CALege

AMENDED IN ASSEMBLY AUGUST 19, 2024

AMENDED IN SENATE MAY 16, 2024

AMENDED IN SENATE APRIL 18, 2024

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

SENATE BILLNo. 1455

CHAPTER 485

Statutes of 2024

[ Approved by Governor September 22, 2024. Filed with Secretary of State September 22, 2024. ]

Introduced by Senator Ashby

February 16, 2024

An act to amend Sections 7000.5, 7011, 7025, 7040, 7059, 7065, 7068.1, 7071.9, 7076, 7076.2, and 7137 of, to amend and repeal Section 7125 of, and to add Sections 7025.1 and 7125.7 to, the Business and Professions Code, relating to professions and vocations, and making an appropriation therefor.

Vote: majority Appropriation: yes Fiscal committee: yes Local program: yes

LEGISLATIVE COUNSEL’S DIGEST

(1) Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs for the licensure and regulation of contractors. Existing law requires the board to appoint a registrar of contractors and fix the registrar’s compensation, as specified.

This bill would continue in existence the Contractors State License Board and the above-described requirements until January 1, 2029.

(2) Existing law authorizes an applicant for a license to qualify the applicant’s knowledge and experience with a responsible managing officer, employee, member, or manager who has certain qualifications. Existing law requires the person qualifying on behalf of an individual or firm to be responsible for exercising supervision and control of their employer’s or principal’s construction operations, as specified. Existing law requires the board to require every applicant or licensee, as specified, to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations, including, but not limited to, an employment duty statement prepared by the qualifier’s employer or principal. Existing law makes the failure to provide this information a cause for disciplinary action and punishable as a misdemeanor, as specified.

This bill would delete the requirement that an employment duty statement be included in a specified applicant’s or licensee’s information submitted to the board. The bill would also delete the provision that makes the failure to provide specified information to the board a cause for disciplinary action and punishable as a misdemeanor. The bill would state that “direct supervision or control” for these purposes to mean, among other things, supervising construction operations.

(3) Existing law defines various terms for the purposes of the Contractors State License Law, including defining “person” to mean an individual, a firm, partnership, corporation, limited liability company, association, or other organization, or any combination thereof. Existing law makes contractors’ licenses issuable to individual owners, partnerships, corporations, and limited liability companies. Existing law authorizes the board to set fees by regulation, including various application, examination scheduling, and license and registration fees, according to a prescribed schedule. Existing law requires the fees received under this law to be deposited in the Contractors License Fund, a fund that is partially continuously appropriated for the purposes of the law.

This bill would expand the definition of “person” under the act to include a federally recognized tribe, as defined. The bill would require a corporation or limited liability company seeking licensure to provide its identification number issued by the Secretary of State. This bill would additionally make contractors’ licenses issuable to participating tribes, as the bill would define, that provide verification of their status as a tribal business, as specified. By expanding the category of who contractors’ licenses are issuable to and would be required to pay fees deposited into the Contractors License Fund, the bill would make an appropriation.

(4) Existing law exempts from licensure under the Contractors State License Law certain entities, including an authorized representative of the United States government or the State of California, when the entity or its representative is acting within the scope of the entity’s or representative’s official capacity.

This bill would extend the above-described exemption to an authorized representative of any federally recognized tribe or participating tribe acting within tribal jurisdiction.

If a qualifying individual, as described, is neither the proprietor, a general partner, nor a joint licensee, existing law requires the qualifying individual to file a bond, as specified, in the sum of $25,000.

This bill would prohibit the above-described bond requirement from applying to a federally recognized tribe or a participating tribe.

Existing law requires a corporation license to be canceled upon the corporation’s dissolution, merger, or surrender of its right to do business in this state and requires a corporation to notify the registrar within 90 days of the dissolution, merger, or surrender. If a corporation fails to provide notice, existing law requires the corporation license to be canceled 60 days after the board’s discovery when researching the corporate records of the Secretary of State.

This bill would extend the above-described requirements to a participating tribe and would specify the above-referenced corporate records to include only relevant corporate records.

