(A69, R87, H4115)

AN ACT TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY AMENDING SECTION 40-11-10, RELATING TO THE CREATION OF THE SOUTH CAROLINA CONTRACTOR'S LICENSING BOARD, SO AS TO MAKE A TECHNICAL CORRECTION; BY AMENDING SECTION 40-11-20, RELATING TO DEFINITIONS CONCERNING THE REGULATION OF CONTRACTORS, SO AS TO REVISE DEFINITIONS AND PROVIDE NEW DEFINITIONS; BY AMENDING SECTION 40-11-30, RELATING TO CONTRACTING WORK FOR WHICH LICENSURE IS REQUIRED, SO AS TO INCREASE THE MINIMUM COST REQUIREMENT OF SUCH WORK; BY AMENDING SECTION 40-11-100, RELATING TO ADMINISTRATIVE PENALTIES FOR VIOLATIONS, SO AS TO REVISE THE PENALTIES; BY AMENDING SECTION 40-11-110, RELATING TO DISCIPLINARY ACTIONS, SO AS TO REVISE THE GROUNDS FOR DISCIPLINARY ACTIONS, AMONG OTHER THINGS; BY AMENDING SECTION 40-11-230, RELATING TO CRITERIA FOR INDIVIDUALS TO BE PRIMARY QUALIFYING PARTIES, SO AS TO REVISE THE CRITERIA; BY AMENDING SECTION 40-11-240, RELATING TO CRITERIA FOR LICENSURE, SO AS TO REVISE THE CRITERIA; BY AMENDING SECTION 40-11-250, RELATING TO RENEWALS OF LAPSED LICENSES, SO AS TO PROVIDE RENEWALS COMPLETED WITHIN NINETY DAYS AFTER EXPIRATION ARE CONSIDERED RENEWED RETROACTIVELY TO THE EXPIRATION DATE AND PERIODS OF LICENSURE LAPSE ARE ELIMINATED; BY AMENDING SECTION 40-11-260, RELATING TO LICENSEE FINANCIAL STATEMENTS AND FINANCIAL REQUIREMENTS, SO AS TO REVISE SUCH REQUIREMENTS FOR LICENSE GROUPS AND TO PROHIBIT DISCLOSURE OF APPLICANT FINANCIAL STATEMENT INFORMATION; BY AMENDING SECTION 40-11-262, RELATING TO SURETY BONDS IN LIEU OF PROVIDING FINANCIAL STATEMENTS, SO AS TO MAKE CONFORMING CHANGES AND TO PROVIDE THE BOARD MAY INCREASE BOND REQUIREMENTS IN CERTAIN CIRCUMSTANCES; BY AMENDING SECTION 40-11-290, RELATING TO LICENSURE OF APPLICANTS LICENSED IN OTHER STATES, SO AS TO SPECIFY THE EXAMINATION SUCH APPLICANTS MAY BE REQUIRED TO PASS; BY AMENDING SECTION 40-11-320, RELATING TO CONSTRUCTION MANAGERS, SO AS TO REVISE REGISTRATION PROCEDURES; BY AMENDING SECTION 40-11-360, RELATING TO EXEMPTIONS FROM APPLICATION OF THE CHAPTER AND REQUIRED CONTENT OF POSTERS DISTRIBUTED TO BUILDING PERMIT OFFICES, SO AS TO REVISE THE EXEMPTIONS, AND ELIMINATE THE POSTER REQUIREMENT, AMONG OTHER THINGS; BY AMENDING SECTION 40-11-410, RELATING TO LICENSE CLASSIFICATIONS AND SUBCLASSIFICATIONS, SO AS TO REVISE THE CLASSIFICATIONS; BY REPEALING SECTION 40-11-390 RELATING TO UNLICENSED ENTITIES ENGAGING IN GENERAL OR MECHANICAL CONSTRUCTION PRIOR TO APRIL 1, 1999; AND BY REPEALING SECTION 40-11-400 RELATING TO QUALIFYING PARTY CERTIFICATES.

Be it enacted by the General Assembly of the State of South Carolina:

Licensing board, technical correction

SECTION 1.    Section 40-11-10(A) of the S.C. Code is amended to read:

(A) There is created the South Carolina Contractor's Licensing Board under the administration of the Department of Labor, Licensing and Regulation. The purpose of this board is to protect the health, safety, and welfare of the public through the regulation of businesses and individuals who identify, assess, and provide contracting work to individuals or other legal entities through the administration and enforcement of this chapter and any regulation promulgated under this chapter and Article 1, Chapter 1.

Definitions revised

SECTION 2.    Section 40-11-20 of the S.C. Code is amended to read:

Section 40-11-20.    For purposes of this chapter:

(1) "Ancillary work" means work that is directly associated with the building or structure which the licensee has been engaged to construct.

(2) "Board" means the South Carolina Contractors' Licensing Board.

(3) "Bid" means an offer to furnish labor, equipment, or materials or other services regulated by this chapter.

(4) "Certificate holder" means a qualifying party.

(5) "Contractor" means a general or mechanical contractor regulated under this chapter.

(6) "Construction manager" means an entity working for a fee whose duties are to supervise and coordinate the work of design professionals and multiple prime contractors, while allowing the design professionals and contractors to control individual operations and the manner of design and construction. Services provided by a construction manager may include:

(a) coordination, management, or supervision of design or construction;

(b) cost management, including estimates of construction costs and development of project budgets;

(c) scheduling, which may include critical path techniques, for all phases of a project;

(d) design review, including review of formal design submission and construction feasibility; and

(e) bid packaging and contractor selection. An owner, who performs construction management himself is not considered a construction manager for purposes of this chapter.

(7) "Department" means the Department of Labor, Licensing and Regulation.

(8) "Entity" means a sole proprietorship, partnership, limited liability partnership, limited liability company, association, joint venture, cooperative, corporation, or other legal entity authorized by law and approved by the board.

(9) "GAAP" stands for Generally Accepted Accounting Principles and means accounting principles generally accepted in the United States of America.

(10) "General construction" means the installation, replacement, or repair of a building, structure, highway, sewer, grading, asphalt or concrete paving, or improvement of any kind to real property.

(11) "General contractor" means an entity that performs or supervises or offers to perform or supervise general construction.

(12) "License classification" or "subclassification" means the type of construction for which a contractor may be licensed to do business.

(13) "License group" means the financial limitations for bidding and performing general or mechanical construction.

(14) "Licensee" means an entity that has been issued either a general or mechanical contractor's license by the department.

(15) "Licensed contractor" means an entity that is licensed by the South Carolina Contractor's Licensing Board to engage in general or mechanical contracting within the State.

(16) "Mechanical contractor" means an entity that performs or supervises, or offers to perform or supervise, mechanical construction.

(17) "Mechanical construction" means the installation, replacement, or repair of plumbing, heating, air conditioning, process piping, refrigeration, lightning protection equipment, or electrical components, fixtures, or devices of any kind, excluding burglar alarm work.

(18) "Net worth" means the total wealth of a company taking account of all financial assets and liabilities.

(19) "Individual" means a natural person.

(20) "Prime contractor" means an entity that contracts directly with an owner to perform general or mechanical construction.

(21) "Primary qualifying party" means a qualifying party who has been designated by a licensee as the principal individual responsible for directing or reviewing work performed by the licensee in a particular license classification or subclassification.

(22) "Public owner" means the State and any of its political subdivisions, which includes all counties, municipalities, school districts, public service, or special purpose districts.

(23) "Qualifying party" means an individual who has been issued a certificate to qualify an entity for a license by way of examination in a license classification or subclassification.

(24) "Sole prime contractor" means the prime contractor for a project on which there is only one prime contractor.

(25) "Subcontractor" means an entity who contracts to perform construction services for a prime contractor or another subcontractor.

(26) "Total cost of construction" means the actual cost incurred by the owner, all contractors, subcontractors, and other parties for labor, material, equipment, profit, and incidental expenses for the entire project. This does not include the cost of design services unless those services are included in a construction contract.

(27) "Unlicensed contractor" means an entity performing or overseeing general or mechanical construction without a license.

