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Can Building Contractors Whose Contractor’s License Has Been Suspended or Revoked Legally Work in the Construction Business, or Get Their Construction Contractors Licenses Reinstated?

California Contractors whose Contractor’s Licenses have been suspended or revoked by the Contractors State License Board for violations of the Contractors State License Law or “substantially related” crimes or professional misconduct - usually after an Accusation from the License Board and an adjudicatory administrative hearing, or by default - typically cannot work as a construction manager or supervisor for or be an officer, owner of or partner in any other licensed construction contractor in the State of California, except as an ordinary employee.

And they are also legally required to notify - in writing - all potential employers or business partners who are licensed contractors of their license suspension or revocation.

And any other licensed contractor who knowingly employs a person whose licensed has been suspended or revoked as an owner, partner, supervisor or manager of its construction projects is also subject to sanctions, fines, criminal penalties, and even suspension or revocation of his, her or its own Contractor’s License!!

However, the former licensee may still be able to work as an independent Construction Manager as an individual, or for a Construction Management company that does not hold a Contractor’s License and which does not engage in any actual Construction bidding or contracting or act as a “Contractor”, within the meaning of Bus. & Prof. Code § 7026.

““Contractor,” . . . is synonymous with “builder” and, within the meaning of this chapter, a contractor is any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith, . . . “Contractor” includes subcontractor and specialty contractor. “Roadway” includes, but is not limited to, public or city streets, highways, or any public conveyance.” (Emphasis added).
CA Bus. & Prof. Code § 7026.

We discuss below some of the applicable provisions of the Contractors State License Law regarding permissible work by contractors whose license has been suspended or revoked, and requirements for applying to try to get a suspended or revoked Contractors license reinstated:

”A person who was the qualifying individual on a revoked license, or of a license under suspension, or of a license that was not renewed while it was under suspension, shall be prohibited from serving as an officer, director, associate, partner, manager, or qualifying individual of a licensee, whether or not the individual had knowledge of or participated in the prohibited acts or omissions for which the license was revoked, or suspended, and the employment, election, or association of that person by a licensee shall constitute grounds for disciplinary action.” (All emphasis added).
CA Bus. & Prof. Code § 7121.5. See Also, CA Bus. & Prof. Code § 7121.

“(a) An individual who meets all of the following criteria shall not perform any act regulated under this chapter for or on behalf of a licensee, other than as a bona fide nonsupervising employee:

(1) The individual was listed as an officer, director, owner, manager, partner, or associate of a license that was revoked.

(2) The individual had knowledge of or participated in any act or omission for which the license was revoked.

(3) The individual is not eligible for reinstatement for licensure under Section 7102.

(b) An individual who meets all of the following criteria shall not perform any act regulated under this chapter for or on behalf of a licensee, other than as a bona fide nonsupervising employee:

(1) The individual furnished the qualifications for licensure, as set forth under Section 7068, and that license was revoked.

(2) The individual served in the capacity of the qualifying individual during the commission or omission of any of the acts that resulted in the revocation of the license, whether or not he or she had knowledge of or participated in those acts.

(3) The individual is not eligible for reinstatement for licensure under Section 7102.

(c) A violation of this section is a misdemeanor punishable by a fine of not less than four thousand five hundred dollars ($4,500), by imprisonment in a county jail for not less than 90 days nor more than one year, or by both the fine and imprisonment. The penalty provided by this subdivision is cumulative to the penalties available under other laws of this state.” (All emphasis added).

CA Bus. & Prof. Code § 7121.6.
“For purposes of this article, “bona fide nonsupervising employee” means a person who is exempt from the provisions of this chapter under Section 7053, and who does not otherwise meet the test of an independent contractor, as set forth under Section 2750.5 of the Labor Code.” (Emphasis added).
CA Bus. & Prof. Code § 7121.8.

This means someone whose licenses has been suspended or revoked may only be a non-supervising employee of a licensed contractor, such as a carpenter, electrician, plumber or other tradesperson without authority to manage or supervise other construction workers or the project.

Persons whose licenses have been suspended or revoked are also required to notify in writing to any licensed contractor for whom they work of their prior license suspensions or revocations!!

“Prior to becoming employed in any capacity by an entity that is subject to licensure under this chapter, an individual who is described in subdivision (a) or (b) of Section 7121.6 shall provide the prospective employer with written notice of the license revocation.” (All emphasis added).
CA Bus. & Prof. Code § 7121.65.

If the other licensed contractor then uses you as a partner, officer, supervisor or manager they are subject to fines and criminal penalties, and suspension or revocations of their own license!!!

“(a) A qualifying individual, officer, partner, or other person named on a license shall not knowingly employ an individual who is described in subdivision (a) or (b) of Section 7121.6, except as a bona fide nonsupervising employee.

(b) A violation of this section is a misdemeanor punishable by a fine of not less than four thousand five hundred dollars ($4,500), by imprisonment in a county jail for not less than 30 days nor more than one year, or by both the fine and imprisonment.” (All emphasis added).

CA Bus. & Prof. Code § 7121.7.

