June 5, 2012

DISCUSSION WITH ORANGE COUNTY DISTRICT ATTORNEY'S OFFICE

Jim Young of the Orange County District Attorney's office gave a presentation on Orange County's District Attorney's office handling of unlicensed contractor issues.  He talked about how important the relationship is between the District Attorney's office and the CSLB and other partners.  He went on to discuss some of the many cases of the Orange County District Attorney's Office in prosecuting unlicensed contractors. 

ENFORCEMENT COMMITTEE REPORT

ENFORCEMENT PROGRAM UPDATE

Vacancy Update

The hiring freeze was lifted on November 22, 2011.  CSLB staff has been advertising and hiring for all vacant positions.  There are currently 21 vacant positions in the Enforcement Division.

Intake/Mediation Centers (IMC)

The savings to the public for the 2012 calendar year is $2,742,405.

Investigative Centers

The consumer restitution in the Investigative Centers from January 2012 through April 2012 is $1,246,047.54.

General Complaint-Handling Statistics

As of April 2012, the pending caseload was 3,399, well below the manageable level of pending complaints of 4,610.  The Enforcement Representative (ER) closure goal has returned to 10 per month.

The following are Enforcement Objectives regarding complaint handling:

• MAINTAIN ER 1 PRODUCTION OF CLOSING 10 COMPLAINTS PER MONTH Following elimination of furlough days and implementation of a personal leave increased the average number of complaints closed per ER to nine (9) closures April 2012, ERs closed an average of 9.6 complaints.
• INCREASE THE PERCENTAGE OF LICENSEE COMPLAINTS SETTLED Licensee complaints settled in April 2012 averaged 37%.
• ACCOMPLISH INTAKE MEDIATION CENTER LICENSEE COMPLAINT DISCLOSURE OF 70% The licensee disposition average in April 2012 was 70%.
• REDUCE 270-DAY-OLD COMPLAINTS TO 100 OR LESSStaff's effective management of pending complaints has resulted in consistently meeting the Board's goal. At the end of April 2012 there were only 81 aged cases.

Case Management

So far this year, there have been over 550 citations issued. 

Due to mandatory settlement conferences, $256,305 has been collected in civil penalties and it has been a savings to the public of $444,663.

The arbitration program has seen 164 cases imitated in 2012 as well as 171 decisions received.  Thirty five of those decisions revoked licenses for non-compliance.  The total for restitution and savings to the public has been $585,303.

There have been 164 new accusation cases opened with restitution for accusations falling just above $26,000 and cost recovery at $6,899.

Statewide Investigative Fraud Team (SWIFT)

There have been 34 sting days during 2012 which SWIFT issued 474 legal actions including Notice to Appear citations.

SWIFT's Spring Blitz

March 14-15, 2012, saw a statewide Spring Blitz wherein SWIFT partnered with local law enforcement, the District Attorney's office and the Employment Development Department in Chico, Clovis, Grover Beach, Lawndale, Murrieta, Redwood City, Visalia and Porterville.  There were 110 arrests and Notices to Appear.  The Spring Blitz was very successful.  The CSLB is gearing up for a summer blitz.

Labor Enforcement Task Force

This task force is a coalition of state and federal agencies working together to combat the underground economy.  It just began January 2012.  The CSLB's core partnerships include the Division of Labor Standards Enforcement, the Division of Occupational Safety and Health and the Employment Development Department.

Between the four agencies there have been almost 500 inspections in the first quarter with just over 400 violations discovered.  The CSLB found that the largest number of the violations that they found were unlicensed contracting, failure to have proper workers' compensation insurance and improper advertising.

Training Update

The 2011-2012 Strategic Plan called for the Enforcement Division to implement a training program for its staff.  Since then, the following training has been conducted:

1. Stop Order Training
2. Conflict Resolution
3. Hearing Officer Training
4. Team Building
5. DCA Management Academy
6. COE Follow-up to Fundamentals of Leadership
7. Training by Riverside District Attorney's Office
8. National Certified Investigator/Inspector Training
9. Basic Investigative Techniques
10. Elder Abuse Training
11. Interview Techniques
12. Bankruptcy Case Law & Impact on Enforcement
13. Security Assessments for Enforcement Staff
14. Northern California Fraud Investigators Association
15. Improving Enforcement Skills
16. Advanced Negotiation

Planned Training

There is a planned training session to cover Effective Report Writing that should take place soon.

Orange County District Attorney's Strict Prosecution of Unlicensed Practice

2007 began the Orange County DA's strict policy to criminally convict unlicensed contractors.  The Orange County Superior Court judges embraced this and hopefully other prosecutors will follow.  Criminal referrals from the CSLB have lead to 186 cases with a 100% conviction rate.  There has been over $530,000 in monies ordered/collected by the Orange County DA because of this policy.

PARTNERING WITH THE NEVADA STATE CONTRACTORS BOARD

California and Nevada Partner to Provide Enhanced Enforcement

Staff from the Nevada State Contractors Board attended the Basic Investigative Techniques class on May 8, 2012.  This class provides instruction on basic investigative techniques, roles and responsibilities of an investigator, effective case management and an overview of rules of evidence as well as abandonment, fraud, and false reporting of workers' compensation insurance exemption certificates. 

On May 16, 2012, the second annual simultaneous enforcement operation was conducted in El Dorado County, California and Douglas County, Nevada.  Members of each Board posed as homeowners looking for bids on carpentry, painting and landscaping and each Board was also observed by staff of the other Board.

PRESENTATION BY KAREN SMITH OF ARBITRATION MEDIATION CONCILIATION CENTER

In the 2011 calendar year:

• 610 complaints resolved; 499 Mandatory Arbitrations and 111 Voluntary Arbitrations;
• Awards totaled approximately $3.7 million to the prevailing party;
• Time frame from case assignment to Award reached its most efficient record of 47 days;
• Evaluations of AMCC administrative services and Arbitrators were 4.8 and 4.85 out of 5, respectively.

The CSLB Arbitration Program provides for both Mandatory and Voluntary Arbitration. 

Mandatory Arbitration is for those matters involving financial injury of $12,500 or less. In these matters, the consumer chooses arbitration as the preferred method to resolve their dispute with the contractor. The Contractor, or Respondent, is required to arbitrate as a condition of their contractor's license. Contractors may also take advantage of this program for Contractor v. Contractor disputes or Prime v. Sub disputes.

Voluntary Arbitration is for disputes involving damages between $12,500.01 and $50,000. Both the homeowner (consumer) and contractor must consent to the arbitration process. The benefits to the participants include a quick and effective way to resolve disputes outside the overburdened court system with nominal out of pocket expenses if self represented. The consumer has the added benefit of CSLB enforcing possible license revocation if the contractor fails to comply with an Award. The contractor will not have the consumer's complaint disclosed to the public if the contractor complies with the terms of an award rendered against him or her.

PUBLIC AFFAIRS COMMITTEE REPORT

PUBLIC AFFAIRS PROGRAM UPDATE

The Contractors State License Board's (CSLB) Public Affairs Office (PAO) is responsible for media, industry, licensee, and consumer relations. PAO provides a wide range of services, including proactive public relations and paid advertising campaigns; response to media inquiries; community outreach, including Senior Scam Stopper and Consumer Scam Stopper seminars, special events, and speeches to service groups and organizations; publication and newsletter development and distribution; contractor education and outreach; social media outreach to consumers, the construction industry, and other government entities; and limited employee relations.

Staffing Update

There are currently six full-time positions, two retired annuitants and two student assistants.  Of those positions, one Information Officer and both student assistants are vacant but expect to be filled soon.

Website Highlights

Website Assistance Project

The Public Affairs Office prepares all press releases, industry bulletins and other items for the CSLB's website.  From April 1, through May 11, 2012, there were 13 items ready for website posting.

Social Media

The CSLB's Twitter and Facebook pages continue to gain followers.  As of May 11, 2011, their Facebook page had 956 "likes" and 881 "followers" on Twitter.

There is also a YouTube page where they have posted past quarterly Board meetings.  Most recently a video of the Spring Blitz press conference on March 16, 2012, has been posted.

Email Alert Feature

From the CSLB website, people can sign up to receive alerts for:

• California Licensed Contractor newsletter
• Press Releases/Consumer Alerts
• Industry Bulletins
• Public Meeting Notices/Agendas

As of May 11, 2012, there were 16,493 active subscriptions as well as the 78,487 active email addresses voluntarily submitted on license applications and renewal forms for a total of almost 93,000 email addresses. 

