Contractors Intelligence School

Contractors Intelligence School
Law & Business Contractors Intelligence School

Chapters Contractors License Law Business Management & Bookkeeping
Contract Procedures Bids Health & Safety in Construction Employment Law, Wages, & Taxes

CONTRACTOR’S LICENSE LAW
CHAPTER 1 CONTRACTOR’S LICENSE LAW

Contractors State License Board (CSLB)
Department of Consumer Affairs Protects consumers by licensing contractors regulating the construction industry provides means of resolving disputes or complaints 15 members Through licensing & regulation the CSLB will Construction work is performed in a safe, competent, and professional manner, That contractors are licensed and are obeying the law, Every person who is doing construction work is licensed, Make sure that the contracts are in fair and uniform manner, Resolve disputes that arise in the construction activity Provide education to consumers so that they make informed choices

Becoming a California Licensed Contractor
Anyone performing work over $500 Must be 18 years old (22years) 4 years experience (within past 10 years) Must have $2,500 operating capital Current assets – current liabilities

Who is exempt from being licensed?
Work less than $500 Public personnel working on public projects A paid employee Officers of a court acting within the scope of their office Public utilities Oil and gas operations performed by an owner or lessee Installation or sale of products that are not fixed Installing satellite antenna systems on residential structures or property

Who is exempt from being licensed?
A seller of installed carpets who holds a retail furniture dealer’s license but who contracts for installation of the carpet with a licensed carpet installer. Security alarm company operators Owners-builders that will not sell their property within a year Owners-builders who have lived on their property for a year Owners-builders who contract for the construction with a licensed contractor or subcontractors

Application can be rejected:
How to apply? Application (pay fee) Application can be rejected: Having had a previous license denied or revoked Having lied about anything required on the application Inability to show the proper amount of work experience Having been convicted of a crime related to the construction industry Having committed any act which would have led to disciplinary action against a license Background Check DOJ & FBI

Qualifying Examination
Law & Business Trade (all classifications except C-61) Multiple choice questions 90 days to reschedule for another test date 18 months to pass the exam

Can examination be waived?
Within the past 5 years the exam has been passed by the applicant Within the past 5 years the applicant was the qualifying individual for another license (in good standing) for the same classification Immediate family member Good standing 5 years (in the previous 7 years) Actively engaged for 5 years (in the previous 7 years) Applying for the same classification Absence or death of the licensee Applying for additional classification and sufficient experience is shown A license in a similar classification is help in a different state Reciprocity Must still take Law Business

License Classifications
“builder” and “contractor” 43 classifications make up the construction industry “A” General Engineering “B” General Building Framing and/or Two unrelated trades C – Specialty Contractor Ex. C-10 Electrical, C-36 Plumbing Limited Specialty (C-61) Law & Business exam only

Individual or Sole Ownership Partnership Corporation
Business Entity Individual or Sole Ownership owns 100% of the equity of the business Partnership ownership shared by two or more individuals Corporation separate legal entity must list President, Secretary, and Treasurer Joint venture Previously licensed businesses renewed every 2 years

The Qualifying Individual
“Qualifier” or “Qualifying Individual” the person who meets the experience requirements Individual – Owner or RME Partnership – Qualifying Partner or RME Corporation – RMO or RME

Responsible Managing Employee (RME)
Definitions Owner Responsible Managing Employee (RME) 32 hours or 80%, which ever is less can qualify for one license at a time, unless: owns 20% of the subsidiary RME owns at least 20% of each license Majority of the officers or partners of the additional licensee are also those of the first of the licensee. Responsible Managing Officer (RMO) President, vice president, secretary, and treasurer

Definitions Qualifying Partner General Partner Journeyman Foreman or Supervisor Prime Contractor Subcontractor

Unlicensed Activity 1st offense 2nd offense $15,000 fine
Citation from Registrar Up to 6 months in jail and/or $500 fine Civil penalty no less than $200, no more than $15,000 Felony charges is natural disaster was declared by governor or president 2nd offense Criminal offense 20% of the contract price or $4,500 (whichever is greater) County jail for a minimum of 90 days $15,000 fine If a licensed contractor contracts with an unlicensed person If a licensed contractor allows an unlicensed person to use his/her license

$10,000 and/or 1 year imprisonment
Unlicensed Activity SWIFT Statewide Investigative Fraud Team They visit any job site without cause asking for proof of licensure, citing those not licensed Other Fines $700-$1,000 advertising in different classification $10,000 and/or 1 year imprisonment Deliberate fraudulent use of a contractor’s license

Workers’ Compensation
Must submit proof to the CSLB If the contractor does not have employees, than exemption certificate must be submitted

