BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 561 (Monning) - Home improvement salespersons ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 12, 2015 |Policy Vote: B., P. & E.D. 9 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 18, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- 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: SB 561 (Monning) Page 1 of ? 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 SB 561 (Monning) Page 2 of ? 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. -- END -- SB 561 (Monning) Page 3 of ?