Articles Posted in Construction Generally

All too often the California Contractors State License Board issues a press release confirming that it has cited numerous individuals for, among other things, unlawfully advertising as contractors when they are not, in fact, licensed contractors. However, California’s Contractors’ State License Law, Cal. Bus. & Prof. Code §§ 7000, et seq. (the “Law”), governs advertising by both unlicensed contractors and licensed contractors. It regulates advertising across various marketing channels, including websites, emails, directories, and other forms of communication. “Advertising” is defined broadly to include “any card, contract proposal, sign, billboard, lettering on vehicles registered in this or any other state, brochure, pamphlet, circular, newspaper, magazine, airwave or any electronic transmission, and any form of directory under any listing denoting ‘Contractor’ or any word or words of a similar import or meaning requesting any work for which a license is required by the Contractors License Law.” 16 C.F.R. § 861; see also Bus. & Prof. Code §§ 7027.1(b), 7027.4(c). Where and how do you “advertise” your construction business and services?

Contractor’s License Number is Required on All “Advertising”

In addition to including you contractor’s license number on all construction contracts, subcontracts and calls for bid, the Law requires it to be included on all forms of advertising used. Bus. & Prof. Code § 7030.5. Licensed contractors are not allowed to advertise for construction work outside of the trade(s) for which they are licensed.

Additional Requirements for Advertising that You are Insured or Bonded

The Law also makes it a “cause for discipline” for any contractor to advertise that it is: (1) “insured” or has insurance without identifying in the advertisement the type of insurance, including, for example, “commercial general liability insurance” or “workers’ compensation insurance” that is carried by the contractor; the contractor may abbreviate the title of the type of insurance; or (2) “bonded” if the reference is to a contractor’s license bond required pursuant to Bus. & Prof. Code § 7071.6 or to a disciplinary bond required pursuant to Bus. & Prof. Code § 7071.8. Bus. & Prof. Code § 7027.4(a), (b). (Any reference by a contractor in its advertising, soliciting, or other presentments to the public to any bond required to be filed pursuant to the Law is a ground for the suspension of the license of such contractor. Bus. & Prof. Code § 7071.13). The CSLB’s publications encourage contractors not to advertise about bonding because it could lead the public to believe there is a higher level of protection provided to them by the bonding procedure than might be the case.

Additional Requirements for Advertising Asbestos Removal Services

The Law further prohibits a contractor from advertising to promote its services for the removal of asbestos unless it is certified to engage in asbestos-related work pursuant to Bus. & Prof. Code § 7058.5, and registered for that purpose pursuant to Lab. Code § 6501.5. Bus. & Prof. Code § 7099.11(a). Each advertisement must include the contractor’s certification and registration numbers and it must use the same name as on the certification and registration. Bus. & Prof. Code § 7099.11(a).

The CSLB is required to issue a notice to comply with the order of correction provisions of Bus. & Prof. Code § 7099.10(a) to any contractor who is certified and registered and who fails to include in any advertisement its certification and registration numbers. Bus. & Prof. Code § 7099.11(b). It will also issue a citation pursuant to Cal. Bus. & Prof. Code § 7099 to any such contractor who fails to comply with the notice to comply, or who advertises to promote its services for the removal of asbestos but does not possess valid certification and registration numbers, or who fails to use in the advertisement the correct name. Bus. & Prof. Code § 7099.11(c).

Additional Requirements for Motor Vehicles Used for Construction Business

Except for C-36 Plumbing contractors, C-45 Sign contractors and C-57 Well-drilling contractors, every contractor licensed under the Law is required to have displayed, in or on each motor vehicle used in its construction business, its business name and contractors’ license number in a clearly visible location in print type of at least 72-point font or 3/4″ in height and width. Bus. & Prof. Code § 7029.6.

