The Contractors State License Board enforces the Contractors State License Law, but it also offers a, sometimes useful, CSLB-sponsored arbitration program. The program provides complainants an opportunity to enforce their rights in workmanship and contract disputes, subject to certain financial and legal limitations. A CSLB arbitration can resolve conflicts between a consumer and contractor, as well as between contractