Fisher & Phillips recently participated in a closed-door meeting with U.S. Wage and Hour Division officials in Washington, D.C. to discuss the Labor Department’s “Hotel and Motel Resort Pilot Initiative.”  There appears to be no specific strategy or plan as yet for this investigative program, but it is scheduled to begin in the agency’s next fiscal year, which commences on October 1, 2010.  It is definite that the Division will target Hospitality employers on two fronts – compliance with both H2B requirements and the Fair Labor Standards Act.

The Division informed us that it considers Hospitality to be a “high risk” industry.  However, when we inquired as to what measures they used to make that determination, the officials had little to share.  They identified principally two industry characteristics they seem to be relying upon:

•   Hospitality employers hire large numbers of H2B workers and younger employees, both of which groups they believe consist of individuals who are “vulnerable” and are unlikely to complain about violations; and

•   As we said in an earlier post, Hospitality is what the Labor Department calls a “fissured industry”, by which it means arrangements it sees as resulting in a dilution of both the employment relationship and the responsibility for compliance.

Officials could not state with any certainty that they have received a statistically-significant higher number of complaints or violations in the industry.  Instead, they indicate that one purpose of the audits will be to find out whether there are large numbers of violations.

The Division made it clear that it will:

◊   Target H2B users for review;

◊   Likely conduct these inspections in certain geographic areas that are not yet specified;

◊   Investigate all employers on the property – including separately owned and operated restaurants, cafes, and the like;

◊   Audit staffing companies supplying workers to the Hospitality industry; and

◊   Scrutinize whether the employers are in compliance with their H2B certifications (if applicable) and are complying with the Fair Labor Standards Act (including its child-labor limitations).

The time to prepare is NOW – this initiative could begin in just a few months.  You should consider conducting an internal compliance audit immediately, before the Labor Department selects your property for an audit.

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In a pronouncement applicable to unionized workplaces, this week the U.S. Labor Department’s Wage and Hour Division issued an Administrator’s Interpretation stating that unionized employers cannot treat time spent donning and doffing certain “protective equipment” as unpaid time, even if an applicable union contract or practice treats the time as unpaid.  This reverses DOL’s previous positions published in opinion letters in 2002 and 2007.  The new position revives DOL’s earlier position in opinion letters from 1997-2001.

Section 3(o) of the federal Fair Labor Standards Act creates a special rule for unionized workplaces in connection with time spent “changing clothes .  .  . at the beginning or end of each workday.”  The provision permits an employer not to count this time as compensable FLSA hours worked, if this is done pursuant to “the express terms of or by custom or practice” under a collective bargaining agreement.  29 U.S.C. § 203(o).

The main question addressed by the new interpretation is whether this rule should apply to time spent donning and doffing “protective equipment.”  Citing statutory language, legislative history, and some recent court cases, DOL concludes, “it is the Administrator’s interpretation that the § 203(o) exemption does not extend to protective equipment worn by employees that is required by law, by the employer, or due to the nature of the job.”

In DOL’s changed view, the FLSA does not permit industries such as meatpacking to rely upon a union contract or a practice in a unionized setting to exclude time spent donning or doffing “protective equipment (e.g., mesh aprons, plastic belly guards, mesh sleeves or plastic arm guards, wrist wraps, mesh gloves, rubber gloves, polar sleeves, rubber boots, shin guards and weight belts)” from an employee’s compensable worktime.  In recent years, some courts had already reached such a conclusion in the meatpacking industry, but other courts addressing the issue in poultry-processing or in a manufacturing setting have found that equipment donned and doffed by poultry workers or protective gear worn by manufacturing employees constitutes “clothes” under Section 203(o) and does not trigger compensable time if the union contract or practice excludes it.

A second conclusion reached in the new Interpretation also reverses a 2007 DOL position.  In the past, DOL said that clothes-changing made noncompensable by Section 203(o) was not a “principal activity” that started the FLSA “workday,” such that subsequent walking time would not be compensable.  Saying that a majority of courts had rejected the 2007 position, the new Interpretation concludes:  “Consistent with the weight of authority, it is the Administrator’s interpretation that clothes changing covered by § 203(o) may be a principal activity. Where that is the case, subsequent activities, including walking and waiting, are compensable.”

It bears watching to see whether courts defer to the new Administrator’s Interpretation under all the circumstances (particularly in light of DOL’s inconsistent treatment of the issue over time).  Our June 3 post discusses some of the factors courts will consider in deciding what weight interpretations like these should receive.

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Employers can expect more investigative attention to child-labor restrictions.  For one thing, the U.S. Labor Department has now adopted a harsher civil penalty structure.  Moreover, in making this announcement, Labor Secretary Solis spoke of the “reinvigorated enforcement” of FLSA limitations upon work by minors.

It is not yet clear whether or to what extent penalties have been increased across-the-board, but the ones publicized have skyrocketed.  For instance, the minimum fine for illegally employing a 12- or 13-year-old in a nonagricultural job has gone from $900 to $6,000.  Indications are that the Labor Department is prepared to impose penalties to the full extent of its authority:  Up to $11,000 per illegally-employed minor, and up to as much as $50,000 for violations resulting in death or serious injury (which can be doubled for “repeated” or “willful” violations).

Over the years, the U.S. Wage and Hour Division has undertaken special enforcement initiatives in the child-labor arena.  So it was no surprise when the Division disclosed earlier this month that it would be focusing upon the employment of minors in connection with blueberry harvests in New Jersey and North Carolina.  There is every reason to believe that child-labor practices among nonagricultural employers will also be scrutinized.

As we said on May 12, management should be certain that it is complying with all of the applicable child-labor limitations.  There have recently been some substantial regulatory changes, so it is wise to take another look to be sure.

UPDATE: The Labor Department has created a “coordinated task force” to conduct FLSA investigations in southern Alabama and in Mississippi.  This group will focus in part upon child-labor violations in retailing, restaurants, and construction and will fan-out across both metropolitan and rural areas.

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When U.S. Wage and Hour Division investigators conclude that back-wages are due under the federal Fair Labor Standards Act, at some point they present the employer with a completed Form WH-56, called a “Summary of Unpaid Wages”.  This document reflects a variety of information, including the names of each individual the investigator believes should receive a payment and the amount of this payment.

The form also contains a signature line beneath a statement saying, “I agree to pay the listed employees the back wages shown due and to mail proof of payment to the Wage and Hour District Office shown above” by a date-certain.  With varying degrees of forcefulness, the investigator typically seeks to have a management official sign this statement.  Many employers do sign on-the-spot, even though at that stage management might well be unaware of valid legal defenses or might not realize that significant factual or legal questions or other errors or misconceptions must be resolved before it is possible to know whether, to whom, and to what extent any back-pay is actually owed.

Frequently, the employer learns about these issues only when it later consults counsel.  We have seen Division officials deflect a subsequent assertion of these defenses, questions, or challenges by saying that, because management signed the WH-56, the employer has committed to an enforceable debt, such that discussions are closed.

For this reason, management might resist signing a WH-56 until it has had the time, opportunity, and advice to evaluate thoroughly the legal and factual reasoning and assumptions underlying the sums presented.  If the circumstances are such that management feels compelled or pressured to sign the form even though it does not want to do so, then it should consider adding words to the signature block making clear that (i) it is signing under protest, and (ii) the employer’s acquiescence is conditioned upon its reservation of the right to show, for example, that no back-wages are due, or that whatever back-wages are due are less than the amounts shown on the form.  The employer should make clear that it is not refusing to pay sums that might ultimately turn out to be owed, but that instead it is simply declining to commit to any figures or payments before having had a sufficient chance to analyze things.

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If a recently proposed amendment becomes law, the federal Fair Labor Standards Act’s Section 13(a)(15) exemption for certain “companionship” employees will essentially be eliminated.

The FLSA’s minimum-wage and overtime requirements do not apply to “any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves .  .  ..”  “Domestic service employment” refers to services of a household nature the worker performs in or about the private home of the person by whom he or she is employed.  The term “companionship services” means providing care, fellowship, and protection to people who cannot care for themselves due either to advanced age or to physical or mental difficulties.  Additional U.S. Labor Department regulations and interpretations limit how and to whom the exemption may be applied.

H.R. 5902 and S. 3696, introduced respectively by Representative Linda Sánchez (D-CA.) and Senator Robert Casey (D-PA.), would narrow the exemption’s scope so much that it would be largely meaningless.  The amended exemption would be available only if:

•    The companionship employment is irregular or intermittent;

•   The work is not performed by someone whose vocation is to provide companionship services;

•   The worker is employed only by the family or household using his or her services (presumably, this is intended to exclude even joint-employment arrangements involving, for instance, the worker, a home-healthcare agency, and the service recipients); and

•    The worker performs the services for no more than 20 hours per week in the aggregate, taking into account all of the work done for the family or household employers served.

As a practical matter, this would mean that most employees providing companionship services (and apparently all such workers employed by home-healthcare agencies and similar organizations) would no longer be exempt.  Both bills have been referred to the appropriate legislative committees at this point, so it does not appear that action is imminent.  Even so, it is not too soon for opponents of these measures to make their views known to their Senators and Representatives.

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We’ve had inquiries recently about whether the federal Fair Labor Standards Act allows employers to pay less than its $7.25-per-hour minimum wage to certain younger workers.  While there is such an exception, it is limited in important ways.

The FLSA’s so-called “Opportunity Wage” provision allows an employer to pay a worker who is under 20 years old at a rate of at least $4.25 per hour for the first 90 consecutive calendar days after the worker’s initial employment by that employer.  An employer may not displace other workers (including that it can neither terminate them nor reduce their hours, wages, or benefits) in order to hire employees at the Opportunity Wage.

The 90-day period begins to run when the employee starts work – not when the employee was made an offer or accepted the job – and it includes the first day of work.  The period is counted in calendar days – not working days – so it continues to run:

•   Regardless of the number of days the employee actually works during that time, and

•   Even if the employee has a break-in-service during the 90 days.

The U.S. Labor Department says that an employer may not (i) employ a worker at this lower rate until the 90 days runs out, and (ii) then discharge that person in order to hire another one at the Opportunity Wage.

The employer is no longer permitted to pay a worker at the lower rate once he or she turns 20.  This is so even if the 90-day period has not yet expired.

The Opportunity Wage does not excuse an employer from complying with the FLSA’s child-labor restrictions.  Neither does it override a state’s or other jurisdiction’s requirement to pay a higher minimum wage than $4.25 (although an employer should find out whether that jurisdiction has its own exception similar to the Opportunity Wage).

Be careful not to confuse the Opportunity Wage with another FLSA exception involving special certificates the U.S. Labor Secretary may issue.  These certificates permit certain workers (such as full-time students and student-learners, for instance) to be employed at rates less than the FLSA’s minimum wage.  However, there are extensive, detailed, and differing requirements for who can qualify, how employers must go about applying for certificates, the conditions under which certificates will be issued, what records must be kept, and how and why the Labor Department might withdraw a certificate.  Employers may not pay the lower minimum wage to such workers without the certificate in hand, and the authorized hourly rate will be substantially higher than $4.25.

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FLSA Opportunity Wage Provision.pdf (17.55 kb)

The U.S. Labor Department has released its general views about the meaning of the federal Fair Labor Standards Act’s new lactation-break requirement that was the subject of our April 1, 2010 post.  You will recall that FLSA-covered employers must now grant breaktime to a worker for the purpose of expressing breastmilk for her nursing child.

Fact Sheet #73 specifically confirms some of our original analyses, including that:

•   This FLSA amendment took effect when the Patient Protection and Affordable Care Act was signed into law on March 23; and

•   The provision does not apply to employees who are completely exempt from the FLSA’s overtime requirement.

DOL has not specified any minimum number of, frequency of, or duration for these breaks.  It says only that the amount of time must be “reasonable”, and that the breaks must be permitted “as frequently as needed” by the employee.

Echoing the amendment, the Fact Sheet states that an employer must provide a place other than a bathroom (even a private one) as a location for the break.  The location need not be reserved exclusively for a nursing employee’s use.  Furthermore, it may be a place that is temporarily created or converted for this purpose or that is made available when needed.  However, DOL emphasizes that the location must be:

•   Functional as a space for expressing breastmilk;

•   Shielded from view; and

•   Free from any intrusion by co-workers or the public.