Additional Requirements for C-36 Plumbing Contractors’, C-45 Sign Contractors’ and C-57 Well-drilling Contractors’ Motor Vehicles

C-36 Plumbing contractors, C-45 Sign contractors and C-57 Well-drilling contractors are required to display on each side of each motor vehicle used in its business, for which a commercial vehicle registration fee has been paid, its name, permanent business address, and contractor’s license number, all in letters and numerals not less than 1 1/2″ high. Bus. & Prof. Code § 7029.5. These identification requirements also apply to any drill rig used for the drilling of water wells. Failure to comply with the Law is a cause for discipline for any contractor.

Consequences for Licensed Contractors (and Their Qualifiers) Who Violate the Law

For purposes of the Law, the term “licensee” is defined broadly to include an individual, partnership, corporation, limited liability company, joint venture, or any combination or organization licensed under the Law, and also includes any named responsible managing officer (RMO), responsible managing manager/responsible managing member (RMM), or responsible managing employee (RME). Bus. & Prof. Code § 7096.

Suspension or Revocation of License

The CSLB may upon its own motion (or upon a verified complaint in writing of any person) investigate the actions of any license applicant or contractor and may cite, temporarily suspend, or permanently revoke any license or registration if the applicant or licensee is guilty of or commits any one or more of the acts or omissions constituting causes for disciplinary action under the Law. Bus. & Prof. Code § 7090.

Citation Plus Civil Penalty

If, upon investigation, the CSLB has probable cause to believe that a licensee or a license applicant has committed any acts or omissions which are grounds for denial, revocation, or suspension of license, it may issue a citation to the licensee or license applicant. Bus. & Prof. Code § 7099. Each citation is to be in writing and to describe with particularity the nature of the violation, including a reference to the Law alleged to have been violated. Each citation may contain an order of correction fixing a reasonable time for correction of the violation or an order, against the licensee only, for payment of a specified sum to an injured party in lieu of correction, and may contain an assessment of a civil penalty. See also Bus. & Prof. Code § 7099.2.

Citation Plus Civil Penalty Plus Termination of Phone Service

If, upon investigation, the CSLB has probable cause to believe that a licensee, an license applicant, or an unlicensed individual acting in the capacity of a contractor who is not otherwise exempted from the provisions of the Law, has violated Bus. & Prof. Code § 7027.1 by advertising for construction or work of improvement covered by the Law in an alphabetical or classified directory, without being properly licensed, the CSLB may issue a citation under Bus. & Prof. Code § 7099 containing an order of correction which requires the violator to cease the unlawful advertising and to notify the telephone company furnishing services to the violator to disconnect the telephone service furnished to any telephone number contained in the unlawful advertising, and that subsequent calls to that number are not to be referred by the telephone company to any new telephone number obtained by that person. Bus. & Prof. Code § 7099.10(a). If the person to whom a citation and order of correction is issued fails to comply with the order of correction after the order is final, the CSLB will inform the Public Utilities Commission (PUC) of the violation, and the PUC will require the telephone company furnishing services to the violator to disconnect the telephone service furnished to any telephone number contained in the unlawful advertising. Bus. & Prof. Code § 7099.10(c).

Misdemeanor

It is also a misdemeanor and cause for disciplinary action for any person to use false, misleading, or deceptive advertising as an inducement to enter into any contract for a work of improvement, including, but not limited to, any home improvement contract, whereby any member of the public may be misled or injured. Bus. & Prof. Code § 7161(a). It is also cause for a disciplinary action against a licensee or license applicant.

Advertising by Persons Who are Not Licensed Contractor; Penalties; Exemptions from Licensing Law

In addition to the foregoing, the Law regulates any person who advertises or puts out any sign or card or other device that would indicate to the public that he or she is a contractor, or who causes his or her name or business name to be included in a classified advertisement or directory under a classification for construction or work of improvement covered by the Law regardless of whether his or her operations as a builder are otherwise exempt under the Law. Bus. & Prof. Code § 7027. It is a misdemeanor for any person to advertise for construction or work of improvement covered by the Law unless that person holds a valid license in the classification advertised, except that a licensed building or engineering contractor may advertise as a general contractor. Bus. & Prof. Code § 7027.1(a). A violation of Section 7027.1 is punishable by a fine of not less than $700 and not more than $1,000, which is in addition to any other punishment imposed for a violation of Section 7027.1. Bus. & Prof. Code § 7027.1(c).