(5) Existing law requires the suspension of a contractor’s license if the contractor fails to register and be in good standing with the Secretary of State after notice from the registrar. Existing law requires a specified notice process and authorizes reinstatement of the license if the contractor provides proof satisfactory to the registrar that the license is properly registered and in good standing. Existing law also makes specified persons within a limited liability company personally liable for up to $1,000,000 in damages to third parties in certain cases.

This bill would exempt federally recognized tribes and participating tribes from the above-described suspension, notice, reinstatement, and liability provisions.

This bill would remove specified fees for scheduling or rescheduling examinations and instead require that the fee to take an examination conducted or administered by a specified public or private organization be no greater than the actual cost of the administration of the examination and be paid directly to the organization by the applicant. The bill would require licensees subject to a public complaint requiring a professional or expert investigation or inspection and report to pay the reasonable fees necessary to cover the costs of that investigation or inspection and report, as specified.

(6) Existing law requires, in public works contracts, as defined, the awarding authority to determine the license classification necessary to bid and perform the project.

This bill would require the awarding authority’s determination to be made in accordance with the classifications prescribed by specified provisions of the Contractors State License Law and provisions of the California Code of Regulations.

(7) Existing law, until January 1, 2026, with certain exceptions, requires every licensed contractor, or applicant for licensure, to have on file at all times with the board a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, or to file a certificate of exemption certifying that they have no employees and are not required to provide for workers’ compensation insurance coverage under state law. Under existing law, the failure to file the proper certification, as described, constitutes cause for disciplinary action, and the failure of a qualifier for a license to ensure compliance with these provisions, as specified, is a crime. Existing law, until January 1, 2026, requires the removal of specified license classifications if certification provisions are not met and requires suspension of any license that is active and has had specified classifications removed, if the licensee is found by the registrar of contractors to have employees and to lack proper certification.

This bill would extend the effective date of those provisions until January 1, 2028.

(8) As of January 1, 2026, existing law requires all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers’ compensation insurance unless they have no employees, are organized as a joint venture, and file a certificate of exemption.

This bill would instead make the above provisions operative on January 1, 2028.

This bill would require the board, by no later than January 1, 2027, to establish a process and procedure, as specified, to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers’ compensation insurance requirement.

(9) By expanding the scope of a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

The people of the State of California do enact as follows:

SECTION 1.

Section 7000.5 of the Business and Professions Code is amended to read:

7000.5.

(a) There is in the Department of Consumer Affairs a Contractors State License Board, which consists of 15 members.

(b) Notwithstanding any other provision of law, the repeal of this section renders the board subject to review by the appropriate policy committees of the Legislature.

SEC. 2.

Section 7011 of the Business and Professions Code is amended to read:

7011.

(a) The board, by and with the approval of the director, shall appoint a registrar of contractors and fix the registrar’s compensation.

(b) The registrar shall be the executive officer and secretary of the board and shall carry out all of the administrative duties as provided in this chapter and as delegated to the registrar by the board.

(c) For the purpose of administration of this chapter, there may be appointed a deputy registrar, a chief reviewing and hearing officer, and, subject to Section 159.5, other assistants and subordinates as may be necessary.

(d) Appointments shall be made in accordance with the provisions of civil service laws.

(e) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.

SEC. 3.

Section 7025 of the Business and Professions Code is amended to read:

7025.

(a) “Members of the personnel of record” as used in this chapter means every person listed in the records of the registrar as then associated with a licensee.

(b) “Person” as used in this chapter includes an individual, a firm, partnership, corporation, limited liability company, federally recognized tribe, association or other organization, or any combination thereof.

(c) “Qualifying person,” “qualifying individual,” or “qualifier,” as used in this chapter, means a person who qualifies for a license pursuant to Section 7068.

SEC. 4.

Section 7025.1 is added to the Business and Professions Code, to read:

7025.1.

(a) As used in this chapter, the following definitions apply:

(1) “Federally recognized tribe” means a tribe located in this state and included on the list published in the Federal Register pursuant to the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) and includes an entity controlled by and established for the benefit of one or more tribes.

(2) “Participating tribe” means a federally recognized tribe that formally applies for licensure from the board pursuant to Section 7065.

(b) The board shall license a federally recognized tribe that applies for licensure under Section 7065 and is otherwise compliant with the provisions of this chapter for the purpose of engaging in a business regulated by this chapter.