DOL acknowledges the amendment’s clear statement that employers are not obligated to treat these breaks as compensable worktime.  However, in a continuation of DOL’s recent “interpretative” actions, the Fact Sheet declares that:

•   An employer allowing paid breaks must compensate a nursing employee in the same way it does others if she uses such a break in order to express breastmilk; and

•   The lactation break must be treated as time worked if the employee is not “completely relieved from duty” during the break.

Whether these two pronouncements are permissible or even entirely correct under the FLSA is subject to debate, as is the effect of DOL’s having announced them in an informal “Fact Sheet”.  Even so, legal uncertainty, the possible impact of laws other than the FLSA, human-resources considerations, and prudence suggest that employers would be wise to follow them pending further developments under the amendment.

The Fact Sheet also clarifies how the “fewer than 50 employees” threshold must be determined in the exception for small employers who are prepared to prove that complying with the requirement causes undue hardship.  DOL says that all employees who work for the covered employer must be counted – not just those who work at a particular worksite.  That is, employers whose total number of employees is 50 or more are precluded from even trying to invoke this exception.

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In a major decision with possible relevance outside of the pharmaceutical industry, the Second Circuit U.S. Court of Appeals (Connecticut, New York, and Vermont) gave strong deference to a U.S. Labor Department legal brief and overruled a lower court in deciding that Novartis’s pharmaceutical sales reps were not exempt from overtime as outside salespersons or as administrative employees under the federal Fair Labor Standards Act or applicable state laws.  On the same day, the Second Circuit also summarily ruled against Schering in a similar case.

The exemption status of pharmaceutical sales reps (who frequently earn substantial compensation) has been hotly litigated with varying results in recent years.  Consider the following unofficial scorecard:  By our count, prior to the Novartis decision, pharmaceutical companies had an 86% win rate (6 out of 7 cases) in federal district court decisions finding that the FLSA’s administrative exemption was applicable.  Pharmaceutical companies had a 71% win rate (12 out of 17 cases) in federal district court decisions finding that the FLSA outside-sales exemption applied to their sales reps.  Many of those cases are on appeal.

On February 2 and March 24, 2010, the Third Circuit (Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands) found that a pharmaceutical sales rep at Johnson & Johnson and sales reps at AstraZeneca were exempt under the administrative exemption.  The court did not rule on the FLSA’s outside-sales exemption.

The unique, highly-regulated circumstances of the pharmaceutical-sales environment has contributed to the split among the courts deciding these cases, particularly the fact that federal regulations bar the consummation of a sale between a pharmaceutical sales rep and a physician.  As the Second Circuit highlighted in finding that Novartis’s reps were not primarily engaged in “making sales” but instead merely promoted drugs to physicians, (1) they could only give free samples; (2) they could not lawfully transfer drug ownership in exchange for anything of value; (3) they could not lawfully take an order for the purchase of drugs; and (4) they could not obtain a physician’s binding commitment to prescribe drugs.  Even though the physician is widely considered to be the “linchpin” in the process of choosing drugs to prescribe, federal regulations bar the consummation of a sale between a pharmaceutical sales rep and a physician – the court concluded that fully consummated sales by pharmaceutical companies are made to wholesalers, rather than to physicians.

Several other courts (including the lower court in Novartis’s case) have taken a “common sense” approach and held that the pharmaceutical sales reps “make sales in the sense that sales are made in the pharmaceutical industry” and thus qualified for the FLSA’s outside-sales exemption.  Moreover, the Novartis lower court found that sales reps were not “robots” or “automatons,” as they contended, but that instead they exercised judgment in tailoring presentations to physicians and qualified for the FLSA’s administrative exemption.

The Second Circuit disagreed as to both exemptions.  Significantly, the Circuit was heavily influenced by the DOL’s interpretations in DOL’s friend-of-the-court legal brief supporting the sales reps.  The court believed itself required to grant “controlling deference” to the brief because the DOL’s interpretations were not “plainly erroneous or inconsistent with the [DOL’s] regulation” on the issues.

These wage-hour battles in the pharmaceutical field are not over, but some of the lessons for employers in any industry include these:

•   Beware so-called “outside sales” employees who are not really making sales within the meaning of the FLSA’s outside-sales exemption (such as those who only promote products or services that are actually sold by others).

•   Beware “promotion” or “marketing” employees who are not exercising “discretion and independent judgment in matters of significance” within the meaning of the FLSA’s administrative exemption but are instead exercising only “skill in applying well-established techniques, procedures, or specific standards.”

•    Because DOL guidance documents and legal briefs can affect the outcome of litigation, think ahead about how DOL might be expected to interpret FLSA exemption rules in the future.

UPDATE 7/23/10: On July 19, 2010 the U.S. District Court for the District of New Jersey ruled for the employer in Jackson v. Alpharma, Inc., finding that the pharmaceutical sales representatives there were exempt under the FLSA’s administrative exemption.  The District of New Jersey is within the Third Circuit, and the court therefore followed the Circuit’s February decision in Smith v. Johnson & Johnson which applied the administrative exemption to a pharmaceutical sales rep.

The Jackson court chose not to address the outside sales exemption.  Interestingly, the court also said, “in light of the Third Circuit’s clear opinion in Smith .  .  ., the Court does not find it necessary to discuss” the Second Circuit’s more-recent Novartis decision.  Further, the court did not mention DOL’s amicus brief which was filed in the Novartis appeal and which the Second Circuit said was entitled to “controlling deference” on the administrative exemption in a similar setting.  As Jackson shows, pharmaceutical companies continue to fare better (in terms of percentages) with the FLSA’s administrative exemption than with the outside sales exemption.

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The general contractor on the Connecticut powerplant project that suffered a fatal explosion in February says it plans to contest $8.3 million in federal penalties proposed on Aug. 5 for safety violations. O&G Industries Inc., Torrington, Conn., was one of 17 site contractors fined a total of $16.6 million by the U.S. Labor Dept.’s Occupational Safety and Health Administration for 371 alleged violations related to the blast at the 620-MW Kleen Energy LLC combined-cycle plant in Middletown. Six workers were killed; 50 were injured.

Our July 5 post prompted a question about whether an established meal period of less than 30 minutes must be considered worktime under the federal Fair Labor Standards Act.  The answer is, “Not necessarily”.