California’s Contractors’ State License Law does not apply to any work or operation on one undertaking or project by one or more contracts, the aggregate contract price which for labor, materials, and all other items, is less than $500. Bus. & Prof. Code § 7048. However, this exemption does not apply in any case wherein the work of construction is only a part of a larger or major operation, whether undertaken by the same or a different contractor, or in which a division of the operation is made in contracts of amounts less than $500 for the purpose of evasion of California’s Contractors’ State License Law or otherwise. Bus. & Prof. Code § 7048. Likewise, this exemption does not apply to a person who advertises or puts out any sign or card or other device which might indicate to the public that he or she is a contractor or that he or she is qualified to engage in the business of a contractor. Bus. & Prof. Code § 7048.

A person not licensed pursuant to the Law may advertise for construction work or work of improvement covered by the Law, provided that (1) the aggregate contract price which for labor, materials, and all other items, is less than $500, and (2) he or she states in the advertisement that he or she is not licensed under the Law. Bus. & Prof. Code § 7026.11.

Other exemptions from licensure contemplated by the Law are set forth in Bus. & Prof. Code §§ 7040, et seq.

Additional Sources: CSLB, Contractor Tips for Advertising; CSLB, Remember Contractor Advertising laws; R-E-C-I-P-R-O-C-I-T-Y ~ Find Out What It Means To You

The Nevada State Contractors Board (NSCB) in its Horizons (Aug. 2014) sets forth tips designed to help Nevada contractors to contract for work and to work within Nevada’s contractors’ law. This handy checklist may be helpful to contractors in other states as well. For additional information about Nevada’s contractor’s law and for the text of the statutes and administrative code cited below, refer to the NSCB Handbook, which contains Chapter 624 of the Nevada Revised Statutes (NRS) and Chapter 624 of the Nevada Administrative Code (NAC).

NSCB’s tips include:

• Always make sure license number and monetary limits on all contracts or bids (see license classifications and link to the NSCB’s contractor listing below) — NAC § 624.640(5)
• Keep your bond current — NRS § 624.270
• Check to ensure that licenses of persons with whom you contract are valid and active — NAC § 624.650
• Be sure the name of the business under which a contractor is contracting is the same as the license number — NRS § 624.305
• Be sure that amount of the bid or contract is within the monetary limit of the contractor — NRS § 624.3015(2)
• Be sure that the contract is within the scope of work/license classification — NRS § 624.3015(3)
• Know what you are contracting for, verify the terms of the contract, and comply with the terms of the contract — NRS § 624.3013(1)
• If it’s not in your written contract, it doesn’t exist — make sure all change orders are in writing and signed by all parties — NRS § 624.3013(1)
• Leave Residential Construction Recovery Fund disclosure with client for all residential contractors — NRS § 624.520
• Provide your customer with required Notice to Owner disclosure — NRS § 624.600(1), (2) and (3), as described in NAC § 624.693 and NAC § 624.6932
• Make sure your license number is on all advertisements for your business including your vehicles, business cards, letterhead, signage, directories, newspaper, website, etc. — NRS 624.720
• Your license number should be approximately 1 1/2″ on your motor vehicle — NRS § 624.288
• If your address or other pertinent information about your business changes, notify the Nevada State Contractors Board in writing within 30 days — NAC § 624.640(3)

Nevada’s contractor license classifications include:

• Classification A: General engineering — NAC § 624.140
• Classification A: Subclassifications — NAC § 624.150
• Classification B: General building — NAC § 624.160
• Classification B: Subclassifications — NAC § 624.170
• Classification AB: General building and general engineering — NAC § 624.180
• Classification C-1: Plumbing and heating contracting; subclassifications — NAC § 624.190
• Classification C-2: electrical contracting; subclassifications — NAC § 624.200
• Classification C-3: Carpentry, maintenance and minor repairs; subclassifications — NAC § 624.210
• Classification C-4: Painting and decorating; subclassifications — NAC § 624.220
• Classification C-5: Concrete contracting — NAC § 624.230
• Classification C-6: Erecting signs; subclassifications — NAC § 624.240
• Classification C-7: Elevation and conveyance; subclassifications — NAC § 624.250
• Classification C-8: Glass and glazing contracting — NAC § 624.260
• Classification C-9: Movement of buildings — NAC § 624.270
• Classification C-10: Landscape contracting — NAC § 624.280
• Classification C-11: Spraying mixtures containing cement — NAC § 624.290
• Classification C-13: Using sheet metal — NAC § 624.300
• Classification C-14: Steel reinforcing and erection; subclassifications — NAC § 624.310
• Classification C-15: Roofing and siding; subclassifications — NAC § 624.320
• Classification C-16: Finishing floors; subclassifications — NAC § 624.330
• Classification C-17: Lathing and plastering; subclassifications — NAC § 624.340
• Classification C-18: Masonry — NAC § 624.350
• Classification C-19: Installing terrazzo and marble; subclassifications — NAC § 624.360
• Classification C-20: Tiling; subclassifications — NAC § 624.370
• Classification C-21: Refrigeration and air-conditioning; subclassifications — NAC § 624.380
• Classification C-23: Drilling wells and installing pumps, pressure tanks and storage tanks — NAC § 624.400
• Classification C-24: Erecting scaffolds and bleachers — NAC § 624.410
• Classification C-25: Fencing and equipping playgrounds — NAC § 624.420
• Classification C-26: Institutional contracting; subclassifications — NAC § 624.430
• Classification C-27: Individual sewerage — NAC § 624.440
• Classification C-28: Fabricating tanks; subclassifications — NAC § 624.450
• Classification C-30: Installing equipment to treat water — NAC § 624.470
• Classification C-31: Wrecking — NAC § 624.480
• Classification C-33: Installing industrial machinery — NAC § 624.500
• Classification C-36: Installing urethane; subclassifications — NAC § 624.530
• Classification C-37: Solar contracting; subclassifications — NAC § 624.540
• Classification C-38: Installing equipment used with liquefied petroleum and natural gas; subclassifications — NAC § 624.550
• Classification C-39: Installing heaters — NAC § 624.560
• Classification C-40: Specialties not authorized by other classifications — NAC § 624.570
• Classification C-41: Fire protection contracting; subclassifications — NAC § 624.572
• Classification C-42: Constructing, altering or improving video service networks — NAC § 624.574

Also note that Nevada’s contractors’ law includes what is referred to as a “handyman” licensing exemption (NRS § 624.031) and what are referred to as federal licensing exemptions (NRS § 624.031).

To facilitate compliance with Nevada’s contractors’ law, NSCB’s website includes a contractor listing by county which includes information about contractors holding licenses in the various classifications as well as the contractors’ monetary limit for contracts.

Additional Source: Nevada State Contractors Board, Overview of Contractor License Requirements for Nevada

On August 20, 2014, the U.S. Court of Appeals for the Fifth Circuit reviewed the lower court’s decision to grant summary judgment to the Department of the Interior in a case involving the Department’s enforcement of the Migratory Bird Treaty Act (MBTA) and the Golden Eagle Protection Act (GEPA). These laws, and the Department’s implementing rules, affect the religious practices of American Indian tribes, including “non-federally-recognized” tribes such as the plaintiffs here. The Court of Appeals concluded that the record simply did not support the lower court’s decision, and the case was remanded to the lower court for further proceedings. The case is McAllen Grace Brethren Church, et. al. v. Salazar.

