Assembly Commerce and Economic Development Committee Statement to Assembly, No. 2138 (2R) (February 13, 2023)

Summary

Statement of the Assembly Commerce and Economic Development Committee, State of New Jersey, dated February 13, 2023, reporting favorably Assembly Bill No. 2138 (2R) with committee amendments. As amended, the bill repeals current law on home improvement and home elevation contractors and establishes the New Jersey State Board of Home Improvement and Home Elevation Contractors, with a membership of nine people, to license contractors and register businesses on a biennial basis. Principal contractors are to oversee contracts valued at least $120,000 that require more than one subcode. Businesses must register, carry general liability and workers’ compensation insurance and hold a bond, letter of credit or other security. 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.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

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
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 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 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 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.

File and source

File

2023-02-13_ACE_A2138_S3.htm

Size

20,926 bytes

SHA-256

5cb012ba1d6fd68a532e2a733a9521e864bf7d237261bde8c6301452b080a9eb

Our copy

2023-02-13_ACE_A2138_S3.htm

Original

No public link identified.