New Law Makes "Consultants" Be Licensed Contractors

New, Revised Laws Affect State Contracting Practices

Legislation strengthens CSLB consumer protection measures

SACRAMENTO — The broadly used term “consultant” as it relates to building and construction work becomes more clearly defined onceAssembly Bill 2237 takes effect on January 1, 2013. The new law, sponsored by the Contractors State License Board (CSLB), states that anyone who provides or oversees bids for construction, arranges for subcontractor work and schedules, and/or has oversight for a project is, in fact, acting in the capacity of a contractor and must be state-licensed. In California, a state contractor license is required for any project that is more than $500 in combined labor and material costs.

“AB 2237 is a valuable consumer protection measure and will place project responsibility where it belongs,” said CSLB Registrar Steve Sands. “All too often, people who don’t have a state contractor license call themselves construction consultants and encourage property owners to take on a home improvement project as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability.”

Owner-builders that employ workers must be registered as an employer with the Employment Development Department and must have protective measures in place for workers, including workers’ compensation insurance in the event of an onsite injury. The homeowner becomes responsible for all phases of a project and its integrity, including pulling project permits, requesting inspections, and making sure local and state building codes are met. The new law will clearly define when someone is a contractor and discourage unscrupulous individuals from working under a fraudulently obtained owner-builder permit.

Another CSLB-sponsored bill strengthens enforcement authority over contractors who violate state contracting laws. AB 2554 amends Business and Professions Code sections 7011.4 and 7106.5 to enable the CSLB Enforcement division and its representatives to issue notices to appear in court related to disciplinary actions against a license.

Several other laws affecting consumers, contractors, and the construction industry take effect January 1, 2013:

Workers’ Compensation Insurance

AB 1794 authorizes the Employment Development Department (EDD) to provide new employee information filed by employers with members of the Joint Enforcement Strike Force (which includes CSLB) to aid in prosecuting tax withholding and workers’ compensation insurance violations.

AB 2219 indefinitely extends the requirement that all C-39 Roofing contractors obtain workers’ compensation insurance coverage, even if they certify that they have no employees. The bill also extends, indefinitely, the requirement that insurers conduct annual audits, and requires that these audits be conducted in person to verify the accuracy of the reported number of employees.

SB 691 adds CSLB to the list of agencies approved to receive workers’ compensation insurance information from EDD.


AB 2114 enacts new construction permit requirements for swimming pools, spas, or public wading pools.

SB 1099 changes the effective date of regulations to four times annually, versus the current 30 days following Office of Administrative Law (OAL) approval, and requires OAL to provide a link on its website to all regulations filed with the Secretary of State.

SB 1520 makes minor changes to the state’s regulatory adoption processes.

CalRecycle’s Paint Stewardship Program is now in effect. These regulations outline the steps for recycling unused architectural paint.

Public Works Contracting

AB 2440 makes changes impacting those contracting for public works projects with the Los Angeles County Metropolitan Transportation Authority.

SB 1370 requires the Department of Industrial Relations to post on its website prevailing wage requirements on public works projects.

SB 1549 changes public works contract bidding in the San Diego region.

Boards and Licensees

AB 1588 waives fees or continuing education requirements for a licensee whose license expires while on active duty in the Armed Forces or California National Guard.

AB 1904 allows for the issuance of temporary professional licenses (including those issued by CSLB) to spouses of those serving in the military.

AB 2570 prohibits a licensee from including provisions in settlements of a civil dispute that prohibit the consumer from contacting, filing a complaint, or withdrawing a complaint with CSLB (or any other consumer protection program overseen by the Department of Consumer Affairs).

SB 1576 enables CSLB to take administrative action if a licensee files a false complaint against another licensee.

The California Air Resources Board issued a regulatory advisory regarding labeling requirements for off-road diesel-fueled construction vehicles.

The Occupational Safety and Health Standards Board introduced regulations pertaining to safety orders for forklifts, excavators, and woodworking equipment and machines, but will not proceed with those related to ladderway openings.

Additional Construction Laws

AB 1750 specifies that a C-27 Landscaping contractor can enter into a prime contract for a rainwater capture project.

AB 2339 requires state regulators and those involved in the heat pump and geothermal heating and cooling industries to evaluate policies and develop infrastructure for wider use of these technologies.

SB 1092 requires brokers of construction trucking services to demonstrate evidence annually of a valid surety bond.

The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. More information and publications about hiring contractors are available on the CSLB website or by calling 800-321-CSLB (2752). You can also sign up for CSLB Email Alerts. CSLB licenses and regulates California's 300,000 contractors, and is regarded as one of the leading consumer protection agencies in the United States. In fiscal year 2011-12, CSLB helped recover nearly $36 million in ordered restitution for consumers.