RMO (owns less than 10%) or RME
Contractor’s Bond A guarantee of money against any loss, damage, or misconduct attributed by a licensee in the course of his/her work as a contractor $15,000 RMO (owns less than 10%) or RME Additional $12,500 bond must be filed Known as the Bond of the Qualifying Individual Must be filed within 90 days (effective bond date) Cash deposit (bank certificates of deposit, savings and loan association investment certificates or share accounts, cash, U.S. government bearer bonds, or any other form that is acceptable to the board)

Bond or cash deposit guarantees compensation to:
Contractor’s Bond Bond or cash deposit guarantees compensation to: A homeowner The trustee of any trust fund Any person damaged Disciplinary bond Not less than $15,000 no more than 10 times the amount of a contractors bond Advertising Cannot mention “licensed and bonded”

Post bond/Cash equivalent
Maintaining a License Post bond/Cash equivalent Display wall certificate at the place of business Carry pocket license Include license number on all important documents and advertisement ¾” license number trucks and commercial vehicles Water well, plumbing, and electrical sign contractors Name, address, and license number 1 – ½” letters

Renew license before it expires Must be renewed every 2 years
Maintaining a License Renew license before it expires Must be renewed every 2 years 90 days from the time of expiration (to avoid a period of unlicensed operation) 5 years from the time of expiration (by completing the renewal form) More than 5 years from the time of expiration (is void)

License cannot be transferred or sold Can be cancelled:
Changes to a License License cannot be transferred or sold Can be cancelled: Individual license – death of the owner Partnership license – death or disassociation of a general or qualifying partner Corporation license – notification by the licensee of merger, dissolution, or surrender of the right to do business in California Joint Venture license – cancellation, revocation, or withdrawal of any of the businesses that formed the joint venture

Applying for continuance
Changes to a License Applying for continuance Family members Within 90 days May operate for up to 1 year Partners Licensee has 90 days to: Submit any changes to a partnership Replace qualifying individual

Changes to the style of business
Changes to a License Inactive License Renewed every 4 years Exempt from contractor’s bond requirement Cannot contract To reactivate the license: Submit appropriate form Pay fees Name change Submit changes within 90 days Changes to the style of business Must reapply for a new license

Disciplinary Guidelines
Complaints must be in writing Must be filed within 4 years after act or omission occurred, or Within 18 months from the time a complaint was filed

Disciplinary Actions Citation given License revoked License suspended
It will describe the type of violation Penalty (not more than $15,000) If a contractor wants to appeal, he/she must do so within 15 days License revoked Will be void and can never be reinstated May not obtain a license for 1 year License suspended Cannot perform work

BUSINESS MANAGEMENT & BOOKKEEPING
CHAPTER 2 BUSINESS MANAGEMENT & BOOKKEEPING

Construction Business
Largest part of the economy Many small businesses Employ fewer than 8 people Relatively easy to enter High rate of bankruptcies and closures

The Contractor Manager
Must become a business manager 90% of bankruptcies due to poor management Managerial competence People competence Technical competence Review available information Make informed decisions

Principles of Management
The Functional Areas of Management Planning Decision making/delegation Standardization Controls The Behavioral Aspects of Management Human Relations Cooperation Responsibility Communication Executive Ability

Guidelines Are all jobs planned carefully and in advance?
Is each worker in the right place? Is each worker sufficiently trained for the job assigned? Are the best possible practices established as standards for all routine operations? Is the business capable of rapid adjustments to changing conditions? Does each worker have the required materials, supplies, and equipment to complete the job effectively? Is each worker directed by one supervisor only? Have any overlapping authority and responsibility been eliminated? Does every worker clearly understand the assigned task and the start and completion schedule for the task? Has all duplication of effort been eliminated?

Forms of Business Sole Ownership General Partnership
Limited Partnership Joins general partnership At least one general partner Corporation C-Corporation S-Corporation

Inventory of Resources
What financial resources do I have and what financial resources will be required? Am I willing to take risks? What resources do I have to attract sufficient business? What type of business do I specialize in? Who will handle the bookkeeping and record keeping? Do I have the resources to handle personnel, financial, and legal reporting requirements?

Taxes and Permits The business is required to pay taxes and fees
Federal State Local City or county permits Zoning laws and building codes

Financial Responsibility and Control
Finance “language of business” Records Every business must keep records Accurate records Cash Basis of Accounting Recognizes revenue/cost, when cash is received/paid For federal income tax purposes, the accrual method is required when inventories are utilized Not recommended for contractors

Accrual Basis of Accounting
Recognizes revenues when earned and expenses when incurred Percentage of Completion Reports profits and losses regularly 50% completion, then 50% of revenues are recognized Completed Contract Gross income and related costs reported in the year in which such contract is completed

Financial Statements Balance Sheet
is a statement of financial condition of an individual business at a certain point in time Also known as a “snap shot” Shows position for past 2 years Debit or Credit Assets (listed in order of declining liquidity) Cash Retention Accounts receivable Inventory Prepaid expenses Property, Plant, and Equipment Other Assets

Accumulated Depreciation
Contra Account “Less: Accum Depreciation” Depreciation – (Cost – Residual Value) ÷ Useful Life Exercise: You bought a truck on Sept 1, 2010 for $10,000. You expect to use this truck for 4 years and then sell it for $2,000 to a salvage yard. How much can you depreciate your truck for the year 2010?

Liabilities Current Liabilities Accounts Payable Notes Payable
Accrued Expenses Payable Accrued Payroll Miscellaneous Taxes Payable Federal Income Taxes Payable Long-Term Liabilities

Stockholders’ Equity Capital Stock Retained Earnings
The total amount invested in the business by the contractor in exchange for shares of common stock at par value. Retained Earnings Total corporation earnings from its beginning minus the total dividends declared since the corporation was founded.

Common Accounting Calculations
Current ratio = current assets ÷ current liabilities Quick ratio = (current assets – inventories) ÷ current liabilities Working capital = current assets – current liabilities Debt ratio = total liabilities ÷ total assets Debt-to-equity ratio = total liabilities ÷ total equity Equity Ratio = total equity ÷ total assets Asset to equity ratio = total assets ÷ total equity

Income Statement Summarizes the operations of the company over a period of time Profit/loss is often called the “bottom line” Income Cost of Operations Direct Labor Direct Labor Burden Material Used Other Direct Costs General and Administrative Expenses Pretax Income Net profit for Year

Financial Management Capitalization Equity funds Debt

Job Scheduling Calendar Planner Bar Chart Critical Path
Least sophisticated method Bar Chart It overlooks how some tasks are interrelated Critical Path Longest path is the shortest timeframe in which the project can be completed Longest path is also the “critical path” Any delays in the critical path will delay the entire project

CHAPTER 3 CONTRACT PROCEDURES

Disclosure Requirements
Notices that must be in the contract: Contractor license requirements Give information on how to check the status of the license with the board Must be in capital letters 10-point roman boldface Or, in contrasting red print in 8-point roman boldface

Disclosure Requirements cont.
If contractor has had his/her licensed suspended or revoked 2 or more times within an 8 year period due to violations Must be made in capital letters in 10-point roman boldface Or, in contrasting red 8-point roman boldface

On ALL prime contracts: Contract Notice in at least 10-point type Lets the customer know the requirements to be licensed Also include address if the customer has questions

Home improvement and swimming pool contracts: Mechanics’ Lien Warning Consumers are required to receive a "Notice to Owner" warning about property liens. Anyone who helps improve property, but who is not paid like subcontractors, suppliers or workers, may place what is called a mechanics lien on the property. A mechanics lien is a claim made against the property and recorded with the county.

Single family dwelling (retained by the owner for 1 yr): General Liability Insurance disclosure Must be at least 14-point type, and questions in at least 12-point type, and comments in italics of at least 11-point type

Home Improvement A contractor that engages in the business of home improvement, which includes swimming pool A home improvement contractor may hire someone who sells, solicits, negotiates, or executes home improvement contracts for a licensed contractor If this solicitation is done outside of place of business, then the salesperson must be registered as a Home Improvement Salesperson with the CSLB

Exemption from HIS registration
Individual licensed contractor Qualifying individuals Partners Officers of the corporation Responsible managing employee Sales person who sells goods or negotiate contracts at a fixed business establishment

Salesperson Registration
Must be 18 years old File proper paperwork (pay fees) No experience or education required Must register for each contractor Contractors must hire only a registered salesperson Misdemeanor: to act as HIS without registration Compensated only by the contractor Registration number A =1, B=2, C=3, etc

Requirements for Home Improvement Contract
Be signed by all parties involved Estimated time of start and finish of the work Name and registration number of the home improvement salesperson (if applicable) Description of materials to be used, work to be done, the equipment to be installed, and the contract price for this work Statement of what constitutes substantial commencement of the work to be performed The downpayment cannot exceed $1000 or 10% of the contract amount, whichever is less Schedule of payments to be made in dollars and cents

Requirements cont. A Notice to Owner that describes Mechanics’ Lien Law A statement that: when satisfactory payments are made for any portion of the work performed, a contractor shall furnish a full and unconditional release from any claim or mechanics’ lien for that portion of the work. This statement should be given prior to any further payments being made General Liability disclosure statement (Example 3.4) Workers Compensation Insurance Notice A statement that: the owner or tenants may require the contractor to post a performance and payment bond

Requirements cont. A notice that a contractor is violating the Contractors License Law if he/she, without lawful excuse, fails to substantially commence work within 20 days from the approximate start date specified in the contract Any other provisions that have been agreed by all parties involved Writing must be legible The contractor must sign a copy of the contract and furnish it to the owner or tenant who is contracting the work

Violation Of The Home Improvement Contract Laws
Can be both misdemeanor and a cause for disciplinary action Criminal penalty of $100-$5,000 and/or 1 year imprisonment False Representation Owner may recover up to $500 + attorney fees False completion certificate $500-$5,000 and/or 1 month to 1 year imprisonment

