A reminder to all contractors that in August of 2023, the Contractors State License Board (CSLB) in California made crucial changes to Section 884 of Title 16, Division 8, of the California Code of Regulations.
These changes are generally about civil penalties in case of litigation by a client against a contractor, with the CSLB amending a full schedule of changes with associated costs based on the gross amount of damages created by the contractor in a civil suit.
We’ll cover the basics of these changes so contractors can enter 2024 armed with the knowledge to protect themselves from serious penalties.
Overview of Section 884 Amendments
The Key Information: Changes To Civil Penalties
The amendment to Section 884 introduces new penalty ranges for various violations under California law as per the CSLB.
For example, violations under Section 7028 now carry a penalty ranging from $200 to $8,000, while more severe violations, such as those under Section 7114, can attract penalties ranging from $500 to $30,000. There are roughly fifty.
We’ll attach a full civil penalties schedule for Section 884 Amendments at the end of this article.
How Are Civil Penalties Assessed By The CSLB?
The revised regulations allow the Registrar to consider several factors when determining penalties. Most of these are already applied, as the CSLB takes every contractor’s unique case into consideration when determining punishments.
The new changes outline that the Registrar can include the presence of multiple violations, a history of previous offenses, bad faith, the seriousness of the violation, and violations affecting vulnerable populations like seniors or disabled persons when outlining the penalties for civil suits.
Additionally, where a citation lists multiple violations related to the same construction project, the total penalty assessment in each citation is capped at different maximum amounts depending on the nature of the violations, with a general cap of $8,000, but going up to $15,000 or $30,000 for more serious offenses.
What Do Contractors Need To Do To Stay Compliant?
If you’re a contractor who is aware of the changes, you can stay compliant with the changes. As always, contractors who tend to be compliant tend to stay compliant – so you probably don’t have anything to worry about.
Bad actors; however, are in serious trouble with these new fees, as they can become extremely punitive to contractors who have a history of taking advantage of clients. We’re not really writing for those people anyway – chances are they don’t know and don’t care about regulation changes.
However, for good contractors like yourself, regular review of your practices makes sense, so you can ensure that you align with these new CSLB standards.
In addition to the new Section 884 changes, here’s some ways to stay compliant with Section 884 and other related regulations, contractors in California should be aware of the following:
- Workers’ Compensation Insurance Requirements: Now, certain contractor classifications such as concrete (C-8), HVAC (C-20), asbestos abatement (C-22), and tree service (D-49) are required to have workers’ compensation insurance, regardless of whether they have employees. By January 1, 2026, this requirement will extend to all licensed contractors.
- Increased Penalties for Permit Violations: Assembly Bill 1747 has increased potential civil penalties to $30,000 for violations of Business and Professions Code Section 7110, which includes disregard for state or local laws related to building permits.
- Public Disclosure of Letters of Admonishment: The CSLB can now make letters of admonishment public for up to two years, depending on the violation’s severity, contractor’s good faith, and violation history. Another incentive to stay compliant!
- Fee Reduction for Veteran Contractors: Assembly Bill 2105 allows a 50% reduction in initial license or registration fees for veterans.
Conclusion
As always, it’s critical that you stay informed on all the latest regulatory and compliance changes. It’s on you to be aware of all the laws and codes that regulate contractor law – so make sure you’re constantly staying up to date, both in terms of your knowledge and your application of said knowledge.
There’s no excuse for falling afoul of compliance in 2024 – we all have the internet – so make sure your ship is tight, so you don’t sink under the weight of rules and regs.
Find California Code Section 884 Civil Penalties Schedule Here.