Senate Commerce Committee Statement to Senate, No. 1890 — State of New Jersey (December 15, 2022)

Summary

A Senate Commerce Committee statement to the Senate on Senate Bill No. 1890 with committee amendments, State of New Jersey, dated December 15, 2022, reporting the bill favorably. 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 to license contractors and register businesses on a biennial basis. A principal contractor is needed for contracts valued at least $120,000 that require more than one subcode. The board is to consist of nine people, including five home improvement contractors, and is to set education and examination requirements, a code of ethics and continuing education. The statement closes with a numbered list of committee amendments, among them a lengthened effective date.

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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. 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.

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 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.

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 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;

(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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