Media Relations Highlights

Media Calls

The Public Affairs Office has responded to 77 separate media inquires as well as provided interviews to newspapers, radio and television outlets from January 25, 2012 through May 14, 2012.

Press Releases

Between January 25, 2012 and May 14, 2012, the Public Affairs Office distributed 12 press releases.

California Blitz Press Event

There was a press event on March 16, 2012 to announce the results of the Spring California Blitz held at the Riverside County District Attorney's Office. 

Joint Press Release with Nevada State Contractors Board

May 18, 2012 saw the Public Affairs Office issue a joint press release with the Nevada State Contractors Board after the second annual Cal-Neva Border Blitz which publicized the results of the simultaneous stings in South Lake Tahoe, California and Zephry Cove, Nevada.

Operation Underground

The Enforcement Division is supported by the Public Affairs Office in their partnership with the Department of Insurance and the Employment Development Department in their attempt to crack down on workers' compensation insurance fraud.  They are working on an upcoming media outreach campaign and have been acquiring video tape at various enforcement operations.

Disaster Outreach Highlights

In that there have been no natural disasters to strike California; the Public Affairs Office has continued its support efforts with the National Association of State Contractor Licensing Agencies (NASCLA) Resource Committee in developing model program materials that can be used for disaster response by states around the country as well as a model program to address elder abuse.

Industry/Licensee Outreach Highlights

California Licensed Contractor Newsletter

April saw the latest edition of the licensee newsletter posted online.  The summer edition is in production and should be mailed out to all licensees in July.

Industry Bulletins

Important and interesting news is distributed by the Public Affairs Office in the Industry Bulletins by email on an as needed basis to more than 4,300 addresses.

Application Instructional Video

The Public Affairs Office has been working on a video that will explain and lead candidates through the license application process and will be on the CSLB's YouTube page as well as directly from the CSLB's website once it is completed.

Publication Highlights

The 2012 Contractors License Law & Reference Book was shipped in late March.  In addition, several other publications were completed, moved into production, or are in the state of being reviewed and/or designed. 

Community Outreach Highlights

Senior Scan Stopper Seminars

A promotional/informational brochure and letter was sent to each legislator in September about the Senior Scam Stopper Seminars.  Because of this, there has been increased interest in holding more of these seminars.  Even though there are still travel restrictions in place for all non-enforcement activities (including Senior Scam Stopper Seminars), the CSLB has put in for travel exemptions in order to deliver these seminars.  To date, all requests have been approved.

Speakers Bureau

CSLB speakers are in demand, especially on enforcement-related topics.  More than two dozen presentations/appearances have been made or scheduled in 2012. 

LEGISLATIVE COMMITTEE REPORT

LEGISLATIVE UPDATE

2012 Legislation

The following is legislation that the CSLB has maintained a watch position on:

AB 1588 (Atkins)

AB 1655 (Dickinson)

AB 1750 (Solorio)

AB 1794 (Williams)

AB 1904 (Block)

AB 1920 (Berryhill)

AB 2219 (Knight)

AB 2237 (Monning)

AB 2482 (Ma)

AB 2554 (Berryhill)

AB 2570 (Hill)

SB 691 (Lieu)

SB 975 (Wright)

SB 1185 (Price)

SB 1185 - Centralized Intelligence Partnership Act

This bill creates the Centralized Intelligence Partnership (CIP) led by the Board of Equalization to collaborate in combating the underground economy.  The fiscal impact for the CSLB is unknown but it has potentially significant costs if the CSLB were required to contribute staff and resources to the CIP.  The staff currently has a watch position on this bill.  The CSLB motioned (and it was carried) to watch this bill.

LICENSING COMMITTEE REPORT

LICENSING PROGRAM UPDATE

License Application Workload

The number of applications received continues to decline due to the economic recession and housing downturn.  The average number of original applications received is down 30% from the average 10 years ago.

Limited Liability Companies (LLCs)

The CSLB is now licensing LLC's as contractors because of the passage of SB 392 in 2010.  Although LLC's are similar to corporations, they will also be required to have $1,000,000 in liability insurance when five or fewer persons are listed as personnel; with an additional $100,000 required for each additional personnel, not to exceed $5,000,000.  The five most common reasons for rejection are as follows:

1. Personnel listed on application needs to match the personnel listed on Secretary of State (SOS) records;
2. Personnel information needs clarification or is missing (i.e. middle name, title, DOB);
3. The LLC / SOS registration number is missing or incorrect;
4. The business name on the application does not match LLC / SOS registration information; and
5. Questions from the application are missing or incomplete.

