Assembly Commerce and Economic Development Committee Statement to Assembly, No. 2138 (February 13, 2023)

Summary

Assembly Commerce and Economic Development Committee Statement to Second Reprint Assembly, No. 2138, State of New Jersey, dated February 13, 2023. The committee reports favorably Assembly Bill No. 2138 (2R) 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. It describes principal contractors as licensed contractors overseeing a contract with a value of at least $120,000, and lists committee amendments, including an exemption from licensure for individuals who earn a maximum of $1,500 per contract and $25,000 annually.

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ASSEMBLY COMMERCE AND ECONOMIC DEVELOPMENT
                COMMITTEE

                          STATEMENT TO

                           [Second Reprint]
                     ASSEMBLY, No. 2138
                        with committee amendments



       STATE OF NEW JERSEY
                        DATED: FEBRUARY 13, 2023

         The Assembly Commerce and Economic Development Committee
      reports favorably Assembly Bill No. 2138 (2R) 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.
      The bill defines “contractor” to mean an individual providing home
      improvement or home elevation services, or both types of services,
      for a corporation, partnership, association, sole proprietorship, and
      any other form of business organization or entity that enters into a
      contract with consumers. The definition excludes individuals who
      own or manage a home improvement or home elevation business
      but do not perform the contracting services and employees of or
      individuals contracted by a business entity 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, under the bill, “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 if the value of the contract is
      at least $120,000 and requires the submittal of more than one
      subcode. A principal contractor may also practice as a non-principal
      contractor if a contract for services is agreed to in which the value
      of services is less than $120,000 or does not require the submittal of
      plans with more than one subcode.
          The board created in the bill is to have a membership of nine
      people, including five home improvement contractors, of whom two
      are to represent a trade association focused on the home
      improvement industry, 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 home elevation
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contractor is removed as a member of the board. It is the
entitlement of the board under the bill 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 those 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 responsibilities of the board are, in part, to license, on a
biennial basis, home improvement and home elevation contractors
and register, also on a biennial basis, home improvement and home
elevation businesses; develop education requirements for
contractors, including principal contractors, and a voluntary
examination preparatory course; establish a code of ethics and
standards of conduct for contractors; develop standards for
continuing education; and promulgate rules and regulations as
guidance for contractors. The board also has oversight of
individuals who earn a maximum of $1,500 per contract and
$25,000 annually.
   Under the bill, requirements for licensure as either a home
improvement or home elevation contractor include demonstrating 1)
through an attestation as prescribed by the board, completion of an
apprenticeship program registered with or approved by the United
States Department of Labor, or a similar program as provided by a
trade school or other facility that is accredited by a regional or
national accrediting agency recognized by the United States
Department of Education, that allows an individual to perform
services that prepare the individual for a career in home
improvement or home elevation or 2) at least two years of
experience performing home improvement services for a home
improvement or home elevation contractor for individuals seeking
licensure as a home improvement contractor, or two years of
experience performing home improvement and home elevation
services for a home elevation contractor. An individual may qualify
for licensure under the experience option if they can demonstrate at
least two years of experience while working as a home
improvement or home elevation contractor out-of-State or while
working under a home improvement or home elevation contractor in
another state. The application required in the bill is to include the
name of the home improvement or home elevations business for
whom the applicant worked if the individual is applying for
licensure using the experience option. An individual applying for
licensure is also required to pass an exam to test knowledge of
home improvement, and home elevation, if applicable.
   Home improvement and home elevation businesses are required
to register under the bill and are to show proof of general liability
                                  3

insurance, workers’ compensation insurance, and financial stability.
A business is to also demonstrate the employment of at least one
licensed home improvement or home elevation contractor and
compliance with applicable tax, business, and other laws in New
Jersey.
    In the bill, clarifications are made to provisions requiring general
liability insurance and workers’ compensation insurance to ensure
that businesses are aware of needing to meet these requirements and
it is not the individual licensed contractors that need to obtain this
insurance. A business is to submit to the board a copy of the
certificate of a new or replacement general liability or workers’
compensation insurance policy in the event the business has a
previous policy canceled or changes the previous policy.
    The bill requires a business 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 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 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. Penalties for the failure to complete a home improvement
or home elevation in accordance with a contract are deemed an
unlawful practice under the consumer fraud statute. A contractor
who commits an unlawful practice may be fined up to $10,000 for a
first offense and up to $20,000 for a second offense.
    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, licensed contractors are to be issued by the board
identification badges currently required under New Jersey law. A
temporary identification badge in paper is to be issued to a
contractor at the same as a license if the processing of the formal
badge is not complete when the license is ready for issuance. The
bill clarifies that a home improvement or home elevation contractor
cannot practice in New Jersey without a license. Additionally, the
bill states that any licensed contractor or registered business who
advertises or indicates publicly that the individual or business can
                                 4

perform home improvement or home elevation services is subject to
the provisions of the bill. The bill also stipulates that businesses are
to prominently display in the place of business and in
advertisements the registration number of the business.
   Exemptions from licensure in the bill apply to various sections,
including 1) licensure 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. Individuals who earn a maximum of $1,500 per
contract or $25,000 annually are also exempted from licensure. The
bill establishes the regulation process the individuals with these
earnings are to follow in order for the board to properly regulate the
work provided by the individuals.
   Language in the bill also “grandfathers in” certain previously-
registered contractors by exempting 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. An individual who is qualified
for licensure under the grandfathering clause and can demonstrate
previous experience overseeing the performance of services for
contracts valued at a minimum of $120,000 and requiring the
submission of multiple subcodes will qualify for licensure as a
principal home improvement or principal home elevation
contractor.
   Language in the bill clarifies that individuals captured in the
grandfathering clause of the bill are to be licensed once current
registration expires and these individuals can be issued construction
permits by a municipality. Further clarification is made to allow
municipalities to issue construction permits to single-family
homeowners performing plumbing, electrical, or heating,
ventilation, and air-conditioning work in the homeowner’s own
dwelling. Moreover, the bill states that it does not deny the right of
                                5

a municipality to inspect a contractor’s work or equipment as is
allowed under current law. Language also in current law on the
establishment of a public information campaign is included in this
bill and states the need to publicize the provisions of the bill to
applicable businesses.
   The bill requires a written contract to include the name of the
principal home improvement or principal home elevation contractor
if one is required for the services to be performed. Continuing
education requirements are established in the bill, in which a
licensed contractor is to complete no less than six hours of
continuing education each biennial renewal period. Among the
stipulations is the permission that a continuing education course
may be attended in-person or online and that a course in another
state or U.S. jurisdiction may qualify for credit if it teaches on a
topic approved by the board. Additionally, a licensee who teaches a
course may receive double the credit offered to attendees of the
course but may only receive that double credit once a biennial
renewal period.

COMMITTEE AMENDMENTS:
    The committee amended the bill to:
    1) stipulate that the members first appointed to the board 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;
    2) tie the bill being fully operative to the promulgation of rules
and regulations issued by the first members of the board;
    3) add oversight of individuals with certain limited earnings to
the responsibilities of the board;
    4) remove the requirement to demonstrate completion of high
school or the equivalent;
    5) apply the requirement for an attestation solely for
individuals who complete an apprenticeship;
    6) ensure individuals exempted under the bill are not impacted
by a provision requiring licensure;
    7) exempt from licensure individuals who earn a maximum of
$1,500 per contract and $25,000 annually and establish a level of
oversight by the board of these individuals; and
    8) make changes to the effective date provisions and additional
technical updates.


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