Contractors State License Board Sunset Review Oversight Hearing


By Erol Kilic

On December 21, 2023, CSLB published its Sunset Review Report in preparation for its Sunset Review Oversight hearing before the Assembly Business and Professions Committee and the Senate Business, Professions and Economic Development Committee. The Board’s enabling act, section 7000, et seq. of the Business and Profession Code is scheduled to “sunset” or be repealed on January 1, 2025, if it is not extended during sunset review.

CSLB’s report includes a summary of the Board’s activities over the past four years, updates the legislature regarding issues raised during its previous sunset review, and identifies six new issues the Board would like the legislature to consider during this sunset review period. Of note, the Board seeks to adopt enforcement of fine minimums in statute. CSLB states the “maximum” amounts by statute allows greater administrative law judge (ALJ) fine reductions during citation appeals. The report further states the minimum fine of $100 has not increased in fifteen years. Out of 5,597 citations issued between 2019 and 2023 (totaling $18,091,356 in fines), ALJs reduced 2,014 fines on appeal to an average of $1,840 compared to the pre-appeal average fine of $3,232 (a difference of $3,706,540 total). CSLB suggests an increase to the statutory minimum fine based on the violation’s egregiousness and adjusted every five years.

In preparation for CSLB’s Joint Sunset Review Oversight hearing, committee staff issued a background paper for members of the respective Business and Professions committees, which provides background about the Board, updates the committees on the changes and improvements CSLB made regarding the 17 issues from the previous sunset review, and identifies 18 new issues to raise with the Board during the sunset review process.

On Monday, March 11, 2024, pursuant to Government Code Title 2, Division 2, Part 1, Chapter 1.5, Article 7.5, the Assembly Business and Professions Committee and the Senate Business, Professions and Economic Development Committee held a joint oversight hearing regarding CSLB’s Sunset Review. The Board’s Registrar of Contractors, David R. Fogt, the Board’s Secretary, Miguel Galarza, and a public member Board Chair, Diana Love, appeared on behalf of the Board.

Mr. Galarza commented on CSLB enforcement, specifically CSLB’s active and aggressive investigation of unlicensed contractor practices in the state with help by other relevant state agencies. The result has been the successful recovery of over $29.4 million for the public, which represented a 6% increase over the prior year. Mr. Galarza further stated CSLB prioritizes emergency response in areas affected by disasters to assist the most vulnerable consumers.

Senator Roth opened questions regarding SB 216, which required contractors to carry worker’s compensation insurance regardless of whether the contractor’s had employees. Specifically, Senator Roth asked whether CSLB had observed a decrease in the number of licensed contractors in the state as a result of SB 216 requirements, and whether CSLB observed an increase in compliance regarding unlicensed contractors. Previous reports showed fewer contractor license renewals and some of those contractors chose to practice unlicensed instead of complying with the worker’s compensation mandate. Mr. Galarza stated CSLB noticed SB 216 resulted in a large increase in necessary paperwork and that, as a result, CSLB increased outreach efforts to contractors to ensure they are aware of the relevant requirements. Mr. Galarza continued to state that CSLB is aware of concerns that contractors without employees will be paying for workers’ compensation policies that would not benefit these contractors directly. Nonetheless, CSLB has continued to enforce these requirements to protect consumers across the state.

Senator Roth further inquired on the decrease in licensing renewals, potentially as a response to SB 216 requirements. Mr. Fogt stated CSLB did have a roughly 8–10% decrease in such renewals. Senator Roth asked whether CSLB was aware of a subsequent increase in unlicensed contractors practicing in the state. Mr. Fogt responded that CSLB has not performed a study on the increase in unlicensed practices, but overall unlicensed practices remain steady.

Senator Archuleta then asked what steps CSLB has taken or considered to protect consumers from contractors that start new projects without completing previous projects which cause undue delays, as well as relief available to those consumers. Mr. Galarza responded that CSLB spends about $42 million in enforcement to ensure that contractors are performing adequate work for consumers. However, Mr. Galarza also noted that enforcement fines often result in appeals that cost the CSLB roughly $9,000 for each appeal. Further, Mr. Galarza stated that the fines are often reduced to the minimum level, which results in a net loss for CSLB and the consumers the Board protects. These fine limits have not been adjusted since 2007 and CSLB’s solution would be to adjust these fines in tandem with the cost-of-living increase to ensure the fines are effective and compensatory to the damage incurred by the consumer.


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