Violations of these provisions can also be an obstacle in getting a suspended or revoked Contractors License reinstated.

Once a contractor’s license is suspended or revoked, it may be possible - usually after a few years and compliance with any other terms of the suspension or revocation order or Court orders - to apply for reinstatement or re-issuance of your license, provided that you meet certain requirements of the License Board, and apply or petition them for reinstatement, which may require a trial-type hearing before a State Administrative Law Judge.

“After suspension of a license upon any of the grounds set forth in this chapter, the registrar may reinstate the license upon proof of compliance by the contractor with all provisions of the decision as to reinstatement or, in the absence of a decision or any provisions of reinstatement, in the sound discretion of the registrar. After revocation of a license upon any of the grounds set forth in this chapter, the license shall not be reinstated or reissued and a license shall not be issued to any member of the personnel of the revoked licensee found to have had knowledge of or participated in the acts or omissions constituting grounds for revocation, within a minimum period of one year and a maximum period of five years after the final decision of revocation and then only on proper showing that all loss caused by the act or omission for which the license was revoked has been fully satisfied and that all conditions imposed by the decision of revocation have been complied with. The board shall promulgate regulations covering the criteria to be considered when extending the minimum one-year period. The criteria shall give due consideration to the appropriateness of the extension of time with respect to the following factors:

(a) The gravity of the violation
(b) The history of previous violations
(c) Criminal convictions.

When any loss has been reduced to a monetary obligation or debt, however, the satisfaction of the monetary obligation or debt as a prerequisite for the issuance, reissuance, or reinstatement of a license shall not be required to the extent the monetary obligation or debt was discharged in a bankruptcy proceeding. However, any nonmonetary condition not discharged in a bankruptcy proceeding shall be complied with prior to the issuance, the reissuance, or reinstatement of the license.” (Emphasis added).

Bus. & Prof. Code sec. 7102.

Regulations adopted by the Contractors State License Board describe what needs to be done by the former licensee to be sufficiently “rehabilitated” to apply for license reinstatement:

“(a) When considering the denial, suspension, or revocation of a license or registration pursuant to Division 1.5 (commencing with Section 475 ) of the Code on the ground that the individual has been convicted of a crime, the Board or Registrar shall consider whether the applicant, licensee, or registrant made a showing of rehabilitation if the applicant, licensee, or registrant completed the criminal sentence at issue without a violation of parole or probation. In making this determination, the Board or Registrar shall consider the following criteria:

(1) The nature and gravity of the crime(s);
(2) The length(s) of the applicable parole or probation period(s);
(3) The extent to which the applicable parole or probation period was shortened or lengthened, and the reason(s) the period was modified;
(4) The terms or conditions of parole or probation, and the extent to which they bear on the applicant's rehabilitation; and
(5) The extent to which the terms or conditions of parole or probation were modified, and the reason(s) for modification.

(b) If subsection (a) is inapplicable, or the Board or Registrar determines that an applicant, licensee, or registrant did not make a showing of rehabilitation based on the criteria in subsection (a), the Board or Registrar shall apply the following criteria in evaluating an applicant's, licensee's, or registrant's rehabilitation:

(1) The Board or Registrar shall find that an applicant, licensee, or registrant made a showing of rehabilitation if, after considering the following criteria and the provisions of subsection (b)(2), the Board or Registrar finds that the individual is rehabilitated:

(A) Denial Based on Felony Convictions Within Seven Years of Application

When considering the denial of a license or registration, the Board or Registrar may consider the applicant rehabilitated if the applicant was convicted of a felony within the preceding seven (7) years from the date of application that is substantially related to the qualifications, functions, or duties of a licensee or registration as defined in Section 868, and five (5) years have passed from the time of the applicant's release from incarceration or completion of probation if no incarceration was imposed, without the occurrence of additional substantially-related criminal activity, professional misconduct, acts, or omissions that also could be grounds for denial. This subsection does not apply to any crimes listed in subsection (b)(1)(B).

(B) Denial Based on Serious Felonies, Felonies Requiring Sex Offender Registration, or Felony Financial Crimes Directly and Adversely Related to the Qualifications, Functions, or Duties of a Licensee or Registrant

When considering the denial of a license or registration on the ground that the applicant was convicted of a crime identified in Section 480(a)(1)(A) of the Code or a felony financial crime as defined in Section 868.1, the Board or Registrar may consider an applicant rehabilitated if seven (7) years have passed from the time of the applicant's release from incarceration or completion of probation if no incarceration was imposed, and the applicant committed no additional substantially-related criminal activity, professional misconduct, acts, or omissions that also could be grounds for denial.

(C) Discipline Based on Felony Convictions

When considering the suspension or revocation of a license or registration, the Board or Registrar may consider a licensee or registrant rehabilitated if the licensee or registrant was convicted of a felony that is substantially related to the qualifications, functions, or duties of a licensee or registrant as defined in Section 868, and seven (7) years have passed from the time of release from incarceration or completion of probation if no incarceration was imposed, without the occurrence of additional substantially-related criminal activity, acts, or omissions that also could be grounds for suspension or revocation.