Gifts or “Kickbacks” Cannot give a “kickbacks” or credit to a homeowner May give a gift as long as: The gift is not conditioned upon obtaining a contract Does not exceed $5.00 One gift per transaction

Written when the customer asks for changes to be done to the contract:
Work or Change Order Written when the customer asks for changes to be done to the contract: Include: Work to be done Total price of the change Total price of the contract with changes included Signed

Home Solicitation Contract - Right to Cancel
Costing more than $25 Made at a place other then the contractor’s normal place of business A contract must include a Notice of Cancellation form with the following statement: “You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.” The customer may cancel a transaction that deals with a personal emergency response unit, repair or restoration of residential premises damaged by a disaster, at any time prior to midnight of the seventh day

Home Solicitation Contract - Right to Cancel Cont.
The solicitation presentation and contract must be in the same language Does not include If the buyer the initiated the negotiations The total price is less than $100

The customer may cancel the contract by: ing Mailing faxing, or delivering a written notice to the contractor at the contractor’s place of business within three business days or seven business days The contractor must return any payments received in full within 10 days after the cancellation (even if the contractor started work) The buyer must return all goods received Within 20 days of the cancellation

The customer may NOT cancel the contract if: The customer furnishes the contractor with a dated and signed statement acknowledging and waiving the right to cancel the contract within three business days The customer furnishes the contractor with a dated and signed statement describing the emergency situation

Declared State of Emergency
Additional Restrictions Cannot raise prices more than 10% for 180 days If convicted for price gouging 1 year in jail $10,000 fine The buyer may cancel the contract up until midnight of the seventh business day

Service & Repair Contracts
A contractor may immediately perform service and/or repair without violating the three-day right to cancel if: The contract price does not exceed $750 The buyer must have initiated contact with the contractor to request the work The contractor may not sell any goods or services beyond those reasonably necessary to take care of the particular problem No payment is due and contractor may not accept any payment until the work is completed

Civil, Government and Penal Code
The California Business and Professional Code (Division 3, Chapter 9) or “Contractors’ License Law” deal with the qualification, examination, classification, licensing, and disciplining of contractors. Penal Code Deals with crimes, penalties, state prisons, county jails, criminal law procedures, etc. The Government Code The Civil Code Criminal Law

3-ways to settle a dispute
Resolving Dispute 3-ways to settle a dispute Mediation Does not decide on cases Arbitration Mandatory if amount is less than $12,500 Voluntary if amount is between $12,500 - $50,000 Litigation Small claims court Less than $7,500 Civil Court Min $10,000

Enforcing Payment Mechanics Lien
A contractor (or an employee, supplier) can file a claim against the title of the property worked on Must be filed with the county recorder’s office Must contain description of the work performed, the address of the property, the name of the owner, and the unpaid balance Gives the right to foreclose on the owners property

Filing Mechanics Lien Notice of Completion Filed to shorten 90-days
May be filed within 90 days following the completion of the contract Lawsuit must be filed within 90 days to “perfect” the lien Notice of Completion Filed to shorten 90-days Filed within 15 days of completion Subcontractors – 30 days Prime Contractor – 60 days

Notice of Cessation Filed to record that the contract is legally terminated (even if the work is not complete) Filed after 30 days after work stoppage Owner’s Counter-Strategy Can post a bond equal to 1 ½ times the amount of the lien

The Preliminary 20- Day Notice
Filed to inform the owner that the work is being done on his/her property It is NOT required to be filed with county recorder’s office The Following contractors whom are required to give a Preliminary Notice: Subcontractors performing work for $400 or more A contractor who contracts with someone who is not the owner of the property. This includes tenants or architects. If the job is funded by a construction loan Performing work on a public works project

The Preliminary Notice cont.
Must contain the following: The Name and Address of the person furnishing the labor, materials, equipment, or service A general description of labor, materials, equipment, or service provided or to be provided, and estimation of the total price thereof The name of the person who contracted for the purchase of the labor, materials, equipment, or service A description of the jobsite sufficient for identification A statement that the claimant has the right to file a mechanics’ lien against the property for any unpaid balance If a construction lender is involved, the total price of the claimant’s contract must also be included

Notice of Nonresponsibility
Filed to record that the owner does not want mechanic’s lien to be filed against his/her property Must be filed with the county recorder’s office Filed within 10 days after the Preliminary Notice is given If the Notice of Non responsibility is filed by the owner the contractor cannot file a mechanics’ lien in this case (the tenant or an agent is responsible for payment)

The balance does not exceed the value of the property
Construction Loan Different from the traditional car or home loan where all of the funds are disbursed at one time. In a construction loan, the money is not disbursed all at one time, but through the life of the project The balance does not exceed the value of the property Lender can place a lien on the property until the amount owed is paid in full

Stop Notice Ensures that the contractor can collect the funds which are due to him/her under the contract Filed against funds (not personal property) Given to the construction lender or awarding authority Obligates to withhold money for stop notice

Stop Notice cont. Must include:
The name, address, and signature of the contractor filing the claim The name of the individual for whom the labor or services were provided A description of the work to be done or the materials, equipment, or supplies to be furnished The value of the work that has been done or materials, equipment, or supplies which have already been provided. The stop notice should also include the total amount of the contract

Stop Notice cont. Must be hand delivered or sent by registered or certified mail Should be given within 90 days from the termination of the contract A lawsuit must be filed to perfect a stop notice within 90 days following the date the stop notice was given the lawsuit cannot be filed for the first 10 days after the stop notice is given In order to have a valid stop notice a bond worth 1 ¼ times the amount of the stop notice claim must be present

Bonds Associated with a Stop Notice
Stop Notice Bond 1 ¼ times Filed with the stop notice Release Bond Filed by prime contractor or the owner Filed to dispute a stop notice Releases funds frozen by a stop notice Payment Bond Posted by prime contractor Limits owner’s liability for payment The owner must record the prime’s 50% payment bond as well as the contract itself The owner and the lender may ignore the stop notice claim

CHAPTER 4 BIDS

Accounts for all direct costs, overhead costs, and profit
Estimating Bids Bid Accounts for all direct costs, overhead costs, and profit Direct Costs All material required to complete the contract Labor costs Other costs (permit fees, loan interests fees, additional insurance and bonding requirements, etc.) Overhead costs (indirect costs) Office rental, advertising, storage charges, supplies and wages, bad debts, etc. Expressed as a percentage of the bid Profit

Bid Calculation Example Question: All of the direct costs for a project are $15,000. The overhead cost is usually 18%, and you want to earn 10% profit of the bid price. What should your bid be? Answer: In this case, the direct cost must represent 72% and it is determined by subtracting profit of 10% and overhead cost of 18% from the total bid of 100%. $15,000 ÷ 72% or 0.72 = $20833 (total bid price) The overhead cost can be determined by multiplying 18% by the total bid price of $20,833 which equals to $3749. The profit can be calculated by multiplying 10% by the total bid price of $20833 which equals to $2083.

Common Mistakes Insufficient planning (because a hurried bid is needed) Bidding on projects with vague plans and specifications Overextension of managerial and/or financial resources of the company Biding against the competition Biding on jobs that a contractor lacks capacity Eliminating the profit from the contract

The contractor is bound by the terms and conditions of the contract
Accepting a Bid The contractor is bound by the terms and conditions of the contract Must complete the project at the agreed price Errors of the contractor must be covered by him/her not customer Use take-off forms, written checklist, to avoid errors on bids Change order Used if the customer decides to deviate from the plans Contractor can charge additional money

Must be included in the bid Types of insurance
Workers compensation (if one has employees) Vehicle Insurance Property insurance Builder’s risk insurance General liability insurance Umbrella policy

Must be included in the bid Types of bonds
Performance bonds Payment bonds Contract bonds

Public Works Contracts/Bids
If subcontractor price exceeds ½ percent Must comply with the provisions of the Subletting and Subcontracting Fair Practices Act The contractor must give all names and addresses of subcontractors, and cannot change them unless the subcontractor: fails to complete a written contract becomes bankrupt or insolvent fails to perform on his/her subcontract fails or refuses to meet the bond requirements of the prime contractor is not properly licensed according to the provisions of the Contractor’s License Law is ineligible to work on a public works project is not a responsible contractor the work performed is unsatisfactory, does not meet plans and specifications, or it is not on-time Or: the prime contractor is able to prove that the subcontractor was listed do to an error

When a prime contractor wants to substitute the subcontractor:
Public Works cont. When a prime contractor wants to substitute the subcontractor: The awarding authority must notify the subcontractor in writing Must be sent by registered or certified mail Must include the reason for substitution The subcontractor has 5 days to object When a prime contractor violates provisions of the Subletting and Subcontracting Fair Practices Act: Penalty of up to 10% of the contract price Action against the license

Health & Safety in Construction
CHAPTER 5 Health & Safety in Construction

Responsible Agencies Cal/OSHA
California Occupational Safety and Health Act Ensures that working conditions are safe and healthful for all employees Makes sure that employers meet their responsibility of providing such conditions Does not issue citations or penalties

Responsible Agencies DOSH Division of Occupational Safety and Health
Enforces the occupational safety and health regulations Responds to employees’ complaints Makes routine inspections of workplaces Investigates serious and fatal job-related injuries and illnesses

Occupational Safety and Health Standards Board
Responsible Agencies Occupational Safety and Health Standards Board adopts, amends, or repeals California safety and health standards Occupational Safety and Health Appeals Board hears and makes decisions on appeals concerning citations, orders, civil penalties, and abatement dates issued by DOSH Enforcement

Employer Requirements and Responsibilities
Must post: Safety and Health Protection on the Job Code of Safe Practices

Injury and Illness Prevention Program (IIPP)
Must be a written plan, which includes procedures that are put into practice and documented Identify the persons who have the authority and responsibility for carrying out the program Have management who are committed to safety and health A system for communicating with employees must be set in place

Injury and Illness Prevention Program (IIPP)
Have a system for identifying, evaluating and controlling existing or potential workplace hazards Develop, maintain, and document training programs for both supervisors and employees “toolbox” or “tailgate” safety meetings must be held every 10 days Ensure that emergency medical services are available to employees

Investigations & Safety Inspections
Why? if an employee files a complaint public complaint imminent danger fatality or serious accident investigations of serious injuries or illness high hazards list Permits random selection

An employee can file a complaint
Complaints An employee can file a complaint If the complaint is serious DOSH has 3 working days to investigate If the complaint is non-serious DOSH has 14 calendar days to investigate The employer may not fire, discriminate against, or punish the employee that filed a good faith complaint

During the Inspection Employers may be subject to an inspection with or without advance notice DOSH investigators must be given free access to the workplace Employee representative must have an opportunity to accompany the DOSH investigator at the worksite

Violations Three categories: Serious violations General violations
Regulatory violations

The violations that can be given as a result of an inspection:
An information memorandum is a warning of a condition that is not a violation at the present time, but will become a violation if not addressed A citation for a serious or a general violation, which may affect the safety and health of the employees A notice in lieu of a citation for a general or regulatory violation that affects health and safety A special order which is specific to the job the contractor performs. This order is meant to notify the contractor of his/her duties in order to comply with the intent of the Cal/OSHA regulations

Violations Citation must be posted at the place of the violation Must be posted for 3 working days (or until corrected, whichever is longer) If the employer knowingly removes the posted citation before the condition is corrected, he/she may receive either a fine no more than $1,000 or imprisonment in the county jail for no more than 1 year, or both

Violations Abatement period
a particular time period within which the employer must correct the violation The contractor may contest the citations and penalties that he/she may have received Appeal must be filed within 15 working days Filed with the Occupational Safety and Health Appeals Board

Injury and Illness Reporting and Recordkeeping Requirements
Reporting Requirements Must immediately report any occupational fatality, serious injury or illness suffered by an employee Must be made to the nearest DOSH district office by telephone must be made no longer than 8 hours after the employer knows of, or, with diligent inquiry would have known of, the incident

Reporting Requirements
The following injuries and illnesses must be reported: All work related fatalities All serious injury or illness, which means injuries and illnesses which require inpatient hospitalization for a period in excess of 24 hours for other than medical observation, or in which an employee suffers the loss of any member of the body or permanent disfiguration All occupational injuries which are due to exposure of any factors which exist at the workplace All occupational injuries or illnesses in which the employee is absent from work for a full day or shift other than the day of the incident All injuries and illnesses which do not cause an employee to be absent from work more than one day but contain one of the following: absence from work on the day of the incident, fainted or loss of consciousness, termination of employment, permanent transfer to another job, any medical treatment that is given other than first aid

Must be made within 5 days of the incident using the Form 5020 If the employee dies an amended report must be filed within 5 days A report must be filed with the insurance carrier within 5 days If self insured, then must file the report with the Division of Labor Statistics and Research within 5 days

Cal/OSHA Form 300 Employers that have more than 10 employees during any 24-hour period during the previous calendar year Maintain records of scheduled periodic hazard identification inspections and safety training

Provide your employees with training
Hazardous Substances Provide your employees with training Material Safety Data Sheets (MSDS) Information about hazardous chemicals HESIS-TRS Hazard Evaluation System and Information Service

Lead in Construction Work
Must provide a written lead-work pre-job notification to the nearest DOSH District office before beginning any work that is lead-related Post all appropriate signs Provide your employees with training Fines up to $37,500

Lead in Construction Work cont.
Contractors conducting renovation or demolition activities in buildings constructed in or before 1978 must receive training from a U.S. EPA-accredited training provider Good for 5 years You are exempt from certification if you: Get it inspected by DPH-certified inspector DPH inspector finds house to be lead-free Working with area less than 6 SQFT indoors, or 20 SQFT outdoors

Hazardous Substance Removal Work
Must obtain certification Pass examination Must have a valid contractor’s license in the appropriate classification

Asbestos The most common carcinogen in construction The contractor must ask the owner if asbestos is present if it was built before 1978 Must be licensed in order to engage in asbestos-related work which involves 100 SQFT or more of surface area Must pass an asbestos certification examination

Asbestos cont. must register with DOSH if work is 100 square feet or more of surface area Before renovation or demolition begins on a site that may contain asbestos-related materials, notify either: National Emission Standards of Hazardous Air Pollutants (NESHAP), or Federal Environmental Protection Agency (EPA) must be notified

