R M O Responsible Managing Officer

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responsible managing officer rmo abuse
There are many different ways a contractor can be determined to be unlicensed.  One that the State is now cracking down on very diligently is the improper use of a Responsible Managing Officer (RMO) or Responsible Managing Employee (RME).   Corporations are attempting to “borrow” another company’s RME or RMO............
cumminsandwhite responsible managing officer rmo abuse

A qualifying individual can be a Responsible Managing Officer (“RMO”), a Responsible Employee (“RME”), a Responsible Managing Member, or Resopnsible Managing Manger, who holds his or her own individual contractor’s license which is associated with the company.

In order for a qualifying individual to obtain a contractor’s license they must satisfy the California Contractors State License Board’s (“CSLB”) experience requirements and take and pass a written Law and Business Examination and a specific trade examination for each classification in which the individual seeks a license.

And that’s where the rub lies.

calconstructionlawblog.com/2013 Renting a Contractors License
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Q: I have an opportunity to RMO my licenses. They are both under one CA license number. I have never been a Responsible Managing Officer (RMO) and know nothing about the good & bad points of doing this. One question is can I leave at any time with my license? I would be hired as a Corporate Officer, Manager or Superintendent with an hourly wage. Where can I get good information without paying an attorney???????????
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That’s part of the problem, said David Fogt, chief of enforcement with the licensing board. He said his office investigates cases to determine if the licensed officers, or “qualifiers,” are actually participating in a job. “If we find the qualifier is not actively involved, we allege there’s a violation.”
 - See more at: Renting License


                                                                                                                                

Dear Editor:

To clear up misinformation about the Contractors State License Board (CSLB) that your readers may have received from SF Public Press’s March 26, 2012 article, titled “State says lax rules might let builders use questionable licenses,” I offer a few of the most important points that need clarification.

CSLB regulates the state’s construction contractors and provides information and education to consumers so they can make informed choices related to home improvement and other construction projects.

There is no state program that enables or “allows” a licensee to lease out a contractor license. In fact, California law prohibits the fraudulent use of a contractor license and it would be possible cause for CSLB to revoke the license and for a prosecutor to file felony charges against the person who fraudulently used the license. What’s more, the licensee is financially liable for any damages caused by the non-licensed person.

It’s important that your readers have some context about Responsible Managing Officers (RMO). Laws outlining the requirements to serve as a qualifier on a contractor license have been part of California’s Business and Professions Code since 1959. An amendment more than 20 years ago added a limit to the number of partnerships or corporations on which an individual could serve as an RMO to three licenses in any one-year period. (This year, limited liability companies (LLC) were added to the code and CSLB now licenses LLCs, as well.)

The code also states that the RMO “shall be responsible for exercising that direct supervision and control of his or her employer’s or principal’s construction operations as is necessary to secure full compliance with this chapter and the rules and regulations of the board relating to the construction operations.” Your article implies that RMOs are required to physically monitor job sites regularly and cannot do so if the job sites are spread out geographically. No part of the law states that the RMO has to physically be onsite or supervising the daily activities of any active job site. If physically monitoring job sites were a legal requirement, it is possible that hundreds, if not thousands, of California contractors with only one license would be unable to conduct business in different parts of the state at the same time.

With that in mind, it’s important to remember that the RMO is ultimately responsible for everything that happens on a job site. If laws are broken and CSLB takes an action against a license, all licenses associated with that RMO would be negatively affected. In addition, RMOs are required to have at least 20 percent interest in the corporation.

Some private companies may to try circumvent current RMO laws by putting licensees in a position of serving as a qualifier without direct involvement in the supervision and control of a company. If that occurs, there are severe consequences. Penalties for violating state contracting laws (both administrative and punitive) have been in place for years, and CSLB aggressively pursues anyone who tries to skirt these laws.

Your article also states that one can obtain a license without passing the state exam or having the required journey-level experience because of RMOs. With rare exceptions, each RMO has passed the law and business and the separate trade exam for the license classification he or she is seeking, and has provided proof of the required four years’ journey-level work experience. Without successful completion of the exams and experience an individual would not qualify for a license.

