January 18, 2012

JANUARY 18, 2012

By Kenneth S. Grossbart
Abdulaziz, Grossbart & Rudman

The Contractors' State License Board held Licensing and Enforcement Committee meetings at the CSLB headquarters in Sacramento on January 18, 2012.


Committee Members Present:
David Dias, Chair; Lisa Miller-Strunk; Bruce Rust; Frank Schetter

Committee Members Absent:
John O'Rourke

Licensing Program Update

License Application Workload
License applications continue to decline due to the economy. There is a 30% decline in fiscal year 2010-11 compared to the previous 10 years.

Limited Liability Companies
The LLC program has now been completed. The LLC applications have been available on the CSLB website since December 28, 2011. The staff has had to develop and create new applications and procedures, as well as information technology programming to make this all possible. The IT division worked closely with Licensing to get this done. It should be noted that the Statement of Information must be filed before you can get licensed.

License Transaction Processing Times
The Licensing Division has been able to keep acceptable processing times even with the reduction in staff hours due to the fact that there is a decrease in applications.

Fingerprinting/Criminal Background Unit (CBU)
The CBU has seen a decline in fingerprint submissions as a result of the reduction in applications as well as adding classifications that have already undergone a background check. Staff continues to conduct background checks on the same day it is received.

Licensing Information Center (LIC)
LIC currently has seven vacant positions. Of these vacancies, two are on hold because of the mandatory budget reduction, and one is on loan to the Department of Consumer Affairs. There are also vacancies due to staff members retiring. Because of all of this, call wait times have significantly increased with June having the highest wait time in over a year. Now that the hiring freeze has ended, recruiting new staff is a top priority, and a few positions have been filled. They are still working at half-capacity with only eight of 16 positions filled.

LIC's training coordinator has developed introductory training materials based on feedback from the call center staff. This introductory training will eventually be followed with more in-depth training that will be offered to all new and existing CSLB employees.

Testing Program Update

The Testing Division is currently waiting for DCA approval to fill three out of four vacant test monitor positions. The San Jose test monitor will start February 1. All four positions have been selected from applicants facing layoff from other state agencies.

Examination Wait Time
Even though the examination wait time is at three weeks statewide, there is still an excellent chance that walk-in applicants can find an available seat at any testing center.

Testing Center Status
The Oxnard Testing Center should be changed in February or March so that they can provide adequate spacing and provide additional comfort for applicants. The Oakland Testing Center's lobby has been repainted; the rest of the interior is due to be repainted shortly.

Examination Development
The Examination Development Unit has completed occupational analyses for the C-4 Boiler, Hot Water Heating and Steam Fitting as well as the C-21 Building Moving and Demolition classifications. They have also finished a new exam for the C-54 Tile classification. The Testing Division uses email and paper surveys for occupational analyses projects. Once they have adequate data, they will be able to conduct an analyses to identify any differences in the results of the two methods between paper and email surveys.

Enforcement Representative I Examination
The CSLB's goal is to administer this test twice a year. They successfully administered this test twice last year, which was given for the first time by computer using SCORE without any problems.

Visit To Belectric Solar Farm
Rick Villucci gave a PowerPoint presentation on Belectric Solar Farm. The presentation included an overview of the visit to the solar farm, the construction of the farm and the pros and cons of going solar. The farm went online in December and now produces electricity. The life expectancy of the solar panels is 20 years.


Committee Members Present:
Matt Kelly, Chair; Pastor Herrera; Ed Lang; Frank Schetter.

Committee Members Absent:
Jim Miller; John O'Rourke.

Enforcement Program Update

Vacancy Update
The CSLB finally received notice from the Department of Consumer Affairs on November 22, 2011 that the hiring freeze has been lifted. There are currently 33 vacant positions in the Enforcement Division and they have been proactive in advertising and hiring for all positions.

Intake and Mediation Highlights
A CSLB Consumer Services Representative was able to mediate a complaint between consumers and a licensee who had built a four-unit condominium project. Even though the statute of limitations had passed, the representative was successful in getting the licensee to take care of all the issues at no cost to the consumer, resulting in a $277,000 savings to the public.

A warning letter was successful in getting a licensee to comply with the law. The licensee had previously been issued a warning letter on a previous job for failing to pull a permit. When the consumer refused to pull a permit, the licensee did not go forward with the project. The consumer filed a complaint, the representative educated the consumer on the importance of the building permit and the complaint was closed with no violations.

Investigative Center Highlights
A solar system failed to deliver the promised power. The licensee has refused to fix the problem due to recently filing for bankruptcy. The complaint has now been recommended for accusation against the licensee for failing to perform per the contract.

Well Drilling complaints result in three revoked licenses and an application denial.

Internal partnering results in criminal prosecution.

Investigation leads to criminal referral.

Unlicensed painter on probation gets caught again.