“Danger-Asbestos. Cancer and Lung Hazard. Keep Out”
Asbestos cont. “Danger-Asbestos. Cancer and Lung Hazard. Keep Out” Must be posted readable 20 feet away from the place were the work is to be done California Department of Toxic Substances Control, Hazardous Waste Management Branch enforces strict requirements governing the disposal of Asbestos $1,000 fine for unlawful asbestos removal

Permits Must be obtained from the DOSH Enforcement Unit before performing the following work: Construction of trenches or excavations that are five (5) feet or more in depth into which a person is required to descend (there are exceptions) The construction or demolition of any building, structure, falsework, or scaffolding more than three (3) stories high, in which one story equals to 12 feet in height The underground use of diesel engines for work in mines and tunnels

Permanent Variance Can be applied for only if the contractor can prove that his/her method of conducting the work provides an equal or greater level of safety for employees.

Can apply if one of the following conditions exist:
Temporary Variance Can apply if one of the following conditions exist: Unavailability of professional personnel or of materials needed to come into compliance with the standard. The contractor purchased a business establishment with violations. The contractor is taking all possible steps to safeguard his/her employees against hazards covered by the standard. The contractor has an effective program to come into compliance with the CAL/OSHA standard as quickly as possible

May be given after a hearing is held by DOSH May be renewed 2 times
Temporary Variances May be given after a hearing is held by DOSH May be renewed 2 times Maximum of 180 days each If a variance is denied May be appealed with the Standards Board

The California Labor Code
Deals with all employment issues and regulations Enforced by the Division of Labor Standards Enforcement, which is part of the Department of Industrial Relations Prohibits employers from discriminating or denying employment to a job applicant based on race, color, national origin, religion, ancestry, sex, or age.

The California Labor Code cont.
The following are unfair employment practices: Using discriminatory job application forms Using group membership as a reason for inclusion in (or exclusion from) training programs Interfering with the political activities or affiliations of employees through coercion or threats of discharge Asking a job applicant to make a promise not to join or organize a union Using group membership as a reason to hire or dismiss an employee Discrimination or dismissing anyone on the basis of their filing a discrimination complaint or testifying at a discrimination hearing Using group membership as a reason for different pay scales, privileges, or working conditions Requiring employees or job applicants to take and pass a polygraph

Americans with Disabilities Act of 1990 Prohibits employers to discriminate against qualified individuals with disabilities If an employee who feels that he/she was discriminated against : may file a complaint with the Labor Commissioner

The Labor Commissioner is responsible for enforcement of the following areas within the Labor Code: Claims that involve wages, incidental expense accounts, or advanced expenses Claims that involve damages based on misrepresentations of employment conditions Claims that involve penalties for no-payment of wages Claims that involve bond money not returned to employees Claims for loss of wages as a result of discharge or wage garnishment Awards for workers’ compensation benefits Claims for vacation pay, severance pay, or other compensation that is part of a wage agreement Claims for return of employee’s tools held by another person Mechanics’ Liens and other liens involving employees

Five 8-hour days (four 10-hour days) Never more than 40 hours a week
Working Time Five 8-hour days (four 10-hour days) Never more than 40 hours a week Time-and-a-half pay For overtime (first 4 hours of overtime) Double pay Beyond 12 of work One day of rest is required

If an employee works 4 hours in a given day:
Working Time cont. If an employee works 4 hours in a given day: 10 min rest period (break) If an employee works 5 hours in a given day: 30 min meal period Employee does not have to be paid for this time

Must be paid by cash, check, money order, bank draft, etc.
Wages Employers must post a notice in the workplace which specifies the place and time of wage payments Must be paid by cash, check, money order, bank draft, etc. Deduction for benefits Must have written permission

If an employee suddenly terminates his/her job
Wages cont. If an employee suddenly terminates his/her job Wages are due and payable 72 hours after quitting work If an employee gives a 72 hour notice Wages are due payable at the time he/she quits

Wages cont. If an employer fails to pay wages which are legally due to an employee, the employer will be subject to following penalties: The employer will be required to pay all wages due to the employee plus up to 30 days’ additional wages as a penalty The employer will also be subject to a fine of $50 (if it is his/her first violation,) or a fine of $100 plus 25% of the unpaid wages for a second or subsequent violation

Wages cont. If an employer paid employee’s wages with a check that was returned by the bank due to insufficient funds or inexistence of such account: employer will be subject to a penalty of up to 30 days’ additional wages to be paid to the employee

Federal Taxes Whenever an employer has one or more employees, he/she is responsible for withholding and payment of federal income tax and Social Security (FICA) taxes Any business or person, who hires employees, must obtain an Employer Identification Number from the Internal Revenue Service (IRS)

Federal Taxes cont. When an employer hires a new employee, he/she must obtain the following: Employee’s Social Security number. A W-4 Form signed by the employee Employment Eligibility Verification (I-9) Form

