BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 561 (Monning) - Home improvement salespersons
          
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          |Version: May 12, 2015           |Policy Vote: B., P. & E.D. 9 -  |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 18, 2015      |Consultant: Mark McKenzie       |
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          This bill does not meet the criteria for referral to the  
          Suspense File.







          Bill  
          Summary:  SB 561 make several changes to the laws governing home  
          improvement salespersons (HIS) that are licensed and regulated  
          by the Contractors' State License Board (CSLB).  Specifically,  
          the bill would eliminate a requirement that a HIS be registered  
          with CSLB for each licensed contractor by whom the HIS is  
          employed.  The bill would instead authorize the HIS to have a  
          single CSLB registration, and require a licensed contractor to  
          notify CSLB when he or she employs a HIS.  


          Fiscal  
          Impact:  







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           One-time CSLB programming costs in the range of $110,000 to  
            $130,000 in 2015-16 to provide for the changes to HIS  
            registration and contractor notification requirements.  
            (Contractors License Fund)

           Estimated CSLB costs of up to $50,000 in 2016-17 to adopt  
            regulations regarding electronic submission of HIS  
            registration applications and contractor notifications.  
            (Contractors License Fund)  CSLB indicates it can regulatory  
            absorb costs within existing resources.


          Background:  Existing law, the Contractors State License Law, provides for  
          the licensure and regulation of more than 300,000 contractors  
          the CSLB.  A "home improvement salesperson" is defined as a  
          person employed by a home improvement contractor licensed under  
          the Contractors Law to solicit, sell, negotiate, or execute  
          contracts for home improvements, for the sale, installation or  
          furnishing of home improvement goods or services, or of swimming  
          pools, spas, or hot tubs.  It is a misdemeanor for any person to  
          engage in the occupation of salesperson for one or more home  
          improvement contractors within this state without having a CSLB  
          registration for each of the home improvement contractors by  
          whom he or she is employed.  A home improvement contractor who  
          employs a person to sell home improvement contracts while that  
          person is not registered with CSLB is subject to disciplinary  
          action.  Existing law also authorizes a HIS registration to be  
          renewed at any time within 3 years after its expiration, if the  
          applicant pays the renewal fee and a $25 delinquent renewal  
          penalty.
          According to CSLB, there are currently approximately 11,170  
          active HIS registrants, nearly 5,500 expired registrants, and  
          almost 85,000 invalid registrants.  In the 2013-14 fiscal year,  
          CSLB received approximately 800 HIS applications a month, a 40%  
          increase over the previous three years.  This significant  
          increase has led to a backlog of applications and processing  
          delays.  




          Proposed Law:  
            SB 561 would make the following changes to the HIS statutes:
           Delete the requirement that a HIS have a registration for each  








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            contractor by whom he or she is employed, and instead require  
            the HIS to register with CSLB in order to engage in the  
            business of a HIS.  
           Specify that a HIS registration expires two years from the  
            last day of the month in which the registration was issued, or  
            two years from the date on which a renewed registration last  
            expired.
           Require a licensed home improvement contractor to notify the  
            CSLB registrar about the employment of a registered HIS, as  
            specified, and to also notify the CSLB when a registered HIS  
            ceases to be employed by the contractor.
           Specify that a contractor who employs a registered HIS, but  
            fails to comply with the CSLB notification requirements, is  
            subject to disciplinary action.
           Authorize CSLB to implement a system, through regulations,  
            that provides for the electronic transmission of an initial or  
            renewal application for HIS registration, and for transmission  
            of contractor notices.




          Staff  
          Comments:  This bill would require CSLB to make changes to the  
          current IT system to account for the issuance of a single HIS  
          registration and to track businesses with that registration.   
          The work would also entail consolidating and converting existing  
          HIS registrations with multiple expiration dates to a single  
          registration number.  Total programming and IT costs are  
          projected to be in the range of $108,000 to $129,000 in the  
          2015-16 fiscal year.  Staff estimates that CSLB workload to  
          develop and adopt regulations to provide for electronic  
          submission of HIS registration applications and contractor  
          notifications regarding HIS employment could result in  
          additional costs of up to $50,000 in the 2016-17 fiscal year, to  
          the extent CSLB opts to implement the electronic system.   
          Providing for electronic transmission could also drive  
          additional IT workload costs.


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