(c) This chapter is not intended to infringe upon or diminish the existing rights, privileges, and immunities of federally recognized tribes as set forth in federal, state, or tribal law, or the jurisdiction of those participating tribes.

(d) This chapter does not confer upon the board, registrar, or director any rights or authority to regulate any activity within the jurisdiction of a participating tribe.

SEC. 5.

Section 7040 of the Business and Professions Code is amended to read:

7040.

(a) This chapter does not apply to an authorized representative of the United States government, the State of California, any federally recognized tribe or participating tribe acting within tribal jurisdiction, or any incorporated town, city, county, irrigation district, reclamation district, or other municipal or political corporation or subdivision of this state when the entity or its representative is acting within the scope of the entity’s or representative’s official capacity.

(b) Nothing in this section authorizes the entity or its authorized representative thereof either to enter into or authorize a contract with an unlicensed contractor for work that is required by this chapter to be performed by a licensed contractor.

SEC. 6.

Section 7059 of the Business and Professions Code is amended to read:

7059.

(a) The board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which they are classified and qualified to engage, as defined by Sections 7055, 7056, 7057, and 7058. A licensee may make application for classification and be classified in more than one classification if the licensee meets the qualifications prescribed by the board for such additional classification or classifications. The application shall be in a form as prescribed by the registrar and shall be accompanied by the application fee fixed by this chapter. No license fee shall be charged for an additional classification or classifications.

Nothing contained in this section shall prohibit a specialty contractor from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work in the crafts or trades, other than in which they are licensed, is incidental and supplemental to the performance of the work in the craft for which the specialty contractor is licensed.

(b) (1) In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations. In no case shall the awarding authority award a prime contract to a specialty contractor whose classification constitutes less than a majority of the project. When a specialty contractor is authorized to bid a project, all work to be performed outside of their license specialty, except work authorized by subdivision (a), shall be performed by a licensed subcontractor in compliance with the Subletting and Subcontracting Fair Practices Act (Chapter 4 (commencing with Section 4100) of Part 1 of Division 2 of the Public Contract Code).

(2) Nothing contained in this subdivision shall be construed as authorizing an awarding authority to enact regulations relating to the qualifications necessary to engage in the business of contracting.

(3) Nothing contained in this subdivision shall deprive the registrar of the authority to investigate complaints and commence disciplinary proceedings for violations of this chapter.

SEC. 7.

Section 7065 of the Business and Professions Code is amended to read:

7065.

(a) Under rules and regulations adopted by the board and approved by the director, the registrar shall investigate, classify, and qualify applicants for contractors’ licenses by written examination. This examination shall include questions designed to show that the applicant has the necessary degree of knowledge required by Section 7068 and shall include pertinent questions relating to the laws of this state and the contracting business and trade.

(b) (1) Contractors’ licenses are to be issued to individual owners, partnerships, corporations, limited liability companies, and participating tribes, in accordance with this chapter.

(A) Every person who is an officer, member, responsible manager, or director of a corporation or limited liability company seeking licensure under this chapter shall be listed on the application as a member of the personnel of record.

(B) Every person who is a member of a partnership seeking licensure under this chapter shall be listed on the application as a member of the personnel record.

(2) A corporation or limited liability company, whether foreign or domestic, seeking licensure under this chapter shall provide its identification number issued by the Secretary of State.

(3) A tribal business, including a corporation organized or chartered by a federally recognized tribe pursuant to tribally enacted laws or to Section 17 of the federal Act of June 18, 1934, popularly known as the “Indian Reorganization Act,” shall provide verification of its status as a tribal business. Verification may include, but is not limited to, the following:

(A) Enacted resolution ratifying the charter pursuant to Section 17 of the Indian Reorganization Act.

(B) Enacted resolution authorizing the tribally chartered corporation under tribally enacted laws.

(D) A current list of federally recognized tribes or directory of tribal leadership published under the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. Sec. 5131) or on the internet website of the United States Bureau of Indian Affairs.

(1) An individual owner may qualify by examination for a contractor’s license upon the appearance of the owner or a qualifying individual appearing as a responsible managing employee on behalf of the owner.

(2) A partnership may qualify by examination for a contractor’s license upon the appearance of a partner or a qualifying individual appearing as a responsible managing employee on behalf of the partnership.

