General Contractors Sub Contractors

General Contractors, Subs and Certs

No, Ghost Busters are not currently a classification that requires a contractor’s license. There are a few older classifications like C14 and C26 that have dematerialized and you might still run across sometime. At some point, the Board decided to repeal those classifications and fold them into other specialties.

What has remained the same are the two major categories of contractor classifications – general contractors (designated with an “A” or “B”) who typically have responsibility for the full project and subcontractors or specialty contractors who have a “C” designation and then a number which describes their specialty or what field they qualified in. General contractors typically hire or retain the subs who will all claim that they are the ones that actually do the work.

Besides the general and subs designations, you may see some contractors advertising themselves as having very specialized certifications. For example, ‘ASB’ is a certification award to a contractor who is qualified to safely remove asbestos. Removal of other hazardous substances may require a ‘HAZ’ certification. Just like contractor designations, certifications sometimes are repealed for various reasons. An example of one that had a relatively short life is ‘HIC’ which stood for Home Improvement Certification. It was removed when it was apparent that it was not only a duplication of the same qualifications a general contractor was required to possess, but it added another level and associated costs to the process that was entirely unnecessary.

It may seem obvious as to when you’d need or use each, but let’s be sure by going over a couple of examples. When is it appropriate to use a General Contractor instead of a Specialty Contractor? According to the CSLB, whenever the job requires two or more types of work like framing and electrical. This means that most every kitchen and bathroom remodel (which usually involves plumbing, electrical, carpentry, tile work, etc) will always require a General Contractor to take responsibility for the entire project. The GC may do all the work or subcontract portions of the job to specialty contractors that they have a relationship with.

An exception to that rule might be if you decide to take the role of general and do it yourself including hiring a plumber for the plumbing work, electrician for electrical and so on. In a future Series, we’ll get into the pros and cons of Do-It-Yourself contracting including why most inexperienced do-it-yourselfers end up paying more than they should because they don’t know the Tips and Tricks on how to work the system.

Quiz time: Who do you contact when you want a new air conditioning system?

Answer: a C-20 HVAC contractor (Heating, Ventilation and Air Conditioning). Who do you call when the new AC system is part of a room addition? Answer – You’ll want a General Contractor who oversees and coordinates each phase of the addition and hires the necessary specialties. He’ll hire the C-20 and take the appropriate responsibility for that decision and the work done.

What if you don’t know a C-20 HVAC Contractor or a General Contractor? Another great segue to our next series, “Finding a Contractor”.

contractor licensing classifications

Licensing Classifications

In our previous licensed versus unlicensed comparison discussion, we briefly touched on California state law that states in part, “anyone who contracts to perform work on a project that is valued at $500 or more for labor and materials must hold a current, valid license from the CSLB”.But does holding a ‘current, valid license’ mean that the contractor is qualified to do anything related to contracting? Absolutely not! You wouldn’t hire a podiatrist to perform eye surgery (unless you’re really into new experiences). Currently, there are 43 different classifications and before you feel too overwhelmed, it’s actually pretty easy to figure out what license classification you need. Let’s take a quick look at those classifications and break them down for real world use.

For the most part, the classifications are divided into two broad types: a general contractor and a specialty contractor. There are two types of general contractors – a General Engineering Contractor (designed with an “A”) and a General Building Contractor (“B”). A brief description of a general contractor might be an individual or company that usually oversees projects and coordinates the specific licensed subcontractors for a job – also known as the boss (at least I like to think so). Subcontractors, or Specialty Contractors, are identified by the letter “C” followed by a number that describes the specialty like roofing (C39) or electrical (C10). Here’s a list of the “C’s”:

 

  • C-2     Insulation and Acoustical Contractor
  • C-4     Boiler, Hot Water Heating & Steam Fitting
  • C-5     Framing & Rough Carpentry
  • C-6     Cabinet, Millwork & Finish Carpentry
  • C-7     Low Voltage Systems
  • C-8     Concrete
  • C-9     Drywall
  • C-10   Electrical
  • C-11   Elevator
  • C-12   Earthwork & Paving
  • C-13   Fencing
  • C-15   Flooring & Floor Covering
  • C-16   Fire Protection
  • C-17   Glazing
  • C-20   HVAC
  • C-21   Building Moving/Demolition
  • C-23   Ornamental Metal
  • C-27   Landscaping
  • C-28   Lock & Security Equipment
  • C-29   Masonry
  • C-31   Construction Zone Traffic Control
  • C-32   Parking & Highway Improvement
  • C-33   Painting & Decorating
  • C-34   Pipeline
  • C-35   Lathing & Plastering (aka stucco)
  • C-36   Plumbing
  • C-38   Refrigeration
  • C-39   Roofing
  • C-42   Sanitation System
  • C-43   Sheet meal
  • C-45   Sign
  • C-46   Solar
  • C-47   General Manufactured Housing
  • C-50   Reinforcing Steel
  • C-51   Structural Steel
  • C-53   Swimming Pool
  • C-54   Ceramic & Mosaic Tile
  • C-55   Water Conditioning
  • C-57   Water Well Drilling
  • C-60   Welding
  • C-61   Limited Specialty

It can be pretty obvious as to whom to call for a stopped up drain. Next, we’ll take a look at the not-so-obvious plus examine a couple of possible confusing scenarios.

contractor licensing violation

Contractor License Violation

Licensing – Forensic dirt analysis

All is not as it seems, Mr. Watson. To truly understand the history of these villainous acts, we must scrutinize the evidence and reconstruct the crimes. We’ll focus only on factual violations that have earned their place of dishonor on the Board’s violation page. But our examination will show that sometimes the punishment does not fit the crime.

Let us examine the story of someone who is still working in Southern California despite having violations back as far as 1998 for 7107 (Abandonment without legal excuse of any construction project), 7109A (Departed from Trade Standards), 7113 (Exceeded Contract Amount) and a few months later, he added 7116 (Willful or Fraudulent Act) and another 7107 abandonment to his sheet. He did eventually lose his license but in the time it took, lots more consumers got ripped off. A background check (mandatory for anyone that applies to work for me) revealed a couple of felony convictions and some jail time for domestic abuse. Even though he is not a licensed contractor at this time, he does run his own handyman outfit locally and receives most of his business from one of those Internet contractor referral services and lists. As a handyman, he isn’t required to be licensed but for you as a consumer, wouldn’t you like to know this information before you invite him into your home or business? No names please – I have no desire to spend time and money defending against even a frivolous lawsuit. My role is to provide the tools a consumer needs to do their own research and protect themselves and their family.

A cautionary word before you move on in your search for the perfect contractor – Consumers don’t really want to hear this, but lots of these complaints come from people who are unreasonable or just plain wrong. Many consumers have a need to ‘win’ and look to get something for free or greatly discounted. Perhaps I shouldn’t admit this in such a public forum, but I’m who really dislikes fighting and when confronted with an individual who finds an argument to justify just about anything, sometimes I’ll provide a free service in order to find a less stressful solution.

In the last article, we touched on a code violation (7110) in which the contractor had failed to pull and pay for the necessary building permits. This one line violation doesn’t mention the fact that (according to the contractor in question), he failed to get the permit because the homeowner had allegedly agreed to pay for it but then refused and (again, according to the contractor) lied to the State Inspector about it. The contractor paid for the permit and so now it shows “Complete” on his rap sheet. Even assuming his version is the truth, the contractor was still in the wrong as it is his responsibility to put details like who pays for the permit in writing. He should have known better.

It isn’t just consumer complaints that appear on this website page. What’s also listed is any violation of contractor law so the violation may appear simply because the contractor’s paperwork isn’t in order. But even in that situation, the contractor gets plenty of warning and time to get things straight before he is forever tarnished with the Stain of Violation.

Contractor Licensing Digging up the Dirt

Licensing – Digging up the Dirt

LICENSING DUE DILIGENCE – Complaint Violation

While reviewing the information on a contractor posted on the Contractors State License Board website, you reached that rather innocuous line titled “Additional Status”. But rather than being blank like so many others, this one is filled in with the following line: “Click here for Complaint Disclosure Information”. Clicking on the Complaint Disclosure link will bring you to another page where any complaint or violation involving that license is listed. Before we click on the violation link and read the juicy details, let’s go over what this information means – and what it doesn’t mean.

It usually has to get pretty bad to end up with something on this page. Think about how many times you might have been wronged by someone and you took it to the rather drastic step of contacting and filing a formal complaint with a state agency. Most consumers who aren’t happy try lots of other steps first (like the BBB or getting a lawyer to write a nasty letter) before they seek a solution using the state bureaucracy. So the odds are that if the complaint is coming from a consumer and it reaches the level of appearing on this page, then there’s probably one very unhappy client out there.