An employer is responsible for the following federal payroll taxes:
Federal Taxes cont. An employer is responsible for the following federal payroll taxes: Federal Income Tax Social Security Tax (FICA) The employer must file quarterly federal tax returns with the IRS

Federal Taxes cont. An Employer may also be required to pay Federal Unemployment Tax (FUTA) if one of the following conditions exists: If an employer had one or more employees for at least some part of a day in any 20 or more different calendar weeks in a given year If an employer paid wages of $1,500 or more in any calendar quarter in a given year

State Taxes Employers are required to withhold and pay taxes to the State of California. As soon as an employer pays more than $100 in taxable wages to all employees Employer will be required to register as an employer with the Employment Development Department (EDD) within 15 days

An employer is responsible for the following State payroll taxes:
State Taxes cont. An employer is responsible for the following State payroll taxes: State Personal Income Tax State Disability Insurance (SDI) The employer must file quarterly state tax returns with the Employment Development Department

Workers Compensation Insurance
All employers with the state are required by the California Workers’ Compensation Law to provide some form of workers’ compensation insurance for their employees

Workers Compensation Insurance cont.
California workers’ compensation law established a no-fault insurance plan purchased by the employer-contractor and administered by the state to: Limit the employer-contractor’s liability for compensation and to avoid costly lawsuits for benefits Guarantee that an injured employee receives prompt and complete medical treatment and benefits for job-related injury or illness

Before obtaining a contractor’s license, an applicant is required to submit one of the following: Workers compensation insurance Securing a permit from the Director of the State Department of Industrial Relations to become a self-insurer An Exemption from Workers ’ Compensation form

Every licensed contractor must submit, in writing, the name and address of the insurer carrying workers’ compensation on his/her employees to the Registrar of Contractors Must be done within 90 days after the policy was issued The contractor must send a copy of this report to the insurer Failure to file such a report will result in a misdemeanor

If employee is injured Must give written notification within 30 days The employer-contractor must submit a report of this injury to his/her insurance carrier within 5 days after he/she is notified

Benefits for which workers may be entitled under workers’ compensation insurance: Medical Treatment Supplemental Job Displacement Benefit Temporary Disability Permanent Disability Death Benefits

Once an employee has received benefits through workers’ compensation, he/she is generally not allowed to file a lawsuit against his/her employer for additional damages, unless one of the following can be proven: The employer attempted to fraudulently conceal the existence of the employee’s injury The employee’s injury resulted from a defective product that was manufactured and distributed by either the employer or a third party The employer physically assaulted the employee

Should the employer-contractor dispute an employee’s claim for workers’ compensation, the following are acceptable defenses: The employee’s injury was caused by his/her own willful misconduct The employee’s unreasonable conduct aggravated his/her injury The employee’s injury was caused by his/her intoxication The employee failed to give the proper written notification of his/her injury within 30 days of its occurrence The injured person was not an employee, but was instead an independent contractor

An employer who fails to obtain workers’ compensation insurance penalty of $2,000 per employee if an injury has occurred, which results in compensable damages to an employee, this penalty increases to $10,000 per employee (up to a maximum of $100,000) If the employer is a licensed contractor, his/her license may be suspended or revoked

Recordkeeping Requirements
Employer-contractor is required to keep all employment and tax records for 4 years, they must include the following: The names, addresses, Social Security numbers, and job titles of all employees. The employer’s federal employer identification number, state identification number, and sales and use tax account number. The amounts and dates of all wage, annuity, and pension payments to all employees. The dates of employment for all employees, including hiring and termination dates. Copies of all employees’ income tax withholding certificates (W-4 Form). The amounts and dates of all payments made to employees while absent due to sickness or injury, whether such payments were made by the employer or by a third party. The dates and amounts of all tax deposits made. Returns reporting federal unemployment (FUTA) tax, Social Security (FICA) tax, federal and state income tax withholding, and the amounts of all wages which are subject to each of these taxes.

Recordkeeping Requirements Cont…
Cal/OSHA (5 years ) Serious injuries, illnesses and deaths Medical tests, first aid, etc. Asbestos or Hazardous related (30 years) Workers’ Compensation (5 years) Income Tax, Unemployment Tax, SSI/Medicare records (6 years)

Collective Bargaining Agreement
Unions Law prohibits employers to prevent employees in any way from joining a union or discriminate against any employee who attempts to join or organize a union It is illegal to require job applicants to already be members of a union before they are hired; however, the law allows employers to require new employees to join a union after they are hired Collective Bargaining Agreement Successor Clause

Unions cont. Labor Disputes: The following types of labor disputes may occur if a labor union and an employer cannot reach an agreement on a contract: A strike – is when the employees refuse to work until an acceptable agreement is reached. A lockout – is when the employer prohibits the employees from entering the workplace until an agreement is reached Advertising Professional Strikebreaker $1,000 and/or 90 days county jail

Contractors Intelligence School

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