(3) A corporation or participating tribe may qualify by examination for a contractor’s license upon the appearance of a qualifying individual appearing either as a responsible managing officer or a responsible managing employee on behalf of the corporation.

(4) A limited liability company may qualify by examination for a contractor’s license upon the appearance of a qualifying individual appearing as a responsible managing officer, a responsible managing manager, a responsible managing member, or a responsible managing employee on behalf of the company.

(d) No examination shall be required of a qualifying individual if, within the five-year period immediately preceding the application for licensure, the qualifying individual has either personally passed the written examination for the same classification being applied for, or has served as the qualifying individual for a licensee whose license was in good standing at any time during the five-year period immediately preceding the application for licensure and in the same classification being applied for.

(e) The registrar may contract with a public or private organization to conduct or administer the examination. The registrar may also contract with a public or private organization for materials or services related to the examination.

SEC. 8.

Section 7068.1 of the Business and Professions Code is amended to read:

7068.1.

(a) The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising supervision and control of their employer’s or principal’s construction operations to secure compliance with this chapter and the rules and regulations of the board. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:

(1) There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.

(2) The additional firm is a subsidiary of or a joint venture with the first. “Subsidiary,” as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.

(3) With respect to a firm under paragraph (2), (3), or (4) of subdivision (b) of Section 7068, the majority of the partners, officers, or managers are the same.

(b) Notwithstanding paragraphs (1) to (3), inclusive, of subdivision (a), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.

(1) “Firm” means a partnership, a limited partnership, a corporation, a limited liability company, or any other combination or organization described in Section 7068.

(2) “Person” is limited to natural persons, notwithstanding the definition of “person” in Section 7025.

(3) “Supervision and control” means direct supervision or control or monitoring and being available to assist others to whom direct supervision and control has been delegated.

(4) “Direct supervision or control” means any of the following:

(A) Supervising construction operations.

(B) Managing construction activities by making technical and administrative decisions.

(D) Supervision on construction sites.

(d) The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations.

(e) Violation of this section shall constitute a cause for disciplinary action and shall be punishable as a misdemeanor by imprisonment in a county jail not to exceed six months, by a fine of not less than three thousand dollars ($3,000), but not to exceed five thousand dollars ($5,000), or by both the fine and imprisonment.

SEC. 9.

Section 7071.9 of the Business and Professions Code is amended to read:

7071.9.

(a) (1) If the qualifying individual, as referred to in Sections 7068 and 7068.1, is neither the proprietor, a general partner, nor a joint licensee, the qualifying individual shall file or have on file a qualifying individual’s bond as provided in Section 7071.10 in the sum of twenty-five thousand dollars ($25,000). This bond is in addition to, and shall not be combined with, any contractor’s bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.

(2) This subdivision shall not apply to a federally recognized tribe or a participating tribe.

(b) Excluding the claims brought by the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10, the aggregate liability of a surety on claims brought against the bond required by this section shall not exceed the sum of seven thousand five hundred dollars ($7,500). The bond proceeds in excess of seven thousand five hundred dollars ($7,500) shall be reserved exclusively for the claims of the beneficiaries specified in paragraph (1) of subdivision (a) of Section 7071.10. However, nothing in this section shall be construed to prevent any beneficiary specified in paragraph (1) of subdivision (a) of Section 7071.10 from claiming or recovering the full measure of the bond required by this section. This bond is in addition to, and shall not be combined with, any contractor’s bond required by Sections 7071.5 to 7071.8, inclusive, and is required for the issuance, reinstatement, reactivation, or continued valid use of a license.

(c) The responsible managing officer of a corporation shall not be required to file or have on file a qualifying individual’s bond, if the responsible managing officer owns 10 percent or more of the voting stock of the corporation and certifies to that fact on a form prescribed by the registrar.

(d) The qualifying individual for a limited liability company shall not be required to file or have on file a qualifying individual’s bond if the qualifying individual owns at least a 10-percent membership interest in the limited liability company and certifies to that fact on a form prescribed by the registrar.

SEC. 10.

Section 7076 of the Business and Professions Code is amended to read:

7076.

