Increases to Civil Penalty Amounts Against Contractors on the Horizon as AB 569 Moves Through the Legislature

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By Sabrina Barr

AB 569 (Grayson), as introduced on February 11, 2021, is a bill sponsored by the Contractors State License Board (CSLB) that would amend sections 7099.2 and 7099.9 of the Business and Professions Code relating to the Board’s ability to assess civil penalties on its licensees.

The proposed amendment to section 7099.2 would increase the maximum civil penalty amounts against contractors for the majority of violations of the Contractors State License Law from $5,000 to $8,000, and for the most severe violations (such as aiding, abetting, or conspiring with an unlicensed person to evade the law) from $15,000 to $30,000. According to the author, the increased maximum penalty amounts will better reflect current economic conditions. The $5,000 maximum civil penalty amount was last increased in 2003, for what was only the second time in the history of CSLB. The $15,000 violation-specific cap has not been increased since its institution in 1992. The proposed increases to $8,000 and $30,000 would reflect the change in the Consumer Price Index (CPI) since the amounts were last set. The CPI has increased 51% since 2003 and 94% since 1992.

In addition, the bill would amend section 7099.9 to allow CSLB to issue single Letters of Admonishment (LOAs) for multiple violations. Existing law requires that CSLB issue one LOA per violation. LOAs are an intermediate level of corrective action and are not considered discipline but exist to enhance public protection by requiring corrective action by the licensee and disclosing the violation to the public. According to the committee analysis, because LOAs can only be used against a single action, field investigators who may establish multiple minor violations during an investigation will select only one of those violations to admonish while any others go disregarded. This is an unintended consequence of the establishment of LOAs that came with the passage of SB 486 (Monning) (Chapter308, Statutes of 2017). Amending section 7099.9 of the Business and Professions code would correct this oversight and allow the issuance of individual LOAs for multiple minor violations.

On March 23, 2021, the Assembly Business and Professions committee passed the bill, and on April 14, 2021, the Appropriations Committee passed it.  At this writing, it is pending on the Assembly floor.

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