U.S. Labor Department interpretations state that bona fide meal periods during which employees are completely relieved from duty in order to eat regular meals are not FLSA worktime.  See 29 C.F.R. § 785.19(a).  This provision also says that “ordinarily” 30 minutes or more is long enough for such a period.  This has led many people (sometimes including even U.S. Wage and Hour Division officials) to insist that, if an employer maintains a meal period of less than 30 minutes, the mealtime must be considered hours worked under the FLSA.

But the Labor Department’s own interpretation recognizes that a shorter timeframe can be long enough “under special conditions.”  Among the special conditions the Labor Department looks for are these:

•   Any work-related interruptions of the meal period are sporadic and minimal;

•   Employees have enough time to eat a regular meal under the circumstances;

•   The period is not just a break for snacks or coffee but instead allows the employee to eat a full meal, comes at a time when meals are normally consumed, and occurs with a frequency that is customary for regular meals;

•   The employer and employees have agreed that a period of less than 30 minutes is sufficient to eat a regular meal; and

•   Applicable state or local laws do not require a longer meal period than the one established.

Section 31b23, Field Operations Handbook (U.S. Labor Department, December 15, 2000).

The Labor Department reviews these factors on a case-by-case basis, taking into account the particular context involved.  U.S. Wage and Hour Investigators are instructed to give “special scrutiny” to meal periods of less than 20 minutes.

These principles have to do with whether established mealtimes of under 30 minutes are bona fide, non-compensable ones.  Work-related interruptions of established meal periods are evaluated differently.

Finally, remember that state or local laws might require a meal period of at least 30 minutes or some other length and might impose other meal-related obligations.  The FLSA does not relieve an employer from its responsibilities under any such laws.

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An increasing number of federal Fair Labor Standards Act lawsuits and U.S. Labor Department investigations include claims based upon the employer’s automatically deducting meal periods from non-exempt employees’ recorded worktimes.  Typically, the employees did not clock out-and-in to reflect the mealtime they took.

Instead, the employers systematically subtracted the full, scheduled meal period from each employee’s total daily hours on the assumption that the person took an entire, uninterrupted meal break each workday.  An employee who worked during a meal period could avoid the deduction by using an exception feature of the timekeeping system, but the usual allegation is that employees did so inconsistently or infrequently, if ever.

Generally speaking, the FLSA does not require that employees be compensated for duty-free meal periods.  However, to the extent that automatic time deductions deprive an employee of FLSA-required wages for work during a meal period, a violation often occurs.  For instance, this frequently happens when the “standard” deduction is made for a day when the employee takes no meal break or takes only a shortened one, or where the meal period is shot-through with work-related interruptions.

A timekeeping-by-exception approach to meal periods is not unlawful under the FLSA if it results in an accurate record of non-exempt employees’ hours worked.  See, e.g., Opinion Letter of Office of Enforcement Policy FLSA2007-1NA (May 14, 2007).  However, experience suggests that this is not what occurs in the real world.  An unusual set of circumstances might permit such a claim to be defended successfully, but even then the “win” is likely to be so expensive and disruptive that it will not feel much like a victory.

A safer approach is to instruct employees clearly that:

•   They are to clock out-and-in for the time taken for a meal period;

•   They are not to work during mealtime unless it is unavoidable; but

•   They will be compensated for and must therefore accurately record any time so worked.

Of course, even if employees are told these things, in the end what matters is what actually happens.  For example, there might be situations in which work-related interruptions of a meal period should lead to considering the entire period to be compensable worktime.

Meal periods might also be regulated by the laws of other jurisdictions.  In addition to considering FLSA issues, it is also important to know whether and how those laws might affect timekeeping and pay where meals are concerned.

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The Contractors State License Board (CSLB) is warning consumers about the dangers of hiring unlicensed contractors following a sting operation in Sonora. CSLB’s Statewide Investigative Fraud Team (SWIFT), in cooperation with the Tuolumne County District Attorney’s and Sheriff’s Offices and the California Department of Insurance (DOI), conducted the undercover sting on May 19 and 20, 2010, at a Sonora home. The sting underscores the fact that unlicensed contractors are operating throughout the Mother Lode.

During the sting, investigators posed as homeowners and solicited home improvement jobs that included tree trimming, concrete, cabinetry, and windows. The nine contractors who bid more than $500 for labor and materials received a Notice to Appear (NTA) in court to face misdemeanor charges of contracting without a license and illegal advertising. California Business and Professions (B&P) Code requires any home improvement contract valued at more than $500 in labor and materials to be performed by a licensed contractor. Jobs cannot be broken down into smaller parts to get around the law.

Contractors are also required to include their contractor license number in all advertisements and promotions. If they are unlicensed, they must state that in their ad. Three of those who received NTAs will also face charges for soliciting an excessive down payment.

B&P Code prohibits contractors from asking for a deposit of more than 10 percent of the entire contract or $1,000, whichever is less. There is an exception to this down payment law for about two dozen contractors who have purchased special bonds for consumer protection. These exceptions are noted on CSLB’s website.

“This sting should serve as a warning to consumers who hope to save a few dollars by hiring someone without a license,” said CSLB Registrar Steve Sands. “You run a much bigger risk of having problems, and you may end up paying more in the long run.”

The lure of easy money led a dozen unlicensed operators to a sting operation conducted by the Contractors State License Board (CSLB) in Orinda on May 18 and 19, 2010. The two-day operation included support from the Orinda Police Department and the Contra Costa County District Attorney’s Office.

Members of CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as homeowners and took bids on home improvement projects that included tree trimming and warm-air heating, ventilating and air-conditioning (HVAC). When the suspects bid more than $500, they were given a Notice to Appear (NTA) in court for contracting without a license. California Business and Professions Code (B&P) requires that home improvement jobs valued at $500 or more for labor and materials to be performed by a state-licensed contractor. One contractor picked up at the sting will receive an administrative citation for contracting with an expired license.

Homeowners seldom realize the risks of hiring illegal operators. Phony contractors rarely have a contractor license bond or workers’ compensation insurance. A worker who is hurt on the job could seek medical reimbursement or other damages from the homeowner. Homeowners also have little recourse for poor workmanship, incomplete work or other financial damage when they use a person that does not have a license bond, which is a standard requirement for CSLB-licensed contractors.

“Some unlicensed operators deliberately target trusting and vulnerable people,” said CSLB Registrar Steve Sands. “They might take your money and be gone without completing the work before you realize what’s happened, which may force you to pay twice just to get the job completed.”