The plaintiffs argued that the Department, by confiscating the feathers of Golden Eagles that are used in religious ceremonies, violated the First Amendment and their rights under the Religious Freedom Restoration Act (RFRA). Only members of federally-recognized tribes can, by rule, obtain the necessary permits to possess the feathers and other valuable materials associated with these protected species. The Court of Appeals held that the case must be remanded to the lower court to afford the government the opportunity to demonstrate that its implementation of these laws was the least restrictive means of furthering the goals of these laws consistent with the opinion of the court.

The Supreme Court’s recent decision in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 2779 (2014), plays an important role in the Court of Appeal’s decision in McAllen. The Court of Appeals recognized that in Hobby Lobby, the Court recognized that “once the regulatory scheme has been shown to substantially burden a sincerely-held religious belief, the burden is on the government to establish that the regulation (1) advances a compelling government interest; and (2) is the least restrictive means of furthering that interest.” The Court of Appeal concluded that “on this record at this early, summary judgment stage, the government did not discharge that burden.”

Judge Jones filed a concurring opinion, in which she noted that “If the government sustains its position that the supply of eagle feathers is limited and that increasing access by non-recognized tribe members, or even by non-Indians, to eagle feathers for sacred purposes will endanger the eagles and the federally recognized tribes, the case becomes very close”.

Last year, the U.S. District Court for the District of Columbia denied a request for a preliminary injunction to stop the construction of a domestic oil pipeline known as the Flanagan South Pipeline that is to be constructed under the supervision of Enbridge Pipelines, LLC. In that decision, reported at 990 F. Supp. 2d 9 (D.D.C. 2013), the court determined that the environmental plaintiffs were unlikely to succeed on the merits of their argument that the federal defendants had violated their obligations under National Environmental Protection Act (NEPA), the Clean Water Act (CWA) or the Administrative Procedure Act (APA). On August 18, 2014, the court reviewed various pending motions for summary judgment, and again concluded that the plaintiffs’ case was without merit. The latest decision is Sierra Club, et. al. v. U.S. Army Corps of Engineers, et. al.

In the latest decision, the plaintiffs allege that the federal agencies that have approved isolated segments of the pipeline (which is being constructed almost wholly on private lands for the length of a nearly 600-mile pipeline that will transport tar sands crude oil from Pontiac, Illinois to Cushing, Oklahoma) violated their obligations under the law by not conducting a comprehensive NEPA review of the entire pipeline. The court again disagreed with this argument, noting that no federal agency has interpreted NEPA to be a mandate to conduct such a comprehensive environmental review on the basis of their authority to review the environmental impacts on only 28 miles of federal land when the vast majority of the pipeline will cross privately-held lands by virtue of agreements negotiated with the private land-owners. Accordingly, the court agreed that this is not a “major federal action” requiring a NEPA review: “neither the Corps’ [CWA] verifications nor the Fish and Wildlife Service’s Biological Opinion and Incidental Take Statement qualify as ‘major federal actions’ under the circumstances presented”.

The court also determined that its decision is consistent with the recent DC Circuit ruling in Delaware Riverkeeper Network v. FERC, No. 13-1015, 2014 WL 2535225, at *8 (D.C. Cir. June 6, 2014), where the court of appeals held that Federal Energy Regulatory Commission (FERC) could not segment its environmental reviews where FERC was the sole permitting authority.

In the future, the U.S. Department of Transportation may be asked to review an oil spill response plan for the pipeline as a whole, but that day has not yet arrived.

In the case of Sierra Club, et. al., v. EPA, the U.S. Court of Appeals for the Ninth Circuit held that EPA cannot rely on Chevron deference to authorize its grant of a Prevention of Significant Deterioration (PSD) permit to Avenal Power Center based on superseded National Ambient Air Quality Standards (NAAQS) and Best Available Control Technology (BACT) requirements. Avenal was an Intervenor in this case which was argued in October and decided August 12.