(28) "Working capital" means the capital of a business calculated as the current assets minus the current liabilities.

Cost thresholds requiring licensure increased

SECTION 3.    Section 40-11-30 of the S.C. Code is amended to read:

Section 40-11-30.    No entity or individual may practice as a contractor by performing or offering to perform contracting work for which the total cost of construction is greater than ten thousand dollars for general contracting or greater than ten thousand dollars for mechanical contracting without a license issued in accordance with this chapter.

Administrative penalties revised

SECTION 4.    Section 40-11-100(D) of the S.C. Code is amended to read:

(D) Administrative penalties assessed pursuant to this section may not exceed the following limits:

(1) for a first violation of a particular provision of this chapter or Article 1, Chapter 1 of this title, or any board regulation, not more than a five-hundred dollar penalty;

(2) for the second of two violations of the same or substantially similar provision in a five-year period, not more than a one-thousand dollar penalty; and

(3) for the third or subsequent violation of the same or substantially similar provision in a five-year period, the citation may be referred to the board for action in accordance with Section 40-11-110 or issued a penalty as prescribed in Section 40-11-100(D)(2).

Grounds for discipline revised

SECTION 5.    Section 40-11-110 of the S.C. Code is amended to read:

Section 40-11-110.    (A) The board may impose disciplinary action authorized by this chapter upon a licensee, certificate holder, or other entity or individual if the board finds any of these conditions:

(1) subsequent discovery of facts which if known at the time of issuance or renewal of a license or certificate would have been grounds to deny the issuance or renewal of a license or certificate;

(2) gross negligence, performing substandard work, incompetence, or misconduct;

(3) abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal;

(4) fraud or deceit in obtaining a license or certification;

(5) violation of a provision of this chapter, Article 1, Chapter 1 of this title or a regulation promulgated under these chapters;

(6) misrepresentation of a material fact by an applicant in obtaining a license or certificate;

(7) conviction or entering a guilty plea or plea of nolo contendere in a court of competent jurisdiction of this or any other state, district, or territory of the United States or of a foreign country of the offense of forgery, embezzlement, obtaining money under false pretenses, theft, extortion, or conspiracy to defraud or other like offense regardless of whether an appeal has been sought;

(8) conviction or entering a guilty plea or plea of nolo contendere of a felony or a crime involving moral turpitude in connection with the performance of a contract for construction regardless of whether an appeal has been sought;

(9) aiding or abetting an unlicensed entity to evade the provisions of this chapter, combining or conspiring with an unlicensed entity, allowing one's license to be used by an unlicensed entity, or acting as agent, partner, or associate, or an unlicensed entity;

(10) knowingly entering into a contract with an unlicensed contractor for work to be performed for which a license is required;

(11) false, misleading, or deceptive advertising whereby a member of the public may be misled and injured;

(12) contracting or offering to contract or submitting a bid while a license is under suspension or probation;

(13) failure to obtain a building permit as required by a local or state government before engaging in construction;

(14) failure to take appropriate corrective action to comply with this chapter or a regulation promulgated under this chapter without valid justification within a reasonable period of time after receiving a written directive from the department;

(15) failure to maintain the net worth, working capital, or surety bond requirements for licensure;

(16) failure to comply with an order of the board;

(17) failure to provide pertinent records and documents as requested by the department or board;

(18) failure to maintain a business address accessible to the public;

(19) failure to comply with a directive of the department;

(20) failure to notify the department of changes in information required in an original or renewal application;

(21) contracting or offering to contract for construction work exceeding the limitations of a group or outside the classification or subclassification of a license;

(22) attempting to serve in the capacity of primary qualifying party while serving a house arrest, a jail sentence, or a prison sentence; or

(23) departure from an applicable building code of the State of South Carolina or any of its political subdivisions as determined by a court of competent jurisdiction.

(B) Disciplinary action may be taken against an entity or individual who the board determines to be responsible for violations of this chapter regardless of changes in corporate identity or federal employer identification subsequent to the violation. In determining responsibility, the board may consider, but is not limited to, an individual's:

(1) participation in management or supervision related to the violation;

(2) position as sole proprietor, partner, officer, or qualifying party.

(C) The board may, in addition to all other disciplinary actions, require a licensee, certificate holder, or other entity or individual to pay a civil penalty of up to five thousand dollars for each violation of this chapter or of a regulation promulgated under this chapter and may order an unlicensed contractor to cease and desist from violating a provision of this chapter.

(D) Upon presentation to the court of common pleas by the department of an affidavit for nonpayment of an administrative penalty under a citation which is a final order or a civil penalty assessed by the board pursuant to subsection (C), the court shall issue an order for judgment to be filed in the office of the Clerk of Court.

(E) A license or certificate that is canceled by the department or revoked by the board must be returned to the department within fifteen days of notification by the department.

(F) No sooner than one year after revocation of a license or certificate by the board, the entity or individual who held that license or certificate may apply for another. The applicant must meet all requirements for initial licensure or certification and must appear before the board to present evidence that his practice will not unreasonably endanger the public.

(G) If a license is canceled by the department, the licensee must apply for initial licensure.

(H) Work in progress may be completed by the licensee if the licensee's license is revoked, canceled, lapsed, or suspended; however:

(1) no new work may be bid or started after revocation or suspension of a license upon proper notification by the department;

(2) unless otherwise directed by the board, the revocation, suspension, or restriction of a license or certificate does not become effective until the tenth day following the delivery to the licensee or qualifying party of a written decision of the board. Service of a petition for a review of the decision does not stay the board's decision pending completion of the appellate process in accordance with the Administrative Procedures Act.

(I) Where a licensee's business is dissolved for whatever reason, that license must be canceled by the department. However, if the business has been administratively dissolved by the Secretary of State, the licensee must be allowed ninety days from when the department notifies the licensee that it has obtained information that the licensee has been dissolved to provide proof of reinstatement by the Secretary of State, and if such proof is timely provided, any cancellation of the license by the department must be rescinded retroactively to the date of the cancellation.

(J) The board may revoke, suspend, or restrict an individual license classification or subclassification without effect to other license classifications or subclassifications.

(K) Sanctions, discipline, or administrative penalties authorized by this chapter or Section 40-1-120 may include a private reprimand. A final order of the board finding that an entity or individual is in violation of this chapter or Section 40-1-10, et seq., becomes public knowledge except for a final order dismissing the complaint, issuing a letter of caution, or imposing a private reprimand.

Primary qualifying party criteria revised

SECTION 6.    Section 40-11-230(B) of the S.C. Code is amended to read:

(B) To become designated by an entity as a primary qualifying party, an individual must meet all of the following:

(1) hold a valid certificate issued pursuant to this chapter;

(2) submit an affidavit verifying employment from former or current employers for whom the applicant was employed full-time for at least two years within the previous five years in the license classification or subclassification for which application is made or submit additional proof of employment experience as approved by the board;

(3) submit documentation as approved by the board that they serve in a management capacity for the applicant and are actively involved in management, supervision, and operations for the work undertaken by the applicant. The primary qualifying party must be an integral party of the applicant's business and the work undertaken by the applicant.

A primary qualifying party may not take other employment that would conflict with the duties as primary qualifying party or diminish the ability to adequately supervise work performed by the licensee.

An individual desiring to be certified and serve as a primary qualifying party for a license group one, two, or three general contractor licensed pursuant to Section 40-11-410(A) must pass either the limited building contractor examination or the unlimited general contractor examination. Structures built by licensees for which the primary qualifying party has taken and passed the limited building contractor examination are restricted to three stories in height.

An individual desiring to be certified and serve as a primary qualifying party for a license group four or five general contractor licensed pursuant to Section 40-11-410(A) must pass the unlimited general contractor examination.

When a primary qualifying party ceases to serve as a primary qualifying party for a licensee, the licensee or the primary qualifying party shall notify the department in writing within fifteen days of the disassociation. If the licensee or primary qualifying party notifies the department within the prescribed time, the license remains in good standing for ninety days from the date the department receives notice of the disassociation. Failure to notify the d