A Contractors State License Board (CSLB) special investigation target, Ronald “Russell” Clawson, 27, of Napa, is now in the Napa County Jail, beginning to serve a six-month sentence. Clawson was ordered into custody at a sentencing hearing in Napa County Superior Court on May 27, 2010. Clawson has failed to pay any of the court-ordered $49,304 in restitution he owed for using the license number of a legitimate CSLB licensee—who is also named Clawson—and ripping off consumers. Three northern Californians paid the unlicensed Clawson for what resulted in incomplete, substandard work.

One Napa woman paid Clawson $8,300 to remodel her kitchen. CSLB Investigators found that Clawson abandoned the project, leaving the woman’s stove in her living room, and her kitchen sink and a pile of construction debris in her backyard. Testimony from investigators and a CSLB industry expert helped the judge determine Clawson should pay $33,908 to reimburse the victim for her payment to Clawson and to clean up the mess he made of her home.

CSLB initiated a special investigation into Clawson in March 2009 after being alerted by Napa County officials about an elderly, blind resident who hired Clawson to build three small sheds at a Yountville rental property. The victim paid more than $8,000, but Clawson did not complete the work and failed to pull the necessary permits from the local building department.

Meanwhile, the legitimate licensee complained to CSLB that a consumer he had never met in Fairfield (Solano County) had filed a claim against his contractor license bond. CSLB’s Special Investigation Unit determined that the unlicensed Clawson was using that legitimate contractor’s license number on business cards, claiming he was the licensee’s son. Clawson was ordered to pay $10,096 in restitution to the Napa man, and $5,300 to the Fairfield man who paid Clawson that amount to build and install an entertainment center that was never delivered.

On November 20, 2009, Clawson pleaded no contest to four counts of elder abuse, identity theft, grand theft, and fraudulent use of a contractor license number. As part of the plea agreement, Clawson was to make full restitution by the date of his sentencing hearing, and then serve a six-month jail sentence. Because he has not paid any restitution, Clawson was sent directly to jail to begin the six-month sentence and was placed on felony probation for three years. Violation of that probation, including failure to make restitution, could send him to state prison for up to six years.

“Sometimes jail is the only way to stop unlicensed people who defraud consumers,” said CSLB Registrar Steve Sands. “It also highlights the importance of checking a contractor’s license and verifying identification before you agree to a home improvement contract.”

CSLB urges you to follow these helpful tips:

• Hire only licensed contractors and ask to see their license and a photo ID. Always check the license number online at www.cslb.ca.gov or www.CheckTheLicense.com and contact the business directly if you have any questions.
• Don’t hire the first contractor who comes along.
• Don’t rush into repairs, no matter how badly they’re needed.
• Don’t pay more than 10 percent or $1,000, whichever is less, as a down payment. There is an exception for about two dozen licensees who carry special bonds to protect consumers. These exceptions are noted on CSLB’s website.
• Don’t pay in cash, and don’t let payments get ahead of the work.
• Get at least three bids, check references, and get a written contract.

Reference: http://www.cslb.ca.gov/GeneralInformation/Newsroom/PressReleases/PressReleases2010/News20100528.asp

Seven suspected unlicensed operators were caught during a Contractors State License Board (CSLB) sting in Calabasas on May 27, 2010, and CSLB is warning homeowners to be especially careful before hiring people for home improvement projects. The California Department of Toxic Substances Control and the Los Angeles County District Attorney’s Office assisted in the operation.

Members of CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as homeowners and invited suspected unlicensed operators to bid on projects including painting, masonry, flooring, and tile work. When the suspects bid more than $500 for a job, they received a Notice to Appear (NTA) in Los Angeles County Superior Court to face misdemeanor charges of contracting without a license. California Business & Professions Code (B&P) requires a state contractor license for home improvement jobs valued at $500 or more in labor and materials. Some also face charges of illegal advertising and asking for an excessive down payment. B&P Code requires contractors to include their license number in all advertisements. Those without licenses are permitted to do work valued at less than $500, but must state that they are not licensed in their ads. It is also a violation of B&P Code to solicit a down payment larger than $1,000 or 10 percent of the contract, whichever is less. (There is an exception for about two dozen contractors who purchase special consumer protection bonds that are noted on CSLB’s website.)

“Unlicensed operators are part of a huge underground economy and may not be such a bargain for the homeowners who use them,” said CSLB Registrar Steve Sands. “Homeowners may end up paying twice for a job when they have to hire a licensed contractor to fix the problem.”

Homeowners seldom realize the risks they take when hiring illegal operators. Phony contractors never have workers’ compensation insurance, which means if a worker is hurt, the property owner could be liable. In addition, homeowners have little recourse if something goes wrong with the project.

“Some unlicensed operators deliberately target trusting and vulnerable people,” added Sands. “They can take your money and be gone before you realize what has happened.”

CSLB provides many helpful consumer publications that can be downloaded or ordered from the website: www.CheckTheLicenseFirst.com or www.cslb.ca.gov, or by calling, toll-free: 1-800-321-CSLB (2752).

CSLB urges consumers to remember the following tips when hiring a contractor:

• Be especially hesitant when approached by someone offering home improvement services door-to-door.
• Verify the contractor’s license by checking online at www.cslb.ca.gov, or via CSLB’s automated phone system at 1-800-321-CSLB (2752), and ask to see a photo identification to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least 3 bids and a written contract before your project begins.

Nearly two dozen people went out on a limb by contracting without a license in San Bernardino. In so doing, they were caught in a sting operation conducted on May 26 and 27, 2010, by the Contractors State License Board (CSLB). The CSLB operation included support from the San Bernardino Police Department, the San Bernardino County District Attorney’s Office, and the California Department of Justice (DOJ).

Members of CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as homeowners and took bids for tree trimming and painting. During the two days, 22 suspects received Notices to Appear (NTA) in court for contracting without a license. One of those 22 received an additional charge for soliciting an excessive down payment; another suspect will answer to charges of being an unregistered Home Improvement Salesperson.

California Business and Professions (B&P) Code requires all home improvement jobs valued at $500 or more for labor and materials be performed by a state-licensed contractor. The code also requires that contractors put their license number in all forms of advertising. Those without licenses may do jobs valued at less than $500, but their ads must state that they are not a licensed contractor. It’s also illegal to solicit a down payment greater than ten percent of the contract price or $1,000, whichever is less. There is an exception to the down payment provision for about two dozen contractors, noted on CSLB’s website, because they purchase special bonds for consumer protection. Another section of B&P Code requires all people who sell home improvement contracting services to be registered with CSLB.