We are hopeful that your readers have not misinterpreted your article to mean that state law or CSLB allows individuals to operate without having successfully met all contracting licensure requirements, and that this explanation confirms that not only do state law and regulations exist, but that they actively are upheld and violators legally and financially are held accountable.

Before hiring any contractor to work in or around their home or business, CSLB encourages your readers to check the status of a contractor’s license and find other important information, including personnel on the license by visiting the CSLB website at www.cslb.ca.gov or www.CheckTheLicenseFirst.com. They can also follow us on Twitter and Facebook to learn more about and engage in ongoing discussions regarding the board’s role in protecting the state’s consumers, licensing contractors, and enforcing state contractor license laws.

Submitted by Rick Lopes (not verified) on Mon, 04/09/2012 - 12:37.

- See more at: Questions Contractors License RMO

From the CSLB - California Contractors State License Board

Responsibility of Qualifying Individuals - Responsible Managing Officer R M O

"R" Stands for "Responsible" 

CSLB licenses and regulates California's construction industry, but its public mandate puts consumer protection above any individual interest.

As a state-licensed contractor, you know that every license requires a qualifying individual, or "qualifier," who is the person listed in CSLB's personnel of record, has demonstrated his or her knowledge and experience through the application process, and holds one or more license classification. (A license qualifier may be a Sole Owner, Qualifying Partner, Responsible Managing Employee (RME), Responsible Managing Officer (RMO), Responsible Managing Manager, or Responsible Managing Member.)

Qualifiers must exercise direct supervision and control of construction operations. Construction performed by unqualified individuals who illegally obtain a license by using an absentee qualifier is a threat to the public. Consumers are put at risk when substandard work is performed by unskilled individuals; the cost to correct deficient work can be exorbitant, often exceeding the original contract amount.

CSLB is aware of "retired" licensees who are serving as RMOs of corporate licenses for a monthly fee, but do not have direct involvement in the construction and business activities. With consumer risk in mind, CSLB is aggressively and stringently taking enforcement actions against those involved in this trend, and is in the process of legislatively enhancing violations to make them a criminal offense.

Many absentee qualifiers are older individuals who are seeking to supplement their retirement income by qualifying licenses, and are unaware of deficiencies and illegal acts performed by those who run the day-to-day operations until CSLB takes formal disciplinary action against their license. Whether the absentee qualifier is 18 or 80, CSLB will hold him or her to answer.

Being the qualifier on a license can be a huge risk and liability. Under existing law (Business and Professions (B&P) Code section 7122.5), if the performance of an act or omission by the license constitutes a cause for disciplinary action, it also is a cause for disciplinary action against the qualifier, regardless of his or her knowledge and participation.

The duties and responsibilities of a qualifier are defined in B&P Code section 7068.1 and the California Code of Regulations (CCR), Title 16, Division 8, Article 2, section 823.

B&P Code section 7068.1 states, in part:

The person qualifying on behalf of an individual or firm under paragraph (1), (2), (3), or (4) of subdivision (b) of Section 7068 shall be responsible for exercising that direct supervision and control of his or her employer's or principal's construction operations as is necessary to secure full compliance with this chapter and the rules and regulations of the board relating to the construction operations.

CCR section 823 further defines a "bona fide employee" and "direct supervision and control" as follows:

(a) For purposes of Section 7068 of the Code, "bona fide employee" of the applicant means an employee who is permanently employed by the applicant and is actively engaged in the operation of the applicant's contracting business for at least 32 hours or 80% of the total hours per week such business in operation, whichever is less.

(b) For purposes of 7068.1 of the Code, "direct supervision and control" includes any one or combination of the following activities: supervising construction, managing construction activities by making technical and administrative decisions, checking on jobs for proper workmanship, or direct supervision on construction sites.

See B&P Code section 7068 for additional information.

Protect your license and avoid the risk of violating state law. If you are qualifying a license, make sure you are aware of all contracting activity and that your involvement in business operation meets state requirements.

cslb.ca.gov/Newsletter/2012 Responsible Managing Officer