Peerless Institute

Why Study Business Law?

A Law and Business Contractors license by the California Contractors State License Board (CSLB) is required to perform work on a majority of construction projects in California. In California, all individuals and businesses that construct or alter, or offer to construct or alter, any construction project except federal projects has to be licensed by the CSLB. This is especially true when the entire cost of materials and labor is $500 or more.

Obtaining this license is a long process of careful considerations. Here are the things you will have to take care of in order to get licensed:

Know Who Can Become a Licensed Contractor

To qualify for this license, you will need to meet certain criteria, which requires that you must:

• Be at least 18 years of age
• Possess a social security number
• Be able to show that you have the required experience and expertise needed to take care of the daily activities of the construction business

Acquire the Required Experience

An individual, who wishes to be qualified for this license, must possess at least 4 years of experience at the journey level, within the ten years before the application for the license. Candidates will only be given credit for experience as a foreman, journeyman, contractor, supervising employee or owner-builder. In addition, all relevant experience will have to be verified by a qualified individual who has first-hand knowledge of the individual’s work during the relevant time frame.

As a qualifying individual, you can get credit as follows (for up to a maximum of 3 years):

• Up to 1.5 years of credit can be attained upon submitting of transcripts relating to an Associate of Arts degree from an accredited college. The degree needs to be in building or construction management.
• Up to 2 years of credit can be received if transcripts for a (i) 4-year program from an institution that is accredited, are submitted in the fields of business, accounting, physics, economics, mathematics or a related field, (ii) a professional degree in law, (iii) a significant amount of university-level work in subject areas of accounting, business, architecture, drafting, construction technology, mathematics, engineering, economics or physics.
• Up to 3 years of credit can be attained if any of the following are submitted: (i) a Certificate of Completion of Apprenticeship from an accredited program or a certified document that signifies the completion of apprenticeship training from a union in the classification being applied for; (ii) official academic records for a four-year degree from an accredited college in any field, such as architecture, engineering, construction technology or others that are directly relevant to the classification being applied for; (iii) transcripts of a four-year degree from an accredited university in the subject areas of horticulture, if applying for a Landscaping classification.

How to Study for Business Law Exam

Know the Classifications a Contractor Can Be Licensed In

For contractors in California, there are three different classifications available. These include:

• Class “A” – General Engineering Contractor: The main business for such a contractor is related to fixed works that require specialized engineering know-how.
• Class “B” – General Building Contractor – The main business for such a contractor is related to any structure constructed, in the course of being constructed, or set to be constructed at a time in the future, requiring in its building procedure the use of at least two distinct building trades or crafts. Carpentry and framing projects can be performed without constraint. Class “B” contractors also have the option of entering into direct contracts for projects that involve only one trade, given that the contractor holds the relevant specialty license.
• Class “C” – Specialty Contractor: For this classification, there are 42 separate options for contractors, whose foremost business involves the application of specific building trades or crafts.

Apply for a Contractor’s License

The application procedure for a contractor’s license requires you to follow certain steps. These include completing and submitting the following:

• An Application for Original Contractor License – In case of individuals, corporations and partnerships
• An Application for Original Contractor License (Exam Waived) – In case of individuals, corporations and partnerships with a qualifying person
• An Application for LLC Original Contractor License – In case of LLCs
• An Application for LLC Original Contractor License (Exam Waived) – In case of LLCs with a qualifying individual

In the options above where you are required to give an exam, you must submit the relevant application, along with a processing fee of $330 (the amount being charged currently) to the CSLB. In cases where you do not need to give the examination, you ought to submit the relevant application with a processing fee of $300 (the amount being charged currently), along with a preliminary licensing fee (currently $200) and an additional classification fee of $75 (the amount being charged currently).

Note: The applications need to be submitted in person or through mail to the CSLB. Even though the CSLB has different offices, the office in Sacramento is the only one that accepts the applications. The address for this office is: P.O. Box 26000, Sacramento, CA 95826.

Know the Requirements of the Examination

If you are giving the examination, there are certain requirements you will need to. You will be required to pass a written law and business exam for it you have to prepare Business Law Practice Exam and a specific trade exam. You will be allotted 3.5 hours for each exam, which would always be in a multiple-choice format. The centers for exams are typically located in Fresno, Oakland, Sacramento, San Bernardino, Norwalk, Oxnard, San Jose and San Diego. The details for your exam venue and date, along with a study guide, will be sent to you by the CSLB.

In certain cases, the Board may waive the examination. These cases involve:

• If the individual is currently licensed and has a good reputation in the same classification in which he is now applying for a license
• If the individual has been licensed and has had a good reputation within the last five years in the same classification in which he is now applying for a license
• If the individual has passed both the law and business examinations and trade examinations within the past five years, in the same classification in which he is now applying for a license
• If the individual is the immediate family of a person who is already licensed, and has had a good reputation for five out of the past seven years, prior to the application procedure. The qualifying individual must be deeply involved in the licensee’s business for five out of the past seven years and is applying for the same classification, and the license is mandatory to go on with the operation of an existing family business due to the absence or death of the licensee.

Note: In cases where you think that you might be entitled for an examination waiver, you will still be required to fulfill the “Experience” section of the application. This is, unless you are a current qualifier on a license in good standing in the same class, as the license you are now applying for.

Additional Documents that You May Need to File

Either with your application, or at a later time specified by the CSLB, you need to submit the following documents and provide relevant information:

• Contractor Bond  (Currently $15,000): This needs to be submitted in the business name of the applicant
• Qualifying Individual Bond or Alternative (Currently $12,500): The bond of the qualifying individual must be in his/her own name and the business name of the person applying
• Proof of Workers Compensation Insurance or Exemption Certificate: This is to provide proof of workers’ compensation or an exemption certificate to certify that no workers are employed

In addition to these requirements, LLCs are also required to submit the following items:

• Surety Bond (Currently $100,000): In the event of a LLC’s failure to pay wages, fringe benefits or interest on wages, along with other such contributions, this surety bond is meant to be for the benefit of affected employees or workers
• Liability Insurance: Proof of liability insurance, with a cumulative limit of $1 million for licensees who have five or lesser employees, and an added $100,000 for each additional employee. However, the amount must not exceed a total of $5 million.

How to Renew Your Expired License

Valid licenses expire every two years, while inactive licenses will expire every four years. Keeping this in mind, you should know the expiration date of your license and renew well in time.

The License Renewal Process

CSLB will send you a renewal application, approximately 60 days before your license is due to expiry. To ensure the smooth performance of this process, make sure you inform the Board of any address changes, in a timely manner

Note: In case if you do not receive the renewal application, you can order one online or simply call the CSLB at 1-800-321-CSLB (2752).

You have to send your renewal application to the CSLB before the expiry date is passed, in order to avoid any unlicensed time. The responsibility of following through with the renewal process lies with you, and not with the Board, even if you do not receive the form.

Bear in mind that the processing time can vary significantly, therefore you should submit the renewal form in a timely manner.

Renewal Fees

The renewal fees would vary according to the time-frame in which you renew.

• Timely Active Renewal – $360
• Timely Inactive Renewal – $180
• Delinquent Active Renewal – $540
• Delinquent Inactive Renewal – $270

The delinquent fee option comes into play if an acceptable renewal is not received on or before the date of expiry.

Changes in License Structure:

If the nature of the business entity in question has changed (for instance, from a sole proprietorship to partnership, corporation etc), you will not be able to renew the license.

Note: You can renew a suspended or expired license as well.

If your application for licensure is approved, you will receive a Letter of Acknowledgement from the CSLB. This will contain a nine-digit Application Fee Number and a four-digit Personal Identification Number. You can use these to track your application on the CSLB website. The application processing can take up to 3-4 months, therefore wait patiently. You may contact the CSLB if you have any other concerns.