(a) An individual license shall be canceled upon the death of a person licensed as an individual. An immediate member of the family of the deceased licensee may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days after the death. Approval of the continuance of an individual license may be contingent upon meeting the bond requirements of Sections 7071.5 and 7071.6 within 90 days of notification by the board of that requirement. The immediate member of the family must apply for and obtain his or her own license to continue contracting after the continuance expires.

(b) A partnership license shall be canceled upon the death of a general partner. The remaining partner or partners shall notify the registrar in writing within 90 days of the death of a general partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.

The remaining general partner or partners may request a continuance of the license to complete projects in progress and undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.

(c) A partnership license shall be canceled upon the disassociation of a general partner or upon the dissolution of the partnership. The disassociating partner or the remaining partner or partners shall notify the registrar in writing within 90 days of the disassociation of a general partner or dissolution of the partnership. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the board’s headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action. The remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable length of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days after the disassociation or dissolution. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.

(d) The general partner or partners shall notify the registrar in writing within 90 days of the death of a limited partner. Failure to notify the registrar within 90 days of the death is grounds for disciplinary action.

The death of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the death of the limited partner unless a new limited partner is added to the license within 90 days of the death.

If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects in progress and to undertake new work for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days after the death. The remaining general partner or partners must apply for and obtain a new license to continue contracting after the continuance expires.

(e) The general partner or partners shall notify the registrar in writing within 90 days of the disassociation of a limited partner. Failure to notify the registrar of the disassociation, within 90 days, shall cause the disassociation to be effective the date the written notification is received at the board’s headquarters office. Failure to notify the registrar within 90 days of the disassociation is grounds for disciplinary action.

The disassociation of a limited partner will not affect the partnership license unless the partnership license has only one limited partner. In this case, the license will be canceled upon the disassociation of the limited partner unless a new limited partner is added to the license within 90 days of the disassociation. If the license is canceled, the remaining general partner or partners may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days after the disassociation. The remaining general partner or partners must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.

(f) A joint venture license shall be canceled upon the cancellation, revocation, or disassociation of any of its entity licenses or upon the dissolution of the joint venture. The registrar shall be notified in writing within 90 days of the disassociation of a joint venture entity or dissolution of the joint venture. Failure to notify the registrar of the disassociation or dissolution within 90 days shall cause the license to be canceled effective the date the written notification is received at the board’s headquarters office. Failure to notify the registrar within 90 days of the disassociation or dissolution is grounds for disciplinary action.

Any remaining entity or entities may request a continuance of the license to complete projects contracted for or in progress prior to the date of disassociation or dissolution for a reasonable amount of time to be determined by rules of the board. The request for a continuance must be made in writing and received at the board’s headquarters office within 90 days of the disassociation or dissolution. The remaining entity or entities must apply for and obtain a new license to undertake new work and to continue contracting after the continuance expires.

(g) Any individual, partnership, or joint venture license continued in accordance with this section is subject to all other provisions of this chapter.

(h) A corporation license shall be canceled upon the corporation’s dissolution, merger, or surrender of its right to do business in this state. The corporation or participating tribe shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the board’s headquarters office. If the corporation or participating tribe fails to notify the board of the dissolution, merger, or surrender, the corporation license shall be canceled 60 days after the board’s discovery when researching the relevant corporate records. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.

(i) A limited liability company license shall be canceled upon the company’s dissolution, merger, or surrender of its right to do business in this state. The limited liability company shall notify the registrar in writing within 90 days of the dissolution, merger, or surrender. Failure to notify the registrar of the dissolution, merger, or surrender within 90 days shall cause the license to be canceled effective the date written notification is received at the board’s headquarters office. If the limited liability company fails to notify the board of the dissolution, merger, or surrender, the limited liability company license shall be canceled 60 days after the board’s discovery when researching the records of the Secretary of State. Failure to notify the registrar within 90 days of the dissolution, merger, or surrender is grounds for disciplinary action.

(j) The registrar shall review and accept the petition of a licensee who disputes the date of cancellation upon a showing of good cause. This petition shall be received within 90 days of the board’s official notice of cancellation.

SEC. 11.

Section 7076.2 of the Business and Professions Code is amended to read:

7076.2.