This unusual case was triggered by EPA’s failure to process Avenal’s application on a timely basis, and an order from the U.S. District Court in the District of Columbia to EPA to come to a decision. Holding that the Clean Air Act unambiguously requires Avenal to comply with the regulations in effect at the time the permit was issued, EPA’s action was vacated because it applied the superseded, less rigid and costly regulations. EPA argued that it had the authority to apply its inherent grandfathering authority to reach an equitable decision that was fair to the applicant, which was penalized by the slow pace of EPA permitting process despite the statutory mandate to process such applications in one year. The court disagreed with this argument, pointing to the clear language of the statute, although it expressed some sympathy for Avenal’s dilemma.

On August 8, 2014, the U.S. Court of Appeals for the Eighth Circuit issued a ruling affirming the lower court’s holding that Union Pacific (UP) did not breach the tolling agreement it entered into with ASARCO, LLC while a Freedom of Information Act (FOIA) dispute was being resolved with EPA. At the conclusion of the FOIA matter, UP settled its CERCLA liability for $25 million with EPA at the Omaha, Nebraska Lead CERCLA Site by means of a court-approved consent decree.

ASARCO, as owner and operator of this large lead smelting site, paid $214 million to settle its liability as it emerged from bankruptcy. ASARCO did not file any objections to UP’s separate settlement, but later argued that UP breached its tolling agreement with ASARCO by settling with EPA. However, the courts have now ruled that UP’s settlement with EPA provided UP with statutory protection under CERCLA against any further claims by ASARCO, with the courts noting that the tolling agreement, while it tolled the statutes of limitation, reserved to the parties all other rights and defenses. Accordingly, the separate CERCLA settlement essentially trumped the tolling agreement, which the courts narrowly construed according to Nebraska law.

Interestingly, the Court of Appeals noted that it had resolved an earlier business dispute between the parties regarding the smelter nearly 100 years ago. See American Smelter and Refining Company v. Union Pacific Railroad Company, 256 F.737 (8th Cir. 1919).

The case is ASARCO, LLC v. Union Pacific Railroad Company, No. 13-12830.

In the case of CEnergy-Glenmore Wind Farm #1, LLC, v. Town of Glenmore, decided on August 7, 2014, the U.S. Court of Appeals for the Seventh Circuit affirmed the lower court’s ruling that the Town of Glenmore, Wisconsin’s delay and final rejection of wind farm building permits did not violate CEnery’s constitutional substantive due process rights. The proposal became very controversial, prompting the Town’s Board to rescind its earlier approval of the building permits, and the applicant alleged that it consequently lost a potentially lucrative business opportunity if the wind farms were unable to deliver power to a local utility.

The Court of Appeals held that the Board’s actions “were not arbitrary in the constitutional sense”, and that “popular opposition to a proposed land development plan is a rational and legitimate reason to delay making a decision”. Moreover, the plaintiff had other state law remedies available which it chose not to use, which further weakened its case. Finally, the Court of Appeals noted that if the plaintiff was successful, its success would cost each resident of Glenmore roughly $6000.

Yesterday, Pillsbury attorneys Ken Taber, Paula Weber, Rebecca Carr Rizzo and Stephen Asay published their advisory titled “Ban the Box” Legislation Expands Across the Country Employers Need to Update Employment Applications and Policies. The Advisory discusses the growing national movement to “Ban the Box” – i.e., to prohibit questions about a job applicant’s criminal history on employment applications.

Currently, “Ban the Box” laws are primarily targeted at public employers; however, there are increasing efforts to impose these same restrictions on private employers. New Jersey, Washington, D.C., and San Francisco have become the latest jurisdictions to pass such legislation. Laws prohibiting private employers from seeking certain information regarding criminal convictions are already in place in Hawaii, Illinois, Massachusetts, Minnesota, and Rhode Island, as well as various cities and municipalities, including Baltimore, Philadelphia, and Seattle.

Employers would be well-advised to review and update their employment applications and policies based on these increasingly common restrictions.

If you have any questions about the content of this blog, please contact the Pillsbury attorney with whom you regularly work or Ken Tabor, Paula Weber, Rebecca Carr-Rizzo, or Stephen Asay, the authors of this blog.