Homeowners seldom realize the risks of hiring illegal operators. Phony contractors don’t carry workers’ compensation insurance or the license bond required by B&P Code that enables consumers, subcontractors or materials suppliers to collect if the job is incomplete or not completed according to the contract.

“Homeowners can end up financially devastated by hiring these illegal operators,” said CSLB Registrar Steve Sands. “If somebody gets injured while working on your property, you may be liable.”

The California Labor Code requires all contractors with employees to have workers’ compensation coverage for each of them. Roofing contractors must also carry workers’ compensation insurance for themselves. B&P Code requires that all contractors have a license bond for $12,500 for consumer protection.

CSLB urges consumers to remember the following tips when hiring a contractor:

• Verify the contractor’s license by checking online at www.cslb.ca.gov, or using CSLB’s automated phone system at 1-800-321-CSLB (2752), and ask to see a photo identification to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least 3 bids and a written contract with the estimated total cost of the project before any work begins

CSLB urges consumers to follow these tips to help avoid being conned. Verify the contractor’s license at www.cslb.ca.gov, www.CheckTheLicenseFirst.com or by calling 1-800-321-CSLB (2752).

• Ask to see the contractor’s plastic pocket license card, and ask for photo identification to make sure it’s the same person.
• Don’t rush into repairs, no matter how badly they’re needed or just because you’ll get a “good deal” that day.
• Don’t pay more than 10 percent or $1,000, whichever is less, as a down payment. Solicitation of a down payment greater than this amount is a violation of the California Business and Professions Code. There is an exception for about two dozen contractors that purchase special bonds for consumer protection. These exceptions are noted on the CSLB website.
• Get at least three bids, check references, and get a written contract.

The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. More information and publications about hiring contractors are available on the CSLB website or by calling 800-321-CSLB (2752). You can also sign up for CSLB e-mail alerts at www.cslb.ca.gov. The CSLB licenses and regulates California’s more than 300,000 contractors, and is regarded as one of the leading consumer protection agencies in the United States. In fiscal year 2008-09, CSLB helped recover nearly $36 million in ordered restitution for consumers.

Nine suspected unlicensed operators were caught during a Contractors State License Board (CSLB) sting in Rohnert Park on June 29, 2010, and CSLB is warning homeowners to be especially careful before hiring people for home improvement projects. The Sonoma County District Attorney’s Office assisted in the operation.

Members of CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as homeowners and invited suspected unlicensed operators to bid on projects including painting, fencing, landscaping, plastering, and tile work. If the suspects bid more than $500 for a job and did not have a license, they received a notice to appear (NTA) in the Sonoma County Superior Court to face misdemeanor charges of contracting without a license, and charges related to unlicensed contracting. California Business & Professions Code (B&P) requires a state contractor license for home improvement jobs valued at $500 or more in labor and materials. Four of the nine also face charges of illegal advertising. B&P Code requires contractors to include their license number in all advertisements. Those without licenses are permitted to do work valued at less than $500, but must state that they are not licensed in their ads.

In addition to contracting without a license, Bart Paul Pettijohn, 53, of Santa Rosa faces a charge of fraudulent use of a contractor license number. Pettijohn’s license was suspended for violations of workers’ compensation law and for a liability from the Employee Development Department in 2008. That license, which was for roofing, expired earlier this year. Pettijohn was advertising and bid to do painting work. He does not have a current, valid contractor license in the painting classification.

“Homeowners undertake a huge risk when they hire someone who is not licensed or someone who doesn’t have the correct license to repair or remodel their property,” said CSLB Registrar Steve Sands. “These illegal operators do not carry workers’ compensation insurance which can leave consumers holding the bag if these scammers or one of their employees is injured on the homeowner’s property.”

CSLB provides many helpful consumer publications that can be downloaded or ordered from the website: www.CheckTheLicenseFirst.com or www.cslb.ca.gov, or by calling, toll-free: 1-800-321-CSLB (2752).

CSLB urges consumers to remember the following tips when hiring a contractor:

• Be especially hesitant when approached by someone offering home improvement services door-to-door.
• Verify the contractor’s license by checking online at www.cslb.ca.gov, or via CSLB’s automated phone system at 1-800-321-CSLB (2752), and ask to see a photo identification to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least three bids and a written contract before your project begins.

CSLB urges consumers to remember the following tips when hiring a contractor… Be especially hesitant when approached by someone offering home improvement services door-to-door.

• Verify the contractor’s license by checking online or via CSLB’s automated phone system, and ask to see a photo ID to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least 3 bids and a written contract before your project begins.

The Contractors State License Board operates under the umbrella of the California Department of Consumer Affairs. More information and publications about hiring contractors are available on the CSLB website or by calling 800-321-CSLB (2752). You can also sign up for CSLB e-mail alerts at www.cslb.ca.gov. CSLB licenses and regulates California’s more than 300,000 contractors, and is regarded as one of the leading consumer protection agencies in the United States. In fiscal year 2008-09, CSLB helped recover nearly $36 million in ordered restitution for consumers.

While not as high a profile as other construction trades, there is a problem in California with sign companies that operate without a contractor license. The Contractors State License Board’s (CSLB) Statewide Investigative Fraud Team (SWIFT), in cooperation with the Upland Police Department, San Bernardino County District Attorney’s Office, and with leads provided by the California Sign Association, has just completed a multi-week undercover sting operation that targeted a group of phony C-45 Sign contractors.

CSLB set up a sting operation on June 23 and June 30, 2010, at a commercial building in the city of Upland, where SWIFT investigators posed as property managers who solicited contractors for installation of outdoor signage on the building. Other unlicensed operators were solicited for tile work and painting at the new, largely unimproved building. Those who submitted bids for more than the legal $500 limit received notices to appear (NTA) in court for contracting without a license and illegal advertising.

California Business and Professions (B&P) Code requires any home or property improvement work valued at $500 or more for labor and materials be undertaken by a licensed contractor. B&P Code also requires contractors to put their license number in all advertisements. Those without licenses may do work valued at less than $500 for labor and materials, but must state in their ads that they are not a licensed contractor.