(a) Notwithstanding any other provision of law, the failure of a contractor licensed to do business as a corporation or limited liability company in this state to be registered and in good standing with the Secretary of State after notice from the registrar shall result in the automatic suspension of the license by operation of law. The registrar shall notify the licensee in writing of its failure to be registered and in good standing with the Secretary of State and that the licensee shall be suspended 30 days from the date of the notice if the licensee does not provide proof satisfactory to the registrar that it is properly registered and in good standing with the Secretary of State. Reinstatement may be made at any time following the suspension by providing proof satisfactory to the registrar that the license is properly registered and in good standing.

(b) Where the license of a limited liability company is suspended pursuant to subdivision (a), each person within the company identified in Section 7028.5 shall be personally liable up to one million dollars ($1,000,000) each for damages resulting to third parties in connection with the company’s performance, during the period of suspension, of any act or contract where a license is required by this chapter. This personal liability shall not apply where there has been substantial compliance with the licensure requirements, as described in subdivision (e) of Section 7031.

SEC. 12.

Section 7125 of the Business and Professions Code, as amended by Section 1 of Chapter 978 of the Statutes of 2022, is amended to read:

7125.

(a) Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name. A Certificate of Workers’ Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers’ compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.

(b) This section does not apply to an applicant or licensee who meets both of the following conditions:

(1) Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers’ compensation laws of California or is not otherwise required to provide for workers’ compensation insurance coverage under California law.

(2) Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.

(c) This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).

(d) A Certificate of Workers’ Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.

(e) (1) The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.

(2) A workers’ compensation insurer shall also report to the registrar a licensee whose workers’ compensation insurance policy is canceled by the insurer if all of the following conditions are met:

(A) The insurer has completed a premium audit or investigation.

(B) A material misrepresentation has been made by the insured that results in financial harm to the insurer.

(3) Willful or deliberate disregard and violation of workers’ compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.

(f) (1) For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is received by the registrar.

(2) For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.

(g) (1) For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is received by the registrar.

(2) For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.

(h) The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(i) This section shall remain in effect only until January 1, 2028, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2028, deletes or extends that date.

SEC. 13.

Section 7125 of the Business and Professions Code, as added by Section 2 of Chapter 978 of the Statutes of 2022, is amended to read:

7125.

(b) This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers’ compensation laws of California or is not otherwise required to provide for workers’ compensation insurance coverage under California law.

(c) A Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.

(d) (1) The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.

(A) The insurer has completed a premium audit or investigation.

(B) A material misrepresentation has been made by the insured that results in financial harm to the insurer.

(3) Willful or deliberate disregard and violation of workers’ compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.

(e) The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(f) This section shall become operative on January 1, 2028.

SEC. 14.

Section 7125.7 is added to the Business and Professions Code, to read:

7125.7.

By no later than January 1, 2027, the board shall establish a process and procedure, which may include an audit, proof, or other means, to verify that an applicant or licensee without an employee or employees is eligible for exemption from the workers’ compensation insurance requirement pursuant to Section 7125.

SEC. 15.

Section 7137 of the Business and Professions Code is amended to read:

7137.

(a) The board may set fees by regulation. These fees shall be set according to the following schedule:

(1) Application fees shall be set as follows:

(A) The application fee for an original license in a single classification shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).

(B) The application fee for each additional classification applied for in connection with an original license shall be one hundred fifty dollars ($150) and may be increased to not more than one hundred eighty-eight dollars ($188).

(C) The application fee for each additional classification pursuant to Section 7059 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).

(D) The application fee to replace a responsible managing officer, responsible managing manager, responsible managing member, or responsible managing employee pursuant to Section 7068.2 shall be two hundred thirty dollars ($230) and may be increased to not more than two hundred eighty-eight dollars ($288).

(E) The application fee to add personnel, other than a qualifying individual, to an existing license shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).

(F) The application fee for an asbestos certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).

(G) The application fee for a hazardous substance removal or remedial action certification shall be one hundred twenty-five dollars ($125) and may be increased to not more than one hundred fifty-seven dollars ($157).

(2) The fee to take an examination conducted or administered by a public or private organization pursuant to Section 7065 shall be no greater than the actual cost of the administration of the examination and shall be paid directly to the organization by the applicant.

