How Should Contractors Respond to Letters from or Investigations by the California Contractors State License Board?
Complaints by consumers to the Contractors State License Board sometimes result in a letter from the Board to the Contractor, asking for a response to the consumer’s complaint and an explanation as to why the contractor acted properly and why it believes it did not violate some of the numerous grounds disciplinary action or License Suspension in the Contractors State License Law.
Local Building Department officials sometimes also refer cases to the License Board.
If you receive such a Board letter on inquiry, it is highly recommended - and legally required - that you cooperate and respond promptly, fully, and in detail to each claim or allegation.
If you do not, or do not file an adequate response or explanation, the License Board may escalate the case by instituting a formal Investigation, which can include an interview with an investigator, document review, and perhaps sending a hired “expert” to the jobsite to investigate the quality of your work, etc.
Failure to cooperate in a Board investigation is - by itself - a separate grounds for disciplinary action against you.
Many or most contractors make the mistake of not taking these letters or such an investigation seriously enough, thinking they did nothing wrong or hoping the case will go away after a short meeting or a simple response.
But the requirements and wording of the License Law provisions are frequently very technical, and many contractors do not understand them fully or adequately enough.
Particularly technical are the detailed, extensive requirements for Home Improvement Contracts, Notices, Payment Applications, Change Orders, etc. in Bus. & Prof Code sec. 7159, the violation of which are the most frequent grounds for “disciplinary action” by the License Board.
Most of the other grounds for disciplinary action by the Board are set out in Bus. & Prof. Code secs. 7090 and following, particularly Sections 7107 to 7159, which all contractors should be aware of, and avoid violating:
Board Disciplinary action can include a Citation and a fine, or the filing of an Accusation to suspend or revoke your license.
While “Citation” seems innocuous in its name, the detailed legal Violations that you have been cited for are published on the Board’s website under your business name for five (5) years, and available for all - including potential clients or customers - to review.
Obviously, customers - businesses or consumers - may be unwilling to do business with someone who has an extensive list of License Law Violations on their public record.
And contractors who previously have had consumer Complaints or Board Citations against them are much more likely to be hit with a future Accusation to Suspend or Revoke their License, if they are found to have committed subsequent License Law Violations later.
While a contractor can Appeal a Citation or defend an Accusation with witnesses and evidence at a trial-like hearing before an Administrative Law Judge at the Office of Administrative Hearings, once the case reaches the issuance of a Citation or Accusation it is very hard to achieve good results in such hearings/trials, as by that time the contractor may have inadvertently waived some rights or made other admissions, errors or mistakes which could make winning such a case difficult.
While sometimes these cases can be settled with the Attorney General’s office, by the time a case reaches the Citation or Accusation stage a favorable resolution may be very hard to achieve.
And the hearing or trial process can be complex and expensive, as usually the assistance of an attorney is needed to effectively present your evidence, the witnesses, and legal arguments to the Judge, or try to reach some settlement.
Consequently, the best course of conduct for a contractor who is the subject of a consumer’s complaint or License Board letter or Investigation is to take such Board letters or Investigations very, very, very seriously from the first, cooperate fully - as required by law - and provide a detailed amount of information sufficient to rebut - factually and legally - the issues raised by the consumer or the License Board.
In serious cases, it is best to seek the aid of an experienced construction attorney early on in the Board’s investigation, to help you present your arguments and evidence to the Board, and respond to the complaint, legal issues or violations raised, in hopes of minimizing any Citation or Accusation, or perhaps avoiding such altogether, or at least being better prepared to raise a more thorough and better defense later, should the Board decide to proceed further against you.
In conclusion, take Consumer Complaints, Letters from the License Board, or Board Investigations very seriously, and address all issues raised promptly and thoroughly, to avoid serious consequences to or suspension of your license, and damage to or loss of your business and reputation!