Senate Commerce Committee Statement to Senate, No. 1890 (December 15, 2022)

Summary

Senate Commerce Committee Statement to Senate, No. 1890, State of New Jersey, dated December 15, 2022, reporting Senate Bill No. 1890 favorably with committee amendments. As amended, the bill repeals current law on the regulation of home improvement and home elevation contractors and establishes the New Jersey State Board of Home Improvement and Home Elevation Contractors as their regulating body. A principal contractor is needed if the value of the contract for services is at least $120,000 and requires the submittal of more than one subcode. The bill sets board membership at nine people, requires licensed contractors to complete at least six hours of continuing education each biennial renewal period, and lists the committee's amendments to the bill.

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     SENATE COMMERCE COMMITTEE

                    STATEMENT TO

                  SENATE, No. 1890
                   with committee amendments



 STATE OF NEW JERSEY
                   DATED: DECEMBER 15, 2022

   The Senate Commerce Committee reports favorably Senate Bill No.
1890, with committee amendments.
    As amended, this bill repeals current law on the regulation of
home improvement and home elevation contractors and establishes
the New Jersey State Board of Home Improvement and Home
Elevation Contractors as the regulating body of these contractors.
“Contractor” is defined to mean an individual providing home
improvement or home elevation services, or both types of services,
for any form of business organization or entity, including sole
proprietorships, that enters into a contract with consumers. The
definition excludes (1) individuals who own or manage a home
improvement or home elevation business but do not perform the
contracting services and (2) employees of or individuals contracted
by a business entity who are hired or contracted to sell the
contracting services.        The bill also clarifies that “home
improvement,” as defined, does not include the construction of new
residential property.
    Additionally, the definition of “principal home improvement
contractor” and “principal home elevation contractor” are
established as the licensed contractors who are to oversee the
performance of services of a contract. A principal contractor is
needed, under the bill, if the value of the contract for services is (1)
at least $120,000 and (2) requires the submittal of more than one
subcode. The bill also stipulates that a principal contractor may
practice as a non-principal contractor if a contract for services is
agreed to in which the value of the services is less than $120,000 or
the contract does not require the submittal of plans with more than
one subcode.
    Board membership is to consist of nine people, including five
home improvement contractors, of whom two are to represent a
trade association focused on the home improvement industry, one
home elevation contractor, one member is to be a licensed
construction code official, two members are to represent the public,
and one member is to represent the Executive Branch. The
members first appointed to the board are to be appointed no later
than the first day of the third month following enactment of the bill.
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It is the entitlement of the board to retain all funds collected as a
result of fees paid for initial licensure and business registration, as
well as for the renewal, reactivation, or reinstatement of licenses
and registrations. The board may use funds to reimburse members
for expenses incurred. The board is to assemble within 30 days of
the members being appointed. Additionally, the first members of
the board are to promulgate rules and regulations for specific
provisions of the bill prior to it being fully operative.
    The bill delineates the responsibilities of the board. Among
other tasks, the board is to (1) on a biennial basis, license home
improvement and home elevation contractors and register home
improvement and home elevation businesses; (2) develop education
requirements for contractors, including principal contractors, a
voluntary examination preparatory course, and an examination, or
an examination is to be designated for applicants by the board; (3)
establish a code of ethics and standards of conduct for contractors;
(4) develop continuing education requirements for contractors; and
(5) promulgate rules and regulations as guidance for contractors.
    Under the bill, an applicant can apply for licensure as a home
improvement or home elevation contractor through certain
apprenticeships or through experience. An attestation will need to
be submitted as part of the licensure application to demonstrate that
an individual has completed an apprenticeship. If applying for
licensure through experience, the bill requires an individual to
demonstrate, as prescribed by the board, completion of at least two
years of experience performing contracting services under a home
improvement or home elevation contractor, depending on the type
of licensure the individual seeks to obtain. The name and address
of the contracting business under who the individual gained the
experience is to be included as part of the application. If an
individual applies using experience, they may use experience
gained out-of-State or in another U.S. jurisdiction as a home
improvement or home elevation contractor or as a contractor
working for another home improvement or home elevation
contractor. The other state or jurisdiction is to have requirements
substantially equivalent to those for contractors in New Jersey. The
bill clarifies that an applicant for licensure through either an
apprenticeship or through experience is to complete educational
requirements as prescribed by the board. Additionally, the bill
moves the requirement to prove financial stability from the
requirements for individuals seeking licensure to businesses seeking
registration by the board. Further requirements for registration of a
business under the bill include proof of commercial general liability
insurance and workers’ compensation; employment of at least one
licensed home elevation or licensed home improvement contractor;
and compliance with all State laws regarding business, tax, and
other applicable matters.
                                 3