License Transaction Processing Times

Processing times for the various units are monitored on a weekly and monthly basis.  Prior to applications being processed, they must go through the cashier and image-scanning which adds two days on the front end of processing.  The Licensing Division has maintained acceptable processing times despite the minimal amount of overtime and the 15% staff reduction because of the furloughs.

Fingerprinting/Criminal Background Unit

The fingerprinting that began in January 2005 for the purpose of doing criminal background checks has proved very useful.  Through April 2012, the Criminal Background Unit denied 1,079 applications and issued 1,208 probationary licenses.  Of those denied licenses, 540 appealed the decisions. 

Licensing Information Center (LIC)

Call Center Workload

The call volume increase 29% from the final quarter of 2011 and call wait times have increased.  However, the CSLB believes that this increase is seasonal and there was a backlog of workers' compensation certificates as well.  The lack of call center agents also continues to affect the call wait time which has sometimes caused the system to reach its maximum on various occasions, which means that they cannot received additional inbound calls. 

Staffing Update

There are currently five vacant positions in the call center, one at the front counter, and one is on loan to the Department of Consumer Affairs.  The Licensing Information Center is working diligently to increase staffing resources.

Increased Training

A trainer and expert resource position has been created to help other Licensing Information Center staff with training.  This is an effective way to give employees a look at the CSLB as a whole.

Quick Tip Program

A daily "Quick Tip" is emailed to Licensing staff each morning.  These tips include information on CSLB laws, regulations and policies. 

Call Center Processing

A call center processing e-mail address has been set up as a full-service resolution program for licensees who need their licenses updated to satisfy a suspension or to avoid suspension.  In addition, the call center will soon cross-train with other units to increase their knowledge of policies and procedures.

Judgment Unit

The judgment Unit processes all outstanding liabilities, judgments, and payment of claims reported to the CSLB by licensees, consumers, attorneys, credit recovery firms, bonding companies, CSLB's Enforcement Division, and other governmental agencies as well as processing all documentation and correspondence related to resolving these issues.

TESTING DIVISION UPDATE

Staffing

The Testing Division has three vacant positions.  All test monitor positions are filled. 

Examination Wait Time

The current wait time for examinations throughout the state is three weeks.  However, applicants have a very good chance of obtaining a seat in any CSLB testing center on a walk-in basis. 

Testing Center Status

The CSLB has eight testing centers: Sacramento, Oakland, San Jose, Fresno, Oxnard, Norwalk, San Bernardino and San Diego.  Oxnard and Fresno was reconfigured to correct inadequate spacing among the seats which provides additional comfort for the applicants.  Oakland is in the process of being repainted.

Examination Development

The Examination Development Unit is responsible for ensuring that the 45 examinations are maintained and updated in accordance with testing standards, guidelines and regulations.  There are two phases to the development process: occupational analysis and new examination development.  These two phases must be completed every five to seven years for each of the examinations.  There are new examinations for C-2 Insulation and Acoustical. C-31 Construction Zone Traffic Control and C-53 Swimming Pool.  Occupational analyses have recently been completed for C-42 Sanitation Systems and C-46 Solar.  There are currently 13 other classifications that are in progress of Occupational Analyses or New Examination.

Utilization of CSLB Testing Centers for Other Projects

Because there are reduced numbers of CSLB licensing exams being given, the testing centers are being used for other purposes.  June 12, 2012, will see the administration of the Enforcement Representative I civil service exam at 5 testing center locations.

In July or August, the Norwalk and San Bernardino testing centers will be used by the Department of Consumer Affairs for BreEZe training.

Ongoing Consumer Satisfaction Survey

The Testing Division has an ongoing survey of consumers whose complaint cases have been closed to assess the overall satisfaction with the Enforcement Division's handling of the complaints and compiles the data into an annual report.  The CSLB began emailing the survey to consumers who provided email addresses to obtain the results in a more timely manner than those sent by first class mail.  The plan going forward is to email these surveys monthly rather than quarterly.

EXECUTIVE COMMITTEE REPORT

ADMINISTRATION AND INFORMATION TECHNOLOGY UPDATE

Personnel Update

There are various examinations for multiple positions that are ongoing throughout the CSLB.  As of May 12, 2012, there are 52.5 vacant positions within the CSLB. 

Business Services Update

Space/Leasing/Facilities

• San Bernardino - Final plans drawn and approved for a Public Counter with bullet-proof glass.
• Bakersfield - New site selected; final plans drawn and approved, waiting for pre-construction meeting to be scheduled.
• Oxnard Testing - Completed remodel of office to remove six testing stations to make more room for testing candidates.
• Fresno Testing - Remodel office to increase space for testing candidates; scheduled for May 31st .
• Fresno IC - Reconfigure modular furniture to accommodate six employees.
• Fresno SWIFT - Vacate the State building and move to the Fresno IC office. The Department of General Services (DGS) is advertising a backfill for our space.
• Oakland - Need to vacate; paperwork has been submitted to DGS. They are advertising a backfill for our space.

Contracts

• Sharp Copiers - Five copiers with maintenance
• Pitney Bowes - Maintenance for inserter machine
• In-a-Bind - Laminating machine with maintenance
• Pitney Bowes - Rental and maintenance for field postage machines
• Pitney Bowes - Rental and maintenance for HQ postage machine and folder
• Workers Comp - Data access for Enforcement staff
• Total Shred - Shredding services for field staff
• CalHR - Peace officer testing

Fleet Management

There are currently 15 enforcement vehicles being surveyed as well as looking into replacing 10 of the vehicles. 

Records Management

Destruction of documentation for cancelled and expired licenses is ongoing in the Headquarters file room.

Information Technology Division Update

BreEZe

The Department of Consumer Affairs has signed the contract with Accenture, who started in late September.  They are currently figuring out the requirements for Phase I for BreEZe to include e-payment/online licensure, licensing and enforcement and imaging functions as well as workflow. 

The BreEze Change Control Board has been established to review and approve changes to the current system.  All modifications to the CSLB's licensing and enforcement system will have to be approved by this control board.

California Email System Mail

The CSLB began its migration to the California Email System (the State's shared email system) in late January.  They are the second board to move.  The rest of the Department of Consumer Affairs followed in April.

Workers' Compensation

AB 397 mandates that at the time of renewal, an active contractor licensee with an exemption for workers' compensation insurance on file with the board to either recertify the licensee's exemption or to provide a current and valid Certificate of Workers' Compensation Insurance or Certificate of Self-Insurance. The bill also provides for retroactive license renewal, as specified, for otherwise acceptable license renewal applications when the applicant provides the required documentation within 30 days after notification by the board of the renewal rejection.

CSLB Information Technology staff is currently on schedule to meet the Licensing division's requested July 1, 2012 completion date.

BUDGET UPDATE

Fiscal Year (FY) 2011-12 CSLB Budget and Expenditures

April 30, 2012 saw the CSLB at 76 percent of its fiscal year final budget at $44.3 million.

Revenue

The total revenue through April 30, 2012, for the fiscal year was up 10.7% from the prior fiscal year at $37,287,763.  This is mainly due to fee increases.

Contractors' License Fund Status

The Contractors' License Fund has a reserve for three months at $14.9 million.

REVIEW AND APPROVAL OF 2012-2013 STRATEGIC PLAN

2011-2012 Strategic Plan Objectives Update (Passed by Board)

1. Reorganize Enforcement Division Objective had an original deadline for the 3^rd quarter of 2011 with a scheduled completion date now being May 1, 2012.  They have currently contracted with Cooperative Personnel Services to:
   • Establish a Deputy Chief Position
   • Reclassify CSRs to SSAs
   • Reclassify ER to Special Investigator
2. Establish Expanded Media Outreach Plan Objective had the proposal approved by the Public Affairs Committee on March 28, 2012.
3. The objective to develop a plan to explore licensure for solar/alternative energy contractors had an original deadline for the 3^rd quarter of 2011 with a new target date being the 3^rd quarter of 2012.  The staff continues its research on this issue and has met with groups involved in the solar/alternative energy industry.
4. The objective to create a new flagship consumer education publication was originally to be completed by the 4^th quarter of 2011 but was delayed by the hiring freeze.  Final drafts are expected in the 3^rd quarter of 2012 and printing is expected to begin in the 4^th quarter of 2012.
5. The objective to create a training curriculum for new hires that includes basic enforcement procedures, a mentoring program, and specialized training was to be done by the 4^th quarter of 2011.  The CSLB and Attorney General Staff created training modules for new hires and existing employees.  Training modules 1 and 2 were provided to staff in 2011.
6. The objective to coordinate with state and local agencies to establish baseline measurements of the underground economy and the effectiveness of enforcement strategies was to be completed in the 4^th quarter of 2011.  Staff partnered with the EDD to perform a study of select contractors to determine underreporting of tax and workers compensation liability that was completed in December of 2011.  Date is now being used to identify contractors for enforcement operations and cost effectiveness of enforcement strategies.
7. The objective to implement online licensure tools for credit card payment was to be completed in the 1^st quarter of 2012.  This is tied to the Department of Consumer Affairs BreEZe project with a new target date of the 4^th quarter of 2013.
8. The objective to develop a legislator relationship plan was to be done by the 1^st quarter of 2012.
9. The objective to implement a workers' compensation insurance recertification process for contractors exempt from workers' compensation was scheduled to be completed by the 1^st quarter of 2012.  Legislation was passed that went into effect on January 1, 2012, which requires the recertification for workers' compensation exemption.  The Licensing staff is working with IT on implementation with a target date of the 3^rd quarter of 2012.
10. The objective to create a new flagship application/licensee education publication had an original deadline of the 1^st quarter in 2012.  It has been delayed by the hiring freeze.  The final draft is expected in the 4^th quarter of 2012 and printing is expected to begin in the 1^st quarter of 2013.
11. The objective to produce a new education video to assist license applicants was to be completed in the 1^st quarter of 2012.  It is currently in production and is expected to be completed in May 2012.
12. The objective to review and revise all Memorandums of Understanding (MOU) for relevancy, information sharing and effectiveness to be completed the 1^st quarter of 2012 is currently underway.  The MOU with the EDD was revised in December 2011 to allow for enhanced sharing of information and is currently pending approval by the agencies' executive officers.
13. The objection to recruit and hire nine peace officer Enforcement Representatives in designated Investigative Centers is to be done the 2^nd quarter of 2012.  Because of the Department of Consumer Affairs delays in getting approval, many candidates have withdrawn their applications and accepted positions elsewhere.  The CSLB did hire a background investigator in February 2012 to perform background checks for peace officer candidates.  Two of the nine police officers have been hired and background checks are underway for six potential candidates.  Recruiting for the remaining position is active.
14. The objective to staff a subsequent arrest unit through the Budget Change Proposal process is scheduled to be done by the 3^rd quarter of 2012.  However, five Budget Change Proposals were submitted and all were rejected.  Request has been sent to the Department of Consumer Affairs to reallocate and Enforcement Representative position to assist the Subsequent Arrest Unit.
15. The objective to update the Enforcement staff classification system is scheduled to be completed by the 3^rd quarter of 2012, estimated completion date is May 1, 2012.  A contract was executed with Cooperative Personnel Services to:
    • Establish a Deputy Chief Position
    • Reclassify the CSRs to SSAs
    • Reclassify ER Series to Investigator Series
16. The objective to implement an online license exam scheduling tool was scheduled to be completed by the 4^th quarter of 2012.  This is tied to the BreEZe system requirement and the CSLB is part of the third and final phase of implementation which is scheduled for the 4^th quarter of 2012.  

Enforcement Prioritization

The CSLBs highest priority is to protect the public and is laid out in Business and Professions Code section 7000.6.  A large part of protecting the public deals with the investigation of filed complaints.

Consumer Complaints

There are approximately 17,000 consumer complaints filed each year.  There are 30 Consumer Services Representatives and 70 Enforcement Representatives to handle these complaints.  The staff is effectively managing the complaint workload and provides a high level of consumer protection and service since the Board implemented process changes and performance goals in 2006.

Industry Complaints

There are 30 Enforcement Representatives to handle the investigations for industry complaints.  Because of the underground economy there are many demands for the CSLB to have more resources to make it a level playing field for the law-abiding contractors.  Board assistance is needed to prioritize the complaint investigations and approving process changes to manage the workload.