Consumers often don’t realize the risks associated with hiring an unlicensed person for construction and property improvement. Phony contractors do not have a contractor license bond or workers’ compensation insurance. A worker who is hurt on the job could seek medical reimbursement or other damages from the property owner. California Labor Code requires contractors to carry workers’ comp coverage for each of their employees. Roofing contractors also must have workers’ compensation coverage for themselves. B&P Code requires contractors to have a $12,500 license bond to help compensate consumers if work is not completed or if something goes wrong on the job.

“This sting should serve as a warning to consumers who might be taken in by promises of cheaper work performed by someone who isn’t licensed,” said CSLB Registrar Steve Sands. “In reality, you likely won’t pay any more by hiring a licensed contractor who provides the added assurance that you’ll be protected from liability if a worker is hurt or anything goes awry during the project.”

An unlicensed cement contractor who was the subject of several consumer complaints to the Contractors State License Board’s (CSLB) Central Valley Investigative Center was one of six targeted in a Bakersfield sting operation on July 2, 2010. Some of the other targets were tree trimmers who had been caught in earlier enforcement operations. CSLB’s Statewide Investigative Fraud Team (SWIFT) was assisted in the operation by the Kern County District Attorney’s (DA) office and the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) unit.

While meeting to plan for the operation on July 1, investigators received a tip that their sought- after cement installer, Jose Chavez Villegas, 27, of Bakersfield, was working at a private home with four employees. The SWIFT investigator issued Villegas a Notice to Appear (NTA) in court to face charges of contracting without a license, illegal advertising and soliciting an excessive down payment. The DA investigator issued an NTA for failure to carry workers’ compensation insurance. ICE booked Villegas and three of his employees for deportation, which took place later that evening.

At the July 2 sting, SWIFT investigators posed as homeowners soliciting bids from suspected unlicensed tree trimmers. Four suspects who bid more than $500 for the project received an NTA for contracting without a license. Three others face an additional charge of illegal advertising, and one faces an additional charge for soliciting an excessive down payment. ICE booked two for deportation.

Suspect Jose Fuentes, 39, of Bakersfield, fled the sting location before offering a bid but was caught by ICE and booked for deportation. Fuentes had received an NTA in a 2003 CSLB sting. He was convicted for contracting without a license, illegal advertising, and using a contractor license not issued to him. He could face charges for a second offense, pending the outcome of the DA’s investigation.

It is a violation of California Business and Professions (B&P) Code to undertake any home improvement job valued at more than $500 for labor and materials without a state contractor license. Contractors must put their license number in all advertisements. Unlicensed contractors may advertise to do home improvement work valued at less than $500, but must state in their ads that they are not licensed contractors.

B&P Code also prohibits soliciting a down payment greater than $1,000 or 10 percent of the contract price, whichever is less. There is an exception to the down payment law for about two dozen contractors who purchase special bonds for consumer protection which are noted on the CSLB website. California Labor Code requires contractors to carry workers’ compensation insurance for all of their employees. The Kern County DA has a special grant to target workers’ comp violators and often partners with CSLB investigators as unlicensed contractors do not carry this insurance.

“Unlicensed operators are part of a huge underground economy and may not be such a bargain for the homeowners who use them,” said CSLB Registrar Steve Sands. “They do not have workers’ compensation for their employees, which could leave homeowners in a lurch if a worker is injured on their property. Not only is it a huge risk for consumers, but these phony contractors make it almost impossible for legitimate, law-abiding licensed contractors to compete.”

CSLB urges consumers to follow these tips when hiring a contractor:

• Be especially hesitant when approached by someone offering home improvement services door-to-door.
• Verify the contractor’s license by checking online or via CSLB’s automated phone system and ask to see a photo ID to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least 3 bids and a written contract before your project begins.

An unlicensed house painter who illegally bid on a job at an Amador County house wound up going to jail instead of getting the job. Karl Calvert Marohl III, 37, of Ione, told an undercover investigator from the Contractors State License Board’s (CSLB) Statewide Investigative Fraud Team (SWIFT) that he would paint a house for $600 if she purchased the materials. According to California law, any home improvement project valued at more than $500 for labor and materials must be done by a licensed contractor.

When Marohl was detained, investigators found he was in possession of methamphetamine and took him to jail. Marohl was accompanied to bid on the job by two people, one of whom was a parolee in possession of meth and drug paraphernalia. Kelly Murrel Woods, 46, of Ione, was also taken to jail.

Marohl was one of eight who received Notices to Appear (NTA) in court for unlicensed contracting during the undercover sting operation held in Jackson on July 20, 2010. The CSLB operation was conducted with the support of the Amador County District Attorney’s (DA) Office and the Jackson Police Department. Of the eight, one will face an additional charge of soliciting an excessive down payment, and two others for illegal advertising. California Business and Professions (B&P) Code prohibits contractors from soliciting down payments greater than $1,000 or 10 percent of the entire contract, whichever is less. There is an exception for about two dozen contractors who purchase special bonds for consumer protection. The B&P Code also requires contractors to place their license number in all advertisements. Unlicensed contractors can advertise for work if they state they are not licensed and do not perform jobs valued more than $500.

On July 21, 2010, SWIFT, the DA, police and investigators from the California Employment Development Department conducted sweeps at nine construction sites in Jackson and two in Sutter Creek. One contractor in Jackson will receive a warning letter for not having his license number on the side of his truck, as required by B&P Code. Another licensee in Sutter Creek will receive an administrative citation for filing a false exemption from carrying workers’ compensation insurance, which violates a B&P Code. The DA will pursue a criminal case against that licensee for failure to carry workers’ comp, a violation of the California Labor Code.

“This sting shows why consumers should take the time to check the license before they hire a contractor to work in or around their home,” said CSLB Registrar Steve Sands. “A few seconds on the CSLB website (www.cslb.ca.gov or CheckTheLicenseFirst.com) will show whether the contractor is licensed and whether he has workers’ compensation insurance so that the homeowner isn’t stuck with any liability if a worker is injured on the property.”

Contractors must purchase workers’ comp coverage for all employees except for themselves, unless they are roofers. Roofers must have this insurance for themselves and employees. The workers’ comp insurer is displayed on the CSLB website’s Instant License Check. If contractors file an exemption stating they have no employees, this exemption is also indicated on the license check. Homeowners should ask their contractor whether any other employees will be working on their project; and, if so, verify there is appropriate insurance coverage.