We’ll get into the process of filing a complaint and how it’s handled (or insufficiently handled) by the Board in a later Series; but let’s get back to some basic definitions and explanations of what can be found on this page. The page will list the Case Number, Date and Status of each violation. Status is what happened as a result of the Board’s investigation. The license may have been suspended as punishment or revoked if for repeat offenders or when the violation was sufficiently bad as to end up with some jail time in some cases. It can also reflect when the violation was resolved (usually by the word “Complete”) which means the contractor did what was necessary and resolved whatever problem existed.

Clicking on the Case Number will bring you to another page that provides you with three pieces of information on the violation: 1) the Code or law that the contractor is accused of violating – usually California’s Business and Professions Code; 2) the Violation which is a code number like 7107 for those who want to really get into the generic details of the law; and 3) a description of the violation – for example, 7107 refers to “Abandonment without legal excuse of any construction project”.

An example of a ‘lesser offense’ might be 7110 which in the case of a contractor I know who has this on his record, refers to the fact that he violated building law by not getting a permit.

But all is not as it seems. Let’s dive deeper into those violations with a couple of good war stories to find out what really happened and to help put this whole violation process in perspective. That’s next.

Decipering a Contractor License

Deciphering A Contractor License

Now that we’ve confirmed the easy and obvious stuff, let’s take a little bit deeper look. There could be some things here that could be of major importance later on.

The next item we’ll take the microscope to is:

Additional Status

In most cases, this is blank. But if there’s been any code violation involving the licensee, you’ll see a link titled “Complaint Disclosure”. In the next articles in this series we’ll go into depth on the information found when you click on the link. But like raising kids and dogs, it’s just as important to acknowledge the positive as the negative and so no link in this section is a good indication that an experienced contractor has never done anything that rises to level of a consumer filing a complaint with the Board (even completed or satisfied complaints are listed as we’ll discuss shortly). Here’s where I get to point out that in over 30 years of contracting, that section has remained blank for my license(s)

Classifications

There’s enough information here to justify its own section so for now, simply make a note of the contractors classification and we’ll discuss in detail shortly.

Bonding

Another topic that qualifies for its own section. We’ll be looking at license bonds in quite a bit of depth later; for now, you’ll want to make sure that they are bonded and the bond is active. Surety companies love to get their premiums so the moment the contractor doesn’t pay up, the surety company changes the status in this database so you can be assured it’s probably up to date

Workers Compensation

Like any other insurance coverage, its status should be listed here along with who the carrier is (this could be important if an accident occurs on your property regardless of whether or not you have homeowners or other property insurance). However, many contractors prefer to use independent contractors and subcontractors when they need additional help rather than employees (primarily for the many tax advantages) in which case they need to file an exemption form with the State. Not a problem, but it does mean that the consumer needs to make sure that anyone else coming on their property is covered by a policy or there is an exemption form on file for each qualifying individual.

Personnel List

This is a link on the bottom, center of the page that is supposed to provide you with key personnel of the contractor. However, it usually only gets updated when the contractor renews their license so while you might find out interesting information about the business, it really isn’t a good source of up-to-date information.

Other Licenses

This link may tell you much about the contractors past although most consumers rarely click on it. In my case, it would let the reader know that I was first licensed on May 11th, 1981. But what’s NOT there is even more important – anything about disciplinary action and/or complaints.

 

Sounds like a great segue to our next posting subject on checking out the disciplinary actions taken against your contractor.

Examining a contractor license

Examining a Contractor License

You’ve just confirmed that the contractor does have a license. Now, let’s take a closer look at some of the information the Contractor’s Board has provided and see what else we can dig up on him/her.

Here’s the real basic information that’s posted on the Board’s website for that contractor:

License Number

Confirm that it is the same number on any and all paperwork between you and the contractor. A very popular scam has been to ‘use’ someone else’s number for their business.  A couple of years ago, I found that a local painting contractor used my inactive license (a contractor should only have one active license at a time) on all his paperwork because he knew that most consumers don’t take the extra step and match things up.

Business Information

Basic contact information like name, address and phone but just like in the previous example, a cautious consumer will do a quick check to make sure the license number above matches the name in this section and all of that matches everything the contractor provides like business cards, advertising, proposals, contracts, etc. If something doesn’t match – STOP! Get the issue cleared up so you know who you’re doing business with.

