BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 561


                                                                    Page  1





          Date of Hearing:  June 23, 2015


                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS


                                Susan Bonilla, Chair


                     SB 561(Monning) - As Amended June 17, 2015


          SENATE VOTE:  38-0


          SUBJECT:  Contractors: home improvement salespersons.


          SUMMARY:    Eliminates the requirement that a home improvement  
          salesperson (HIS) register separately with the Contractors State  
          License Board (CSLB) for each home improvement contractor he or  
          she works for, and instead allows an HIS to utilize a single  
          registration with one or more licensed contractors.  


          EXISTING LAW:   


          1)Provides for the licensure and regulation of contractors,  
            including home improvement contractors, under the Contractors'  
            State License Law (Contractors Law) by the CSLB within the  
            Department of Consumer Affairs (DCA).  The CSLB is under the  
            direction of the registrar of contractors (Registrar).   
            (Business and Professions Code (BPC) § 7000 et seq.)


          2)Defines a HIS as a person employed by a home improvement  
            contractor licensed under the Contractors Law to solicit,  
            sell, negotiate, or execute contracts for home improvements,  








                                                                     SB 561


                                                                    Page  2





            for the sale, installation or furnishing of home improvement  
            goods or services, or of swimming pools, spas, or hot tubs,  
            except as specified.  (BPC § 7152)
          3)Provides that it is a misdemeanor for any person to engage in  
            the occupation of a salesperson for one or more home  
            improvement contractors within this state without having a  
            registration issued by the Registrar for each of the home  
            improvement contractors by whom he or she is employed as a  
            HIS. (BPC § 7153)


          4)Provides that HIS registrations expire subject to board  
            determination.  (BPC § 152.6)


          5)Provides that an application for renewal of registration is  
            delinquent if the application is not postmarked by the date on  
            which the registration would otherwise expire.  (BPC §  
            7153.3(a))


          6)Provides that a home improvement contractor who employs a  
            person to sell home improvement contracts while that person is  
            not registered by the Registrar as a HIS, is subject to  
            disciplinary action.  (BPC § 7154)


          7)Requires that every application form for an original  
            contractor license, for renewal thereof, for reinstatement or  
            for reissuance, including both active and inactive licenses,  
            shall be signed by both the applicant and by the person  
            qualifying on behalf of an individual or firm, as specified.   
            (BPC § 7067.6)


          THIS BILL: 


          8)Specifies that it is no longer a misdemeanor for a person to  








                                                                     SB 561


                                                                    Page  3





            engage in the occupation of a salesperson for one or more home  
            improvement contractors without having a registration issued  
            by the Registrar for each of the home improvement contractors  
            by whom he or she is employed as a HIS and instead requires a  
            HIS to have, at the time of the sales transaction, a current  
            and valid home improvement salesperson registration issued by  
            the Registrar. 

          9)Provides that these registrations expire two years from the  
            last day of the month in which the registration was issued, or  
            two years from the date on which the renewed registration last  
            expired.

          10)Requires a home improvement contractor to notify the  
            Registrar, in writing, about the employment of a registered  
            HIS prior to his or her employment, including his or her name  
            and HIS registration number, and when that HIS ceases to be  
            employed by the contractor, as specified, and subjects a home  
            improvement contractor to disciplinary action if he or she  
            fails to report that information.

          11)Authorizes the CSLB to implement a system, by regulation,  
            which provides for the electronic transmission of an initial  
            application or renewal application for HIS registration and  
            electronic transmissions of specified notices.

          12)Authorizes the CSLB to implement a system, by regulation,  
            which provides for the electronic transmission of an initial  
            application or renewal application for a contractor license  
            and the acceptance of a digital or electronic signature as  
            part of the filing of that application.   

          13)Makes other clarifying and conforming changes.

          FISCAL EFFECT:  According to the Senate Appropriations Committee  
          analysis dated May 18, 2015, this bill will result in: 


           "One-time CSLB programming costs in the range of $110,000 to  








                                                                     SB 561


                                                                    Page  4





            $130,000 in 2015-16 to provide for the changes to the HIS  
            registration and contractor notification requirements. 



           Estimated CSLB costs of up to $50,000 in 2016-17 to adopt  
            regulations regarding electronic submission of HIS  
            registration applications and contractor notifications.  The  
            CSLB indicates it can regulatory absorb costs within existing  
            resources."
          COMMENTS:  


          Purpose.  This bill is sponsored by the  CSLB  .  According to the  
          author, "[This bill] streamlines the HIS registration process  
          and provides a registration system that makes it easier for an  
          HIS to work for multiple contractors while continuing to be in  
          good standing with the [CSLB]."


          Background.  A HIS is a person employed by a home improvement  
          contractor licensed by the CSLB who is registered to solicit,  
          sell, negotiate, or execute contracts for home improvements on  
          behalf of the contractor.  Existing law requires that a HIS  
          apply for, and be separately registered for each distinct  
          contractor for which he or she works.  Because HISs often work  
          for more than one contractor, the HIS is required to register  
          multiple times with the CSLB.  


          In the 2013-14 fiscal year (FY), the CSLB received 9,522 HIS  
          registration applications, or approximately 800 applications per  
          month, representing a nearly 30% increase from FY 2012-13, and a  
          nearly 40% increase from FY 2011-12.  According to the author,  
          the number of applications received per month has continued to  
          grow while the number of staff to process these requests has not  
          increased, leading to longer processing times.  The average  
          processing time for a HIS registration has grown from 22 days in  
          FY 2011-12, to 64 days in FY 2012-13, to 77 days in FY 2013-14,  








                                                                     SB 561


                                                                    Page  5





          according to the 2014 CSLB Sunset Review Report.  


          As of June, 2015, the CSLB has over 12,600 active registrants,  
          over 5,700 registrants that are expired but eligible to be  
          renewed, and over 85,000 invalid registrants (or registrations  
          that are expired and no longer eligible to be renewed).  The  
          number of invalid registrations is due in large part to  
          salespersons registering with new employers, and also represents  
          a high turnover in the industry.  Roughly 10% of the active  
          registrants hold multiple registrations.   


          This bill would streamline the registration process for a HIS  
          and eliminate the requirement that an HIS separately register to  
          work for each contractor.  Instead, a HIS would only have to  
          register with the CSLB one time, and any home improvement  
          contractor who employs the HIS would have to notify the CSLB  
          about a HIS's pending employment, including his or her name and  
          registration number, and when his or her employment ceases.  In  
          addition, this bill would allow the CSLB to implement a system  
          to provide for the electronic transmission of applications for a  
          HIS registration, and also for contractor licenses, which should  
          further improve processing times and increase efficiency.  


          Prior Related Legislation.  AB 2457 (Nakanishi), Chapter 106,  
          Statutes of 2006, exempted from HIS registration a general  
          partner of a licensee and would make the exemption, as it  
          applies to such a general partner or a corporate officer or  
          qualifying person, applicable only in specified circumstances. 


          SB 364 (Figueroa), Chapter 789, Statutes of 2003, delayed until  
          July 1, 2004, the requirement that an applicant for registration  
          as a HIS furnish a full set of fingerprints to the CSLB.


          SB 1953 (Figueroa), Chapter 744, Statutes of 2002, required all  








                                                                     SB 561


                                                                    Page  6





          applicants for a HIS license to submit a set of fingerprints to  
          the CSLB with his or her application and requires the CSLB to  
          obtain and receive criminal history information from the  
          Department of Justice and the Federal Bureau of Investigation  
          for a criminal history records check.


          AB 2544 (Bill Campbell), Chapter 372, Statutes of 2002, required  
          the CSLB to post specified information on its website each week  
          regarding HIS registration applications.  


          ARGUMENTS IN SUPPORT: 


          According to the  CSLB  , "This bill eliminates the requirement  
          that a[n]?HIS separately register to work for each contractor  
          and, instead, allows a properly registered HIS to utilize his or  
          her individual registration with one or more licensed  
          contractors.  With this change, the licensed contractor that  
          employs an HIS would be required to notify CSLB about the  
          pending employment of any registered HIS, prior to him or work  
          beginning work for the contractor?.    The change proposed by  
          this bill will improve the current registration process and  
          provide increased flexibility of HIS registrants." 


          According to the  California Fence Contractors  and the  Flasher  
          Barricade Association  , "Many?members employ [HIS] in their  
          construction companies.  They are a critical component of these  
          companies' operations and generate a significant portion of  
          their sales.  Unfortunately, current law requires that each and  
          every salesperson who comes to work for a member company must  
          re-register with the [CSLB] again even though most are already  
          registered in good standing with the Board.  This redundancy  
          within the current law is costing these companies and their new  
          salespeople literally thousands of dollars in lost revenue as  
          they cannot legally go to work until their new registration  
          application is processed through the CSLB.  With the economy  








                                                                     SB 561


                                                                    Page  7





          finally starting to pick-up significantly, hundreds of  
          salespeople statewide are all attempting to register with new  
          contractors at the same time?.This measure will eliminate the  
          need to re-register every time a salesperson goes to work for  
          another contractor."


          According to the  California Solar Energy Industries Association  ,  
          "[This bill] promises to reduce the amount of time and paperwork  
          needed to properly comply with the state's [HIS] licensing  
          procedure at the [CSLB]?.As the solar industry ramps up our work  
          to help the state meet its clean energy goals, it is imperative  
          that we reduce soft costs wherever and whenever we can.  The  
          current delays in hiring and employing salespersons is adding to  
          the costs of going solar.  Streamlining and modernizing the  
          process, while maintaining critically important consumer  
          protections, is a significant step in the right direction of  
          lowering the cost of solar power for all California consumers."   



          ARGUMENTS IN OPPOSITION:


          None on file. 


          REGISTERED SUPPORT:


          Contractors State License Board (sponsor)
          California Fence Contractors 
          California Solar Energy Industries Association 
          Flasher Barricade Association 
          Gallagher's Plumbing, Heating, and Air Conditioning 

          REGISTERED OPPOSITION:










                                                                     SB 561


                                                                    Page  8





          None on file. 


          Analysis Prepared by:Eunie Linden / B. & P. / (916) 319-3301