    Provisions in the bill on securing and maintaining commercial
general liability insurance are updated to clarify that (1) they speak
to registered contracting businesses, not individuals licensed as
contractors, and (2) a business is to also maintain workers’
compensation insurance. This includes an update to the process to
follow in the event the business has a previous liability or workers’
compensation policy canceled or it is not renewed. The bill also
clarifies that a registered business, not an individually licensed
contractor, is to have a bond, letter of credit, or other type of
security. If a business has a bond, the bill provides that it must be a
compliance bond. The bill also delineates the dollar amount of the
bond, letter of credit, or other type of security needed by a business
depending on the value of the contract in place for a business to
provide services. The board can collect penalties from a bond, letter
of credit, or security if penalties are assessed against a business.
     The bill allows a business to reduce, by half, the dollar amount
of a compliance bond, letter of credit, or other security if the
business can demonstrate that a senior manager of the business
completed a course in financial responsibility and security. The
board is granted discretion to require the full dollar amount of the
bond, letter of credit, or other security even if a senior manager has
completed an aforementioned course, if a business, as demonstrated
on an application for registration for renewal, has a claim, or
multiple claims, of a certain dollar amount, as determined by the
board, made against the bond, letter of credit or other security held
by the business.
     Under the bill, if a registered business has only one licensed
contractor under its employment who then leaves their employment,
the registered business has 60 days to hire a new contractor.
Additionally, the bill states that only a licensed contractor
performing contracting services is required to wear an identification
badge unless an individual is selling contracting services in-person.
The bill also allows for the issuance of a temporary paper badge if
there is a delay in processing of an identification badge. Moreover,
if an individual wears a badge but is not a licensed contractor at the
time, it is a crime of the fourth degree.
     The bill retains current provisions requiring an individual
performing contracting services to be licensed in New Jersey. It also
stipulates that a registered contracting business, along with licensed
contractors, are regulated by the provisions of the bill if the business
holds itself out as providing contracting services. The bill also
clarifies that contracting businesses that hold themselves out in
advertisements as performing contracting services are to be registered
with the State. Additionally, an advertisement is to include the
registration number of the registered contracting business.
     The bill also modifies the provisions of the bill from which the
numerous individuals or entities are exempt to include 1) licensure
                                 4

requirements; 2) the nonrenewal of a license or licensure revocation
or suspension; 3) liability insurance and proof of financial stability;
4) criminal penalties; 5) identification badges; 6) licensure display;
7) the grandfathering clause; 8) the application of the law to
individuals with places of business outside the State; 9) provisions
on the cancellation of a contract; 10) written agreements between
county or municipal offices and the board regarding consumer
complaints; 11) conversion of licenses from home elevation to
home improvement or home improvement to home elevation; and
12) continuing education provisions. Additionally, the bill clarifies
that individuals required to be licensed for selling home repair
contracts under current law are also exempt if sales are made door-
to-door. However, door-to-door sales individuals are to still
comply with identification badge requirements, which are required
of individuals that make in-person sales to consumers.
    Language in the bill also exempts from licensure individuals
currently registered as a home improvement contractor in New
Jersey for at least five years and individuals who have at least five
years of experience in providing home elevation services who have
been registered as home improvement contractors in New Jersey for
at least five years or registered as home elevation contractors in
New Jersey for at least five years. The bill also clarifies that an
individual who is exempted under this language can qualify as a
principal home improvement or home elevation contractor if they
can demonstrate experience overseeing the performance of services
valued at $120,000 and requiring the submission of multiple
subcodes. The bill retains language that its provisions apply to all
individuals engaged in New Jersey in any of the activities regulated
under the bill, even if the principal place or business or the
residence of the individual is outside the State.
    The bill also modifies current law regarding the applicability of
its provisions to municipalities by allowing a municipality to issue a
construction permit to licensed contractors and registered
contractors who will obtain licensure once current registrations
expire and to single-family homeowners who perform certain
services on their own dwelling.
    The bill also stipulates the various requirements for written
contracts for the performance of home improvement, home
elevation, or both types of services. This includes allowing a
consumer to waive the three-day waiting period during which the
consumer can exercise the right to cancel a contract for a home
improvement or home elevation service in the event of a bona fide
emergency. Additional requirements for a contract that the bill now
includes is the registration number of the business where the
contractors are employed and the legal name of the principal
contractor if one is needed, which is to be in a clear and
conspicuous manner.
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   The bill also allows a county or municipal office of consumer
affairs that enters into a written agreement with the board to accept
consumer complaints against either a contractor or registered business
to be entitled to a share of licensing and registration fees collected by
the board.
   The bill also establishes a process for converting a license for
home improvement to home elevation, which may entail a fee. The
bill stipulates that, among other items, the individual works at least
two years on home elevations under a home elevation contractor
licensed pursuant to the bill and that the required cargo insurance
requirement of the registered business is maintained.
   The bill also incorporates the board under various provisions of
Title 45, including those related to the appointment of public
members to a board. Additionally, the bill establishes continuing
education requirements for licensed contractors. At least six hours
of continuing education is to be completed each biennial renewal
period by a licensee. The bill also delineates the board’s role in
approving providers and conferring credit for courses, and
stipulates that online courses are permissible. Lastly, the effective
date of the bill ties it being fully operative to the promulgation of
rules and regulations issued by the first members of the board.