Entity

This is the contractor’s business legal status. Everyone chooses a business form that works best for them so don’t read too much into it. But it could be important later to know just who (or what) you’ve contracted with should a problem come up.

Issue Date

True or False: Because license numbers are issued sequentially, the smaller the number, the longer the contractor has been in business. Answer – FALSE (maybe). Under California’s contractor laws, every entity must have a license. Using myself as an example, when I first qualified for a general contractor’s license back in 1981, I was assigned license number 404777 as a sole proprietor. When I decided to incorporate my company I was essentially forming a new entity and under the law, it had to have a new number issued – 975906. Same qualifying person; same experience, etc. Just a quirk of how the State does things. Quick Note: A qualifying licensee can only have one active license at a time so 404777 didn’t vanish – it’s listed as inactive and I can activate it at any time should I decide to inactivate the corporate license.

Expire Date and Current Status

Just like a Driver’s License, a contractor’s license must be renewed on a regular basis. This helps you make sure they’re up to date at that specific time and whether or not the license is active. Remember that unscrupulous painting contractor? Anybody who had checked the license number would have seen that its status was “Inactive” and warning bells should have gone off.

At first glance, everything seems to look pretty good. But let’s peel away another layer and see what we find.

How to Check a Contractor License

Checking whether a contractor is properly licensed is very easy. Go to the Board’s web site: www.cslb.ca.gov and on the left side, you’ll see this box:

Instant License Check

Click on this link even if you don’t know the license number. What will appear next will be a page with five buttons in the middle that gives you options where you can find out if the contractor is properly licensed to provide the work he or she is proposing. The options below are listed in the sequence best able to get you that information with “Search Tips” on the bottom of the page to help you:

  • License Number – Licensed contractors must include their license number on any advertising so if you already have something from them, this is an easy way to find them in the database
  • Business Name – If you don’t have the number, but you do have the name of the business, click on this link
  • Personnel Name – You may be talking to someone who claims to be or to represent a licensed contractor. This option can help when you don’t have a license number or perhaps you’re unsure of the company name
  • His Number – sales people who are authorized to represent a licensed contractor are assigned a number that ties them back to the company they represent.
  • His Name – when all else fails, try accessing the records through the person’s last name. A bit harder search, but a check here can help determine credibility

If you don’t find what you’re looking for, do not jump to the assumption that the contractor lied to you and isn’t really properly licensed. Remember that computers and their databases are only as smart as the people who enter the data. Let’s use my company as an example. If you didn’t have my license number, you’d probably start searching with the second button – ‘Business Name’. Try typing in ‘HB Contracting’. Click on the button and you find . . . . nothing; no HB Contracting!

Someone in the Contractors Board office decided to add a space between the ‘H’ and the ‘B’ so unless you typed in ‘H B Contracting’, you might assume I don’t exist. This error may be corrected by the time you read this, but the lesson here is don’t assume – just contact the contractor and ask for help in finding him or her in the Board’s database (don’t take their word for it either – check it out).

Once you’re found the contractor in the database, you’ll get a page that provides some basic information on the licensee.  So is the contractor in the clear? Many consumers stop at this point but there’s much, much more to this page of information so while you’re there, why not take the next step? How we analyze this information is the subject of our next posting.

Risks of Hiring Unlicensed Contractors

Risks of Hiring Unlicensed Contractors

The facts and the resulting risk we just introduced may be sufficient to discourage most consumers from using an unlicensed contractor. But I’ve pledged to be as open and honest as possible in reviewing these issues and we don’t want to ignore the sole underlying reason as to why a consumer would even consider using unlicensed workers – the question of price.

Many consumers still hire unlicensed people on the theory that they will charge less than a licensed contractor.  That theory is based upon a number of both valid and not-so-valid assumptions. Examples of these assumptions include:

  • Government regulations result in additional costs to licensed contractors that are passed on to consumers
  • Everyone else who has a license (doctors, lawyers, architects, engineers, etc) have high rates; partly in order to recoup their investment in education and experience
  • As an advanced college degree is not required to be a licensed contractor, the work is really very simple so there’s no real difference between the licensed and the unlicensed contractor.

There is an element of truth to each of these assumptions.  For example, a license must be renewed on a regular basis to remain valid at a current cost of $360 ($30 per month). The government also requires that licensed contractors carry a license bond in the amount of $12,500 – easily obtainable for under $600 ($50 per month). Other government fees like a city requiring a business to buy a business license or pay for job permits have nothing to do with whether or not the contractor is licensed. Bottom line – there is a cost for the license but it’s pretty minimal.

Here’s a Rule-of-Thumb backed up by over 30 years of contracting experience. For low-cost jobs that require a minimum of expertise, unlicensed contractors can usually do the job cheaper. But for anything that requires any reasonable level of complexity (like remodeling or adding a room) or a special skill set (like air conditioning, plumbing or electrical work) there is very, very little difference in price between qualified experienced contractors. Check it out and you’ll find that the real difference in price is based upon factors completely unrelated to their license status like whether or not they’re carrying acceptable insurance policies and how much they spend on marketing and lead generation. We’ll explore those factors extensively in future articles but let’s close this post regarding licensed vs. unlicensed contractors with the following Alert direct from the California Contractors State License Board website:

Alert

Be advised that unlicensed individuals pose a risk to you and your family’s financial security. They expose you to significant financial harm in the event that a worker is injured while on your property, if your property is damaged, if the work is incomplete and/or faulty. Few, if any, unlicensed individual has bonding or workers’ compensation insurance. The quality of their work usually doesn’t compare to that of a licensed contractor. Don’t take the chance in order to save a few dollars. You’ll probably end up paying more in the long run.

Next, we’ll investigate how to investigate – a license that is.

Licensed vs Unlicensed Contractors

Here’s what the California State License Board (CSLB) has to say about licensed vs unlicensed contractors:

“It is illegal for an unlicensed person to perform contracting work on any project valued at $500 or more in labor and materials. Besides being illegal, unlicensed contractors lack accountability and have a high rate of involvement in construction scams.” 

While the law’s pretty clear on the subject, the fact remains that the CSLB and law enforcement stay pretty busy setting up stings and other actions designed to catch unlicensed contractors and the courts are full of claims by consumers trying to recover damages from these individuals.

The argument in support of a consumer knowingly undertaking the risk associated with hiring the unlicensed will be the subject of our next article. But before we get into the risk/reward debate, we need to get a better handle on some of the risk issues as they relate to the consumer’s objectives. For the consumer, the real issue comes down to their desire to get the work they want done with the least amount of headaches and at the best price for the value. So let’s look at a few additional truths that should enter into the decision process:

  • If someone is really qualified to do the work you want done without a lot of stress, than the question to be asked is “Why doesn’t that individual have a license?” There may be a valid reason like a past conviction involving ripping off consumers; or insufficient experience in order to qualify for the license.
  • If anything goes wrong, you’re pretty much on your own. The law cannot help you (after all, you committed an illegal act when you hired that unlicensed guy) and the CSLB’s attitude comes down to something akin to an “I told you so”. They reserve their scant resources to help law-abiding consumers. Even when they go after or set up stings to catch the unlicensed guy in the act, their objective is to stop him or her from taking advantage of new victims and punish him for breaking the law – none of which helps you recover any damages you may have suffered.
  • Insurance companies typically will not insure or bond an unlicensed operator. Imagine what would happen when that worker without workers compensation coverage experiences a slip and fall or other type of accident (whether real or a scam) on your property – you may now be responsible for their medical bills plus anything else their lawyers can pin on you.  Or imagine this nightmare scenario – during the job, your property is damaged (accidentally of course) by one of their workers and you now discover they don’t have liability insurance to take care of the damage.

This introduction to the risks associated with unlicensed activity is probably enough to make anyone wonder why would someone hire an unlicensed contractor. But as any thriving underground economy exists for a reason, we’ll next take a closer look at some of the influencing issues.

contractor licensing overview

Contractor Licensing Overview

It’s time to move forward on that construction project. You need to hire a contractor, but aren’t sure of the best way to proceed. If you have a relative or good friend who’s a contractor (and you like him or her), the decision has probably already been made. It’s also an easy decision if you previously had contracting work done and it was a great experience.

But for many people who have heard news stories reporting scams or tales of construction horror, considering even the smallest of construction projects can produce tremendous trepidation and stress. The intent behind these consumer awareness articles is to help ease that stress by arming you with the information and support you need to make good decisions.

In this new Series on Licensing Due Diligence, we’ll review a series of topics related to contractor licensing.

Subjects include:

Let’s start with the argument for and against licensing.