(3) Initial license and registration fees shall be set as follows:

(A) The initial license fee for an active or inactive license for an individual owner shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).

(B) The initial license fee for an active or inactive license for a partnership, corporation, limited liability company, or joint venture shall be three hundred fifty dollars ($350) and may be increased to not more than four hundred thirty-eight dollars ($438).

(C) The registration fee for a home improvement salesperson shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).

(D) (i) The board shall grant a 50-percent reduction in the fees prescribed by this paragraph to an applicant who is a veteran of the United States Armed Forces, including the National Guard or Reserve components, and was not dishonorably discharged.

(ii) To demonstrate discharge grade at the time of the board’s request for the initial license or registration fee, the applicant shall provide the board a copy of a current and valid driver’s license or identification card issued by this state or another state with the word “Veteran” printed on its face or a copy of their DD214 long form.

(4) License and registration renewal fees shall be set as follows:

(A) The renewal fee for an active license for an individual owner shall be four hundred fifty dollars ($450) and may be increased to not more than five hundred sixty-three dollars ($563).

(B) The renewal fee for an inactive license for an individual owner shall be three hundred dollars ($300) and may be increased to not more than three hundred seventy-five dollars ($375).

(C) The renewal fee for an active license for a partnership, corporation, limited liability company, or joint venture shall be seven hundred dollars ($700) and may be increased to not more than eight hundred seventy-five dollars ($875).

(D) The renewal fee for an inactive license for a partnership, corporation, limited liability company, or joint venture shall be five hundred dollars ($500) and may be increased to not more than six hundred twenty-five dollars ($625).

(E) The renewal fee for a home improvement salesperson registration shall be two hundred dollars ($200) and may be increased to not more than two hundred fifty dollars ($250).

(5) The delinquency fee is an amount equal to 50 percent of the renewal fee, if the license is renewed after its expiration.

(6) Miscellaneous fees shall be set as follows:

(A) In addition to any other fees charged to C-10 contractors, the board shall charge a fee of twenty dollars ($20), to be assessed with the renewal fee for an active license, which shall be used by the board to enforce provisions of the Labor Code related to electrician certification.

(B) The board shall require a licensee that is subject to a public complaint requiring a professional or expert investigation or inspection and report pursuant to Section 7019 to pay those reasonable fees that are necessary to cover the costs of that investigation or inspection and report, in accordance with the following provisions:

(i) Fees shall be fixed in an amount not more than the board’s cost of contracting for the investigation or inspection and report, except that the minimum fee shall be one hundred dollars ($100) for each investigation or inspection and report and may be increased to not more than one thousand dollars ($1,000) for each investigation or inspection and report.

(ii) The fee shall only be assessed for an investigation or inspection and report that resulted in issuance of a letter of admonishment or a citation pursuant to Sections 7099 and 7099.9.

(iii) The full amount of the assessed fee shall be added to the fee for the active or inactive renewal of a licensee who is subject to this subparagraph. A license shall not be renewed without payment of the renewal fee and all fees for the investigation or inspection and report pursuant to this subparagraph.

(C) The service fee to deposit with the registrar lawful money or cashier’s check pursuant to paragraph (1) of subdivision (a) of Section 995.710 of the Code of Civil Procedure for purposes of compliance with any provision of Article 5 (commencing with Section 7065) shall be one hundred dollars ($100), which shall be used by the board only to process each deposit filed with the registrar, to cover the reasonable costs to the registrar for holding money or cashier’s checks in trust in interest bearing deposit or share accounts, and to offset the costs of processing payment of lawful claims against a deposit in a civil action.

(D) The fee for the processing and issuance of a duplicate copy of any certificate of licensure or other form evidencing licensure or renewal of licensure pursuant to Section 122 shall be twenty-five dollars ($25).

(E) The fee to change the business name of a license as it is recorded under this chapter shall be one hundred dollars ($100) and may be increased to not more than one hundred twenty-five dollars ($125).

(F) The service charge for a dishonored check authorized by Section 6157 of the Government Code shall be twenty-five dollars ($25) for each check.

(b) The board shall, by regulation, establish criteria for the approval of expedited processing of applications. Approved expedited processing of applications for licensure or registration, as required by other provisions of law, shall not be subject to this subdivision.

SEC. 16.

No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.