• Failure to Adhere to Responsible Managing Employee Requirements May Result in Contractors Going Unpaid

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    February 28, 2023

    Responsible Managing Employee Rules Are No Joke:

    Failure to Adhere to Responsible Managing Employee Requirements May Result in Waiver of the Contractor’s Right to Compensation for Work Performed

    For the second time in calendar year 2022, the Court of Appeal of California has found California Contractors State Licensing Laws bar contractors from collecting for work performed. (See Dan McLennon’s Law Note on Kim v. TWA Construction, Inc. (2022) 78 Cal.App.5th 808, finding that licensed contractor could not collect payment for work performed by an unlicensed subcontractor notwithstanding that the contractor was itself licensed to perform that work.)
    In an opinion that should be a warning to all contractors in California, the Court of Appeal upheld a trial court’s decision to vacate an arbitration award of over $100,000 to a contractor because the contractor did not carry its burden to prove that its purported Responsible Managing Employee was in fact a bona fide Responsible Managing Employee. (Vascos Excavation Grp. LLC v. Gold (Cal. Ct. App., Dec. 21, 2022, No. B315205) 2022 WL 18398783.)
    All corporate contractors in California should be aware that failure to have a bona fide Responsible Managing Employee automatically suspends the contractor’s license, resulting in the inability to collect for the work performed.
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    Dan F. McLennon, Partner
    dfmclennon@smithcurrie.com, 415.394.6688
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