The Board needs to consider if the list of Top Ten enforcement activities is a comprehensive list, in the proper prioritization and if the proposed controls are appropriate to manage the workload.

The Top Ten list is as follows:

1. Unlicensed practice at active jobsites - The controls to manage the workload are to respond to leads with a CSLB Enforcement Representative conducting a site visit.
2. Workers' Compensation violations as active jobsites - The controls to manage the workload are to respond to leads with a CSLB Enforcement Representative conducting a site visit.
3. Labor/Health and Safety Code (DOSH/DSLE MOUs) - The controls to manage the workload are for a CSLB Enforcement Representative and partnering agency investigator to conduct a site visit.
4. Out-of-classification licensees - The controls to manage the workload are to determine if there is a health and safety issue or if unsure if the contractor is licensed, then a site visit may be warranted.  Otherwise, this will be addressed by Intake/Mediation Center or Investigative Center staff.
5. Building permit enforcement - The controls to manage workload are to investigate only when jurisdiction is cooperative.  The building department must be willing to waive fees associated with conducting the investigations and the jurisdiction must provide the CSLB with their work product.  Evidence of no permit must be attained.  If work is in progress it is possible that a site visit will be conducted.
6. Public Works investigations - The controls to manage the workload are that SWIFT will respond to leads and perform sweeps with other state agencies as applicable.  Otherwise, leads will be referred to the CSLB Public Works Unit.
7. Electrician Certification - The controls to manage the workload are that they will only conduct a site visit to verify certification if we are responding with partnering agencies and/or observe workers' compensation violations.  Otherwise, work product from a labor compliance agency is required.
8. Illegal print advertisements - The controls to manage the workload is to process through the Intake/Mediation Center where a Warning Letter, Stop Order of Telephone Disconnect can be issued.  The action taken is then referred to SWIFT for use in future stings.
9. Referral fees/kickbacks - The controls to manage the workload are that enforcement will be primarily handled by the Intake/Mediation Center.  Contractors will be contacted and educated on Business and Professions Code section 7157 - Referral Fee Restrictions.  Warning letters will then be issued and used for more stringent action.  Investigative Center staff will conduct two stings per calendar year to target egregious offenders.
10. Outreach - The controls to manage the workload is that the Public Affairs Office will take the lead.  The Enforcement Division will develop a list of Enforcement Representatives available to assist the Public Affairs Office when necessary.  To minimize the impact on enforcement workload, staff will work with the EDD to develop an outreach packet to educate Legislators, contractors and consumers on the dangers of the underground economy. 

Unlicensed Practice Investigators

Twenty-seven percent of complaints in any given year involve unlicensed contractors.  Many of those complaints are made by consumers who repeatedly hire unlicensed contractors and then file complaints so that they can avoid paying for the service received.  This is taking up valuable resources.  The Board has approved a letter for consumers which warn of the serious financial loss and potential liability they expose themselves to when they repeatedly hire unlicensed operators.  However, there are still some questions to be answered:

1.    Educational/Warning Letters

To discourage consumers from repeatedly hiring unlicensed operators, should staff:

• Send education/warning letters to all consumers filing complaints against unlicensed operators (currently letters are sent only to select consumers)?  If so, should the complaint be revised and automated (this will require IT resources)?
• Develop criteria regarding the referral of a complaint to a local prosecutor (that may provide a restitution hearing) in lieu of an administrative action?

2.    Referral to Other State Agencies

Labor Code section 2750.5 established that a person performing services who requires a license is an employee, rather than an independent contractor, when the person is not licensed.

• Should referral be made to the EDD (tax withholding), DLSE (workers' compensation insurance), and the local building department (permit requirements) when a consumer repeatedly hires unlicensed operators?
• Should staff develop criteria to work cases resulting from consumers who are complicit in aiding their contractor in avoiding business requirements?  Example: consumer pays contractor in cash to receive a lower contractor price, obtains an owner building permit, or agrees to perform the work without a building permit. 

3.    Minor Work Exemption

Business and Professions Code section 7048 exempts minor (handyman type) work from licensure requirements if the aggregate value of the work is less than $500.  However, pursuant to Business and Professions Code section 7027.2, the $500 exemption does not apply if the unlicensed contractor solicits for work without stating in a solicitation that he/she is "not a licensed contractor."