CSLB urges consumers to always follow these tips as well before hiring a contractor:

• Verify the contractor’s license by checking online at www.cslb.ca.gov, or use CSLB’s automated phone system at 1-800-321-CSLB (2752).
• Ask to see a photo identification to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this rule for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least three bids and a written contract with the estimated total cost of the project before any work begins.

A Contractors State License Board (CSLB) sting netted 16 suspects for unlicensed contracting and related violations in Big Bear City on July 22, 2010, and CSLB is warning homeowners to take precautions when hiring people for home improvement projects. The San Bernardino County Sheriffs and District Attorney’s Office, along with the California Department of Insurance, assisted CSLB in this operation.

Members of CSLB’s Statewide Investigative Fraud Team (SWIFT) posed as homeowners and invited suspected unlicensed operators to bid on painting, landscaping, concrete, and tile projects. If the suspects bid more than $500 for a job and did not have a license, they received a notice to appear (NTA) in San Bernardino County Superior Court to face misdemeanor charges of contracting without a license and related violations. California Business & Professions Code (B&P) requires a state contractor license for home improvement jobs valued at $500 or more in labor and materials. Fifteen of the 16 also face charges of illegal advertising, and six of them will answer to charges of soliciting an excessive down payment.

B&P Code requires contractors to include their license number in all advertisements. Those without licenses are permitted to do work valued at less than $500, but must state that they are not licensed in their ads. B&P Code also prohibits contractors from soliciting a down payment greater than 10 percent of the total contract price or $1,000, whichever is less. There is an exception to the down payment provision for about two dozen contractors who purchase special consumer protection bonds and are noted on the CSLB website.

In addition to contracting without a license, illegal advertising, and soliciting an excessive down payment, Oscar Quinonez Gutierrez, of San Bernardino, faces misdemeanor charges for attempting to use a license not issued to him. Nikolas James Strich, of Irwin Lake, and Bradley Steven Slovick, of Lucerne Valley, were booked on outstanding warrants for failure to appear in court.

Two licensed roofing contractors advertised themselves as unlicensed contractors and showed up to at sting to bid on a deck project. They received warning letters for contracting for a home improvement project outside of their specialty classification and illegal advertising.

CSLB recommends that consumers always get at least three project bids from licensed professionals and check out the contractor license on CSLB’s website to be sure it is in good standing. “Homeowners should also be aware that if they do hire somebody without a license, there is a tremendous risk,” said CSLB Registrar Steve Sands. “These scammers do not carry workers’ compensation insurance and the property owner could be liable if the illegal operator or their employees are injured during the project.”

CSLB urges consumers to remember the following tips when hiring a contractor:

• Be especially hesitant when approached by someone offering home improvement services door-to-door.
• Verify the contractor license by checking online at www.cslb.ca.gov, or via CSLB’s automated phone system at 1-800-321-CSLB (2752).
• Ask to see a photo identification to make sure you’re dealing with the correct person.
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who have special bonds for consumer protection that are noted on the CSLB website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least three bids and a written contract before your project begins.

Four unlicensed operators contracting to replace the air-conditioning unit of a Rancho Bernardo condominium were among the 13 snared for violating California home improvement contracting laws during an undercover contractor sting operation on July 28 and 29, 2010.

The Contractors State License Board’s (CSLB) Statewide Investigative Fraud Team (SWIFT) was assisted by the San Diego Police and City Attorney, San Diego County District Attorney, and the California Department of Insurance. SWIFT members posed as homeowners seeking bids for the installation of a new air conditioner, and for plumbing, painting, and tile work. Unlicensed C-20 Heating, Ventilating and Air-Conditioning (HVAC) contractors are of particular concern to CSLB because they generally fail to obtain the required building department permits for such projects. California’s Energy Efficiency Standards updates that took effect in January 2010 require contractors to obtain a permit from the city or county building department where the home or business is located before installing, removing, remodeling, or replacing any heating or air-conditioning unit. Compliance with HVAC permit laws is one of the Board’s top enforcement priorities.

Failure to obtain a building department permit and have proper follow-up by a California Energy Commission-certified inspector could result in additional expense and risk for the homeowner. A deficient HVAC system may affect a property’s resale value, and could harm the state’s air quality and environment. Inspections ensure that a system is safe, will produce lower utility bills, and help the state meet energy-efficiency goals.

“Badly installed heating or air-conditioning units cost California families money, harm the state’s ability to meet important energy and environmental goals, and can even make people sick,” said CSLB Registrar Steve Sands. “Stings like this help keep California consumers from making an expensive mistake.”

Unlicensed operators also do not carry workers’ compensation insurance for their employees as required by California Labor Code or the contractor license bonds required by the state’s Business and Professions (B&P) Code. The homeowner may be liable if a worker is hurt on their property and without financial recourse if something goes wrong with the project.

Twelve individuals who bid more than $500 during the sting received notices to appear (NTA) in San Diego County Court on charges of contracting without a license. By law, any home improvement project valued at more than $500 for labor and materials must be done by a licensed contractor. Two of the twelve will face an additional charge for seeking an excessive down payment. B&P Code prohibits contractors from soliciting a down payment greater than ten percent or $1,000, whichever is less, unless they are one of about two dozen contractors who purchase special consumer protection bonds. Eight sting targets will answer to charges of illegal advertising. B&P Code also requires licensees to place their license number in all advertisements. Unlicensed contractors can advertise and perform projects valued at less than $500 but must state in their ads that they are not licensed.

CSLB urges consumers to remember the following tips when hiring a contractor:

• Be especially hesitant when approached by someone offering home improvement services door-to-door.
• Verify the contractor’s license by checking online at www.cslb.ca.gov, or via CSLB’s automated phone system at 1-800-321-CSLB (2752).
• Don’t pay more than 10% down or $1,000, whichever is less. There is an exception to this for about two dozen contractors who purchase special bonds that are noted on CSLB’s website.
• Don’t pay in cash, and don’t let the payments get ahead of the work.
• Check references, and get at least three bids and a written contract before your project begins.
• Make sure your contractor obtains the necessary building permits for any project. If you are unsure of these requirements, contact your local building department to verify your project complies with building codes.

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