, and your role with the Company has been in a Supervisory position, you would qualify to request a Waiver the exams.

Q:  We recently applied for a CA Contractor’s License and the CSLB rejected the application stating the business name is not acceptable with the classification we applied for.  They gave us two options, either to change our business name with the CA Secretary of State, or to add a “dba” (doing business as) name to the existing name.  Since we are a Delaware corporation doing business in several other States, we have chosen to add a “dba” for California.  Would that require that we re-submit the application?

A:  No, it does not.  Adding a “dba” would be a revision to the application, you would not be required to start over from scratch.  The CSLB will continue processing the application once you submit the correction.

Q:  We are an Arizona Contracting company and we have a potential project coming up in California.  In reading the instructions for the CA license application, we need to first register our LLC with the CA Secretary of State.  Can you help with this and how quickly can it be done?

A:  Yes, we can assist you with that.  The registration process is currently taking about a month as the Secretary of State has temporarily suspended expedited processing due to the COVID-19 situation.