(D) Denial or Discipline Based on Misdemeanor Convictions

When considering the denial, suspension, or revocation of a license or registration, the Board or Registrar may consider an applicant, licensee, or registrant rehabilitated if the applicant, licensee, or registrant was convicted of a misdemeanor that is substantially related to the qualifications, functions, or duties of a licensee or registrant as defined in Section 868, and three (3) years have passed from the time of release from incarceration or completion of probation if no incarceration was imposed, without the occurrence of additional substantially-related criminal activity, act(s), or omission(s) that also could be grounds for denial, suspension, or revocation.

(E) Denial or Discipline Based on Professional Misconduct, Acts, or Omissions

For professional misconduct or acts that are substantially related to the qualifications, functions, or duties of a licensee or registrant as defined in Section 868, or for other acts or omissions that are grounds for denial, suspension, or revocation, the Board or Registrar may consider the applicant, licensee, or registrant rehabilitated if three (3) years have passed from the time of commission of the professional misconduct, act(s), or omission(s) without the occurrence of additional substantially-related criminal activity, professional misconduct, act(s), or omission(s) that also could be grounds for denial, suspension, or revocation.

(2) The amount of time needed to demonstrate rehabilitation under subsection (b)(1) may be increased or decreased by taking into account the following:

(A) The nature and gravity of the crime(s), professional misconduct, act(s), or omission(s) that are under consideration as, or that were, the grounds for denial, suspension, or revocation.

(B) Evidence of any crime(s), professional misconduct, act(s), or omission(s) committed subsequent to the crime(s), professional misconduct, act(s), or omission(s) that are under consideration as, or that were, the grounds for denial, suspension, or revocation, which also could be considered as grounds for denial, suspension, or revocation.

(C) The time that has elapsed since commission of the crime(s), professional misconduct, act(s), or omission(s) that are under consideration as, or that were, the grounds for denial, suspension, or revocation.

(D) The extent to which the applicant, licensee, or registrant has complied with any terms of parole, probation, restitution, or any other sanctions lawfully imposed against the applicant, licensee, or registrant.

(E) Consistent work history subsequent to the release from incarceration, or the completion of probation if no incarceration was imposed, or subsequent to the time of commission of the professional misconduct, act(s), or omission(s).

(F) Documents or testimony from credible individuals who have personal knowledge of the applicant's, licensee's, or registrant's life and activities subsequent to the time of commission of the crime(s), professional misconduct, act(s), or omission(s) who can attest to the applicant's, licensee's, or registrant's present fitness for licensure or registration.

(G) The acts underlying the conviction have been dismissed pursuant to Section 1203.4, 1203.4a, 1203.41, 1203.42, or 1203.425 of the Penal Code, or a comparable dismissal or expungement. An applicant who has a conviction that has been dismissed pursuant to Section 1203.4, 1203.4a, 1203.41, or 1203.42 of the Penal Code shall provide proof of the dismissal if it is not reflected on the report furnished by the Department of Justice.

(H) Other relevant evidence, if any, of rehabilitation submitted by the applicant, licensee, or registrant. For example, relevant evidence may include evidence of recovery from drug and/or alcohol addiction or abuse or completion of a drug and/or alcohol aversion or diversion program if the crime(s), professional misconduct, act(s), or omission(s) related to or involved drug and/or alcohol use; or evidence of completion of an anger management program if the crime(s), professional misconduct, act(s), or omission(s) demonstrated the applicant's, licensee's, or registrant's inability to control one's temper.” (Emphasis added)

16 Calif. Code of Regulations § 869.

Applications for reinstatement of a revoked or suspended Contractors license are frequently denied, but that denial must be timely contested or appealed on very short notice and at an administrative hearing requested before an Administrative Law Judge at the California Office of Administrative Hearings, which “hearing” is roughly equivalent to a trial before a Superior Court Judge without a jury.

At such an administrative hearing or trial, the former licensee should be prepared to present proof in the form of oral testimony and other admissible evidence and documents from live witnesses who can prove or testify to the former’s licensee’s subsequent good conduct and character, compliance with terms of the suspension or revocation, payment of any fines or damages to customers (unless the financial obligation was discharged in Bankruptcy), and proof of no further Contractors’ License Law violations or ‘substantially related” crimes or misconduct.

Usually the assistance of an attorney is necessary to have any chance of prevailing in these hearings, as the State is typically represented by a Deputy Attorney General in opposing reinstatement, and because most contractors are not sufficiently familiar with the laws and legal procedure governing such hearings.

N.B. The contents of this Article do NOT constitute legal advice or create an attorney-client relationship, and you may NOT rely on it without seeking legal advice regarding your particular situation from a competent California Construction License lawyer or Construction attorney.

Please also note that factual situations vary, and statutes, regulations and case law as well as the License Board policies and regulations are frequently and constantly changing and evolving, and these written materials thus also may now be or may become outdated or incorrect.

For further information on this topic and how the current law and legal policies and regulations may apply to your unique Contractor’s licensing issues, Contact Us via email, phone 415-788-1881 or visit our website at www.wolfflaw.com for other contact information.

© 2022, George W. Wolff, all rights reserved.


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