For the 2011 calendar year, there were 540 arbitration cases initiated. Of those, 467 had decisions received, 127 had licenses revoked for non-compliance and the savings to the public for restitution was $1,478,734.

SWIFT Statewide Investigative Fraud Unit
SWIFT has partnered with San Bernardino investigators to issue administrative citations and four Stop Orders after a sweep. There has also been partnering with the San Diego District Attorney's office as well as San Joaquin County. There have been criminal charges for repeat offenders, 11 unlicensed operators found and at a routine traffic stop, a police officer issued a Notice to appear for driving on a suspended license and violation of Business and Professions Code 7028 for contracting without a license.

General Complaint Handling Statistics
The Enforcement Division is now closing an average of nine complaints per month since the elimination of furlough days. They are working towards an average of 10 complaints closed per month. They achieved their goal of increasing the percentage of licensee complaints settled to 30% in November 2011 with an average of 32%, as well as accomplishing Intake and Mediation Center licensee Complaint disclosure of 70% with an average of 70% in November. Other than in November 2011, the staff has been able to meet their goal of reducing 270-day-old complaints to 100 or less.

Investigative Center Audits
The internal audit of CSLB's Investigative Centers is now complete. The audit determined some areas where the staff needed improvement, but the majority of those recommendations can be undertaken by training and increased supervisory oversight.

Public Works Investigation Unit Update
At this time, there are three public works contractors that are pending disciplinary actions for using the same unlicensed construction clean-up contractor. The unlicensed subcontractor was also issued three non-licensee citations.

During the 2011 calendar year there were 118 public works complaints that were initiated. Out of those complaints, 23 were Citations, 18 were referred for Accusation, two were referred to a prosecutor for criminal filings and five were non-licensee Citations.

Impact of Underground Economy on Employers & Anticipating Effects of Health Reform
Frank Neuhauser, Executive Director of the Center for the Study of Social Insurance at the University of California at Berkeley gave a great PowerPoint presentation regarding the impact that the underground economy has on the construction industry. Worker's Compensation is being under-reported, mis-reported and in some instances not reported at all. This impacts the honest employer. From 1997 to 2005 it was estimated that 15 to 68 billion goes unreported. Honest employers pay two to three times more than the appropriate rate for high risk jobs. The conclusions he came to from research are that the PPACA (Patient Protection and Affordable Care Act) and related mandate may increase employer costs (especially for small to medium-size employers with high workers' compensation insurance costs), which will increase the importance of enforcement efforts against underground employers to protect the honest companies. The main issue is that we need to improve enforcement. This was a very informative presentation.

Proposed 2012 Proactive Enforcement Strategies
The CSLB's Labor Enforcement Task Force has five top enforcement objectives. They already have some associations that have agreed to participate. They want to partner with EDD, DLSE, DOSH, BOE, and CDI to identify construction businesses that are in violation of license, tax and workers' compensation insurance requirements through CSLB complaints, industry associations and labor compliance organizations.

They also want to regularly meet with associations to identify flagrant construction offenders that will be subject to one or more enforcement actions.

Another objective is to establish protocol with partner agencies to provide for violation disclosure and outstanding liability suspension for such things as unpaid wage claims, tax liabilities and civil penalties.

Enforcement wants to create a statistical report format that identifies their actions, monies owed, and compliance (such as the impact of license suspensions etc.).

The Enforcement Representatives are also establishing an outreach and educational program that provides assistance to prospective and established business owners regarding license, safety and tax requirements within the construction industry.

The Economic Employment Enforcement Coalition (EEEC) which was part of SWIFT and conducts sting operations has now been reorganized as the Labor Enforcement Task Force (LETF). LETF instead of conducting random sweeps, a formal process has been established to identify offenders before visiting a project site, which should increase the number of enforcement actions for the CSLB and will result in more efficient sweep operations.

JESF Investigators Pilot the Partnering Agency County Task Force (PACT). PACT teams the CSLB Enforcement Representatives with District Attorneys and investigators etc., to a participating county to target unlicensed and/or uninsured violators.

The CSLB will be partnering with the Employment Development Department to combat the underground economy. Dan Kurtilla, Chief of the Underground Economy section of EDD addressed the Board to express its continued support of the CSLB in helping on the underground economy issue. The EDD said that the CSLB is their number one partner on fighting the underground economy.

Review & Approval of Enhanced Enforcement Representative Identification
The CSLB has been working on new professional identification cards for staff that conducts business in the field. There has been a task force and meetings to look into this. One of the requirements is to have the staff trained on how and what to do with the badges. The Board has been asked to approve the enhanced ID emblem to all Enforcement Representatives that are part of the SWIFT staff after they have completed the proper training and signed an acknowledgement statement that they have completed this.


February 7, 2012, San Jose - Board Meeting
April 17-18, 2012, Monterey - Board Meeting
June 5, 2012, Orange County - Joint Board Meeting with Nevada State Contractors Board