• Should the CSLB take administrative action for the unlawful advertisement but not for the contracting activity valued at less than $500 (Attorney General Recommendation)?
• Should the Board pursue legislation to clarify the minor work exemption? 

Public Works

August 2010 started the Public Works Investigative Unit with two Enforcement Representatives to focus on public works investigations.  It has been very successful with 118 complaints in 2011. 

Unforeseen Workload

It was originally thought that the focus would be on contractors that:

1. Have been disbarred by the Labor Commissioner or awarding agency/local jurisdiction;
2. Are working without a license or working out of their classification; and
3. Are illegally subcontracting pursuant to the Public Contract Code,

This has not been the types of complaints investigated by the Public Works Unit.  There is also other information regarding underground economy activities on public works projects that are not being addressed by other state agencies. 

The Board is now being asked to consider making policy decisions that would allow for enforcement to address these violations independent of other state agencies.

1.         Prevailing Wage Violation Referrals

The DLSE or an Awarding Agency's Labor Compliance Program (LCP) has primary jurisdiction to investigate and take action against construction employees violating prevailing wage requirements.

Pursuant to Business and Professions Code (B&P) §7110.5 - Initiation of action against contractor after receipt of Labor Commissioner's finding of a willful violation of Labor Code -- CSLB can impose discipline on a license based on the final order taken by DLSE/LCP.

Unfortunately, the DLSE/ LCP appeal process typically takes more than one year and no license disclosure is present to assist awarding agencies in prequalifying bidders for public works projects.

QUESTION:  Should staff develop criteria to take disciplinary action separate from DSLE's action on the more egregious offenders to provide complaint disclosure on the license?

2.         Outreach to Awarding Agencies and Public Works Contractors

Complaints received by CSLB from government agencies, LCPs, and public works contractors confirm that many awarding agencies and public works prime contractors do not understand:

• License Law Requirements (classifications, license structure, etc.)
• Prequalification's Strategies
• How to Effectively Use the CSLB website
• Public Contract Code Requirements
• Evidence Requirements to File a Complaint

QUESTION:  Should staff develop a public works brochure and/or a training module for awarding agencies and public works contractors? If so, what are the top educational/training topics?

3.         Legislative Considerations

Should legislative proposals be considered to address the following deficiencies in the law?

• Currently, CSLB is unable to disclose a legal action taken by a partner state agency on a license history. Should B&P §7124.6 -- Public Access to Complaints against Licensees; Disclaimer; Limitations of disclosure -- be revised to provide disclosure of a partner state agency's finding of a violation of law without CSLB having to file a formal disciplinary action?
• PCC §4017.2 prohibits a subcontractor listed by a prime contractor as furnishing and installing carpeting, from subcontracting any portion of the labor unless the listed subcontractor specified the subcontractor to perform the labor in his/her bid to the prime. With the exception of a listed subcontractor that installs carpet, the PCC does not prohibit the listed subcontractors from bid shopping any portion of their subcontracted work or subcontracting to others who fail to pay prevailing wages. Should the PCC be revised to preclude listed subcontractors from bid shopping or subcontracting to others without approval from the awarding authority?
• B&P §7125.4 requires that a licensee have a certificate of WC on file with CSLB prior to employing anyone subject to WC coverage. The law does not require that listed subcontractors verify WC coverage prior of unlisted subcontractors that have employees. Should B&P §7125.4 be revised to require that contractors verify WC coverage for their subcontractors who have employees?
• The law does not provide for CSLB to discipline contractors who are employers (easily confirmed by certified payroll) and have not registered as employers with the Employment Development Department (EDD). Should contractors' license law be revised to provide for discipline for contractors who are employers and are not registered as employers with EDD?

ELECTION OF BOARD OFFICERS

Paul Schifino was elected Board Chair

Joan Hancock was elected Vice Chair

Mark Thurman was elected Secretary

DISCUSSION WITH THE NEVADA STATE CONTRACTORS BOARD

The Nevada State Contractors Board gave a PowerPoint presentation.  Among the issues discussed were Elder Abuse and Unlicensed Contractors taking advantage of consumers.  They also showed videos of various news stories and talked about how the Nevada State Contractors Board can help.  There was also a news clip on unlicensed contractors preying on disaster victims.

Abdulaziz, Grossbart & Rudman

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Abdulaziz, Grossbart & Rudman

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