CA Contractors License For Labor Only Work?

El Dorado Wood

Hey all. This is long, but any ifno could really help me out.

I've been trying to get an answer about this from the CSLB and, obviously, can't get a decent answer.

I own a small, two man cabinet and furniture shop in California. I am unlicensed as a "Contractor" and simply sell the cabinets to my clients as a retailer with a flat $499 charge for installation... which keeps me under the license requirements. We also do some installation and trim work for other shops in town, which we do on a 1099 (Independent) basis.

With residnetial work slowing down (and getting tired of Resi clients)... I am interested in expanding my business to doing retail and commercial installation for national contractors (shelving, casework, trim, cashwraps etc). I will basically be selling labor at an hourly rate to contractors while using my own liability, worker's comp and bond. This would obviously allow me to charge more per hour, and, since I don't pay comp ins. on myself, keep more of the money in the business.

Honestly, I don't see what the difference is between doing this and what companies like CLP, Labor Ready and Manpower are doing.

Anyone have any thoughts?

Oh... I know I should just go ahead and get the license... and I will. However, because of a past violation, I'd need to have a hearing with the CSLB, and don't expect to have the license until mid/late 2007.

tkle

It'll probably take to then to get a test date anyway.Sounds like a possible way around it but a lot of trouble.I don't like the labor places.I don't see too many good workers come out of them.250$ for the test 200 for the books a little effort and the test is simple.It's multiple choice on a computer.You have 8 chances to pass then all you have to do is give them more money and you have another 8 chances.It's so easy it's a joke but it's the right way to do it,shows that you're not too big a flake.
You near Folsom or Tahoe?Ever hear of Terry's Masonry

dirt diggler

El Dorado ...

do you cut corners?? I've got this gut-like feeling (after reading this post) that your past violation was the consequence of an event that occured because of corner cutting. Whether it was in the field, the books, or something

don't be offended --- it was just the picture i had in my mind right after reading that

El Dorado Wood

Seriously though... no offense taken, well, maybe some, but I can see how you could get that impression. Although, it's not accurate.

I didn't want to get into the specifics of my CSLB violation, but... I made a rookie mistake of trusting a client and taking her at her word. She ran up a 6 figure bill doing change orders and additions on her custom home. When final payment time came, she sued me and reported me to the CSLB. Because of the law in the great State of California, I had to return every cent she had paid me... a debt I'm still paying off. My license application was denied... pending full restitution to this "client". That's right... she gets over $100,000 worth of custom cabinets for free.

Now, I know you're probably thinking, "There's gotta be something he's not telling us." Nope. Client was just a total btch . She's also suing the GC, electrician, stucco guy and the architect. I hope she rots in hell.

'Cut corners'? No.

I'm not ripping anybody off. My taxes are all paid, my insurance and bond are current and up to date, my landlord loves me and my clients adore me. I turn down more work than I accept, and it all comes from referrals.

I could also have easily filed bankruptcy, closed my business and moved to AZ and started over. But I chose to take my 'man pill' and accept the consequences of my mistake. Even though it almost cost me my business and my home.

So... I can't afford to get a license... and I can't afford to not work. I left my business set up as a retailorship as it was... under the consultation (and blessing) of my attorney. I'm also under extremely close scrutiny by the CSLB... and they have had no issues with how I operate currently.

Debookkeeper

The only thought that comes to mind is if there is a way you can set yourself apart from CLP, Labor Ready, and others - that would be great. We actually used one of their services 3 months ago - we requested carpenters with a minimum of 15 years experience, and they couldn't perform. Many people in the construction trade are ready to pull their hair out trying to find quality compentent workers. So, after reading your post - I am being negative in the sense that I can imagine it becoming equally frustrating for you to try and find compentent, reliable help to staff this venture.

Melissa

I don't know. I'd have look on CSLB, which isn't easy to navigate through and find a quick answer at all You might have found a loop-hole... as far as selling cabinets compared to being a contractor and needing a license...???

I do know that Labor Ready, ManPower, etc. don't need to have a license, because whoever is hiring the labor will have the license- of course if anything bad were to happen, you'd probably be partly responsible...

I'm a little confused at to what you're asking and thinking of doing as compared to what you're currently doing.

BTW, which part of Cali are you in?

El Dorado Wood

Hey Melissa...

We're in Escondido.

I guess you could call the retail cabinet thing a "loophole", but I know quite a few guys that do it. In fact, because of the tax and legal advantages, any cabinet shop that's NOT acting as a retailer is missing out... licensed or not. The biggest thing is... the maximum allowable deposit for contractors in this state wouldn't even begin to cover materials for a cabinet order. As a retailer, you aren't restricted by the same rules. Not paying 8% sales tax on materials is also nice.

For clarification about my 'idea'. What I'd like to do is, basically be a carpenter/installer for hire service doing retail or commercial work throughout the Southwest. I would not hire any employees beyond the two I have now. Just make the service available to the myriad of National retail installatoin companies, and work on a first come, first served basis. I would pay for travel, lodging, meals, insurance and labor out of the hourly rate I'd charge these companies. The rate would be higher than what the contractor would pay at CLP(etc), however, they would know who they are hiring and get a competent, well tooled crew that's used to working together.

The sticking point with the CSLB law is the language about acting in a supervisory position. A person "who does not have direction or control over the performance of work or who does not determine the final results of the work or project"... is not required to be licensed.

My attorney tells me that this is probably the line. If I were to be sent on a job with no representatives from the contractor, it would 'probably' be a violation.

However... I've worked a bit for CLP (etc), and have run lots of jobs for other companies while being hired through CLP.

If it is illegal... how do they get away with it?

Seems like a major gray area... and the CSLB is of little or no help. Of course.

Melissa

What is CLP?
Sounds like your attorney already gave you the advice you need. If I were you, rather than install the cabs, I'd just get in good with some Kitchen and Bath remodellers in your area, you make the cabinets, they install them. Until you can get your own license.

dirt diggler

sorry to hear that El D ... like i said ... don't take any offense ... just the way it was written sounded ....

tkle

I don't have too many problems with the Great State of California.A simple complaint about what?No license?How did her lawsuit stick?

nadonailer

Welcome to the forum first of all! I'm also curious how this crook got ya? People can't just not pay you. The Great State of CA actually has great protections built in for contractors, probably more so than any other state! I know from experience our lien laws are really strong!

__________________
"History does not long entrust the care of freedom to the weak or the timid”.
Dwight D. Eisenhower

Melissa

Can you pull a lien if you don't have a license though?

JMFloors

No, you can't process a lien if you aren't licensed. It's also very difficult to get bonded without a license, but you can find companies that will give you liability insurance. You may have trouble collecting on any claims though, when they discover you are breaking the law.

I believe the rule is, and I'm certainly no lawyer or expert in this area, the total amount you can work for without a license includes the material costs, if you supply them. So, if you sell cabinets for $1,000.00 and install them for 499.00, the total contract is for 1,499.00 and falls outside the CA license limits -- you must be licensed.

This is the rule for flooring. I worked for many years without a license, having let it lapse thinking I would never crawl on my knees again, but ended up doing just that anyway. I live in the rural area I grew up in and am well known, so I was able to keep putting it off and putting it off until I was forced to retire recently (health issues). I broke the law. I never meant to, but I did and make no excuses for it. Wish I could have a do-over.

Whether or not the licensing laws are just or fair to everyone is not the issue. I think you should do more research to learn the laws governing your proposed situation and the one you are working under now. Do what you can to clear up the matter and not have to worry about retaining legal counsel. Don't do what I did and then find yourself unable to make it right.

Best R'gards,

Jim

El Dorado Wood

Thanks Jim. That is certainly my plan. I could've very easily told this lady to pound rocks and gotten away with it, had I never wanted to be licensed in CA.

As far as the materials+labor thing. I haven't looked into it very hard, since I dont do floors, but I think there is a special provision in the "exemptions" for flooring companies. Believe me, I know that the way I'm operating now is okay with the CSLB. After I was reported... I had a CSLB investigator go through my books to see if there were any other violations. I'm not gonna make the claim that what I'm doing is "legal" (although I'm 99.9% sure that it is), but the CSLB knows how I operate, and doesn't have an issue with it. The situation I got busted for was NOT a $499 installation. I just kept throwing the changes and add-ons onto the contract. I went WELL over the $499 installation charge on that contract... that's what burned me.

I have a retailorship set up nice and legal with my City and CA. I have tax ID #'s, collect sales tax... and so on. Also, 50% of my work is not stuff that's "installed" anyway. Custom furniture, game tables, free standing entertainment centers, etc.

Just wanted to add for clarification... this lady I worked for... her cabinets are completely done, and she's very happy with them. She just happened to know the law better than I did (at the time) and was able to take advantage of the situation. Not saying I'm blameless either. I was working illegally, and exposed her to liability by exceeding the structure of my insurance and bond limits. I accepted the consequences of my mistake.

Sorry to turn this into a soap opera.

Appreciate the input from ya'll.

tkle

A 499$ job turned into a 100,000$ job.Why can't I get those?My biggest peeve in this area(Yucca Valley) is illegal contractors.There's no enforcement and I end up wasting a lot of time trying to bid against them.It's not a level playing feild.That said some of my better friends work without a license.Haven't been in Escondido for some time,but it's got to be jumping with work.If you have an established shop with a good rep advertise for a CEO with a license.I have a GC B-1 license just sitting on the shelf looking for something to do...

El Dorado Wood

Actually... the residential work is getting really slow in the San Diego area right now. Houses aren't selling, home values are dropping and people don't have that free $50k in equity after a year to roll over into a remodel. There are a few large scale condo projects sitting in Escondido that are half built. Escondido had the brilliant idea to create huge tax/land incentives for developers to build new condos or convert apartments. The goal was to reduce the city's "rental occupancy rate" which they said was the highest in the State. However, now the market is flooded with condos and most developers are sitting on unsold units or turning them over to managment companies that are renting them out.

Things definitely aren't "bad" yet, but it's nothing like it was the last few years. With Thanksgiving, Christmas and Superbowl coming up, this is usually my busiest season. I've probably taken half the orders so far than I did up to this time last year. Must say... getting a liiiiiiittle nervous.

tkle

We're still going pretty strong in this area(Morongo Basin).My house has slightly depreciated a few thousand though it went up about 50 thousand last year.Lots of Mom and pop builders the last couple of years.Lots of copycat houses.Those with distinction are still selling.People are starting to fix up what they have.Even if it gets slow there's always work in the Palm Springs,Palm Desert area.There never seems to be a reccession there.Those people never run out of money.
Some of them filter up this way.There are several well known musicians living in the basin.This attracts a certain crowd with money plus the Swedes love the desert and the joshua trees.I'm just building my business so I have slow periods but I just go to work for somebody else temporarily with the condition that I have obligations.I have a B and a C-29 but I stick to masonry cause that's what I'm good at.

Plan 9

In California you do not need a license to contract work under $500 but you must include language in all your advertisements that you are un licensed.

Also keep in mind that in California, it is unlawful for a Contractor to contract with an unlicensed person. 90% of the general contractors I know sub out work such as plumbing and drywall to unlicensed contractors.

Getting a contractors license in California is easier than getting a driver's license. For some trades such as glazing, the required passing score is 50%. You can basically toss a coin and pass the test...

Hindsight is 20-20 but you should have gotten your license long ago.

Your idea of providing a labor only service is an obvious ruse to circumvent license law and the CSLB will look dimly upon that. Your comparison to Labor Ready or Contractors Labor Pool is a flawed analogy. You are doing work that normally requires a license, as soon as you've done more than $500 worth of work, you will be in violation.

You are doomed. You will need to continue hanging cabinets in peoples kitchens until you finally get a license of your own.

You sound like a square guy that does good work, but you have to play the hand you were dealt. You made a poor business decision contracting without a license, but you know that already. I wish you the best, I hate it when bad things happen to good people.

Whoop! Whoop!

tkle

Several ads in my local paper with no mention of being unlicensed.One guy has had his license "pending"for almost a year now.It's a joke.Complaints to the paper go unanswered.Complaints to CSLB go unanswered.People brag about no license.They wouldn't have one.Why have laws when they're not enforced?It makes it unfair to those who try to do it right.

nadonailer

The easier the trade, the easier the test - some, such as swimming pool construction, general contractor, etc.. require 72% to pass and the passing rate is about 1 out of 8 (Just to put things in perspective)

I like the idea of getting a CEO with a license for now, and then get your own as soon as possible. The moral of the story: when in doubt, get licensed.

__________________
"History does not long entrust the care of freedom to the weak or the timid”.
Dwight D. Eisenhower