COMMITTEE AMENDMENTS:
The committee amended the bill to:
     (1) clarify that the definition of “contractor” applies to individuals
providing home improvement or home elevation services and excludes
owners or managers of home improvement or home elevation
businesses who do not perform the services and individuals who
strictly sell the services;
     (2) exclude new residential properties from the definition of “home
improvement;”
     (3) delete the definition of “responsible managing employee,” and
subsequent references, and add definitions of “principal home
improvement contractor” and “principal home elevation contractor;”
     (4) adjust board membership by deleting as a member a home
elevation contractor, adding two members representing a trade
association focused on the home improvement industry, and
stipulating that the members first appointed will be appointed by the
first day of the third month following enactment of the bill and are to
promulgate rules and regulations for specific provisions of the bill
prior to it being fully operative;
     (5) specify that the board is entitled to retain the fees it collects and
may reimburse members of the board with the fees;
     (6) add certain responsibilities regarding education and
examination requirements for the board to fulfill;
     (7) clarify that if applying for licensure through experience, an
attestation is not necessary; that the application is to require the name
                                  6

and address of the contracting business for whom the applicant
worked; and that certain experience gained out-of-State may apply
towards the experience requirement in New Jersey;
     (8) reiterate that educational requirements as established by the
board are to be completed by contracting licensure applicants;
     (9) establish requirements for contracting businesses to be proof of
financial stability, commercial general liability insurance and workers’
compensation; employment of one licensed home improvement or
licensed home elevation contractor; and compliance with all applicable
State laws on business, tax, and other matters;
     (10) update provisions on securing and maintaining commercial
general liability insurance to include securing and maintaining
workers’ compensation insurance; apply these requirements to
registered contracting businesses rather than licensed contractors; and
include a process for when an original policy is canceled or not
renewed;
     (11) require a registered business, not an individual contractor, to
obtain a bond, letter of credit, or other type of security and that if a
bond is secured, it is to be a compliance bond;
     (12) delineate the dollar amount of the bond, letter of credit, or
other type of security needed by a business and allow the board to
collect penalties from a bond, letter of credit, or security if penalties
are assessed against a business;
     (13) remove language connecting the board to the process by
which a consumer makes a claim against the bond, letter of credit, or
other security of a business;
     (14) allow a person in senior management to complete a course in
financial responsibility and stability to qualify for a reduced amount of
the compliance bond, letter of credit or other security but allow the
board the ability to require maintenance of the full amount if it is
demonstrated on the application for business registration renewal that
a business received a claim, or multiple claims, in a dollar amount as
determined by the board, made against its compliance bond, letter of
credit, or other security;
     (15) require a registered business with one licensed contractor
under its employment who then leaves the employment 60 days to
hire a new contractor;
     (16) remove the requirement for an identification badge for
individuals strictly selling home improvement or home elevation
services unless selling of services is provided in-person;
     (17) allow temporary paper badges to be issued if there is a
delay in processing of an identification badge;
     (18) stipulate that a registered contracting business is regulated by
the provisions of the bill if it holds itself out as providing contracting
services;
     (19) require registration numbers of a business to be included in
all advertisements;
                               7

    (20) modify the provisions of the bill from which the numerous
individuals or entities are exempt; and clarify that individuals
required to be licensed for selling home repair contracts under
current law are also exempt if sales are made door-to-door but they
are still to comply with identification badge requirements;
    (21) reduce the number of years that qualifies a New Jersey-
registered contractor to be exempt from the bill and allow a
registrant to qualify as a principal home improvement or home
elevation contractor if they have experience overseeing the
performance of services valued at a minimum of $120,000 and
requiring the submission of multiple subcodes;
    (22) allow a municipality to issue a construction permit to
registered contractors who will obtain licensure once current
registrations expire and to single-family homeowners who perform
certain services on their own dwelling;
    (23)      remove the requirement for direct supervision for
experience required to convert a home improvement to a home
elevation contractor and remove a reference to “place of
employment” and insert “registered business” as the entity to
maintain the required cargo insurance for individuals converting to
a home elevation license;
    (24) incorporate the board under various provisions of Title 45,
including those related to the appointment of public members to a
board;
    (25) establish continuing education requirements, including the
role of the board and the responsibilities of course providers;
    (26) lengthen the effective date;
    (27) replace certain terms with or incorporate the term
“registered business;”
    (28) tie the bill being fully operative to the promulgation of
rules and regulations issued by the first members of the board; and
    (29) make clarifications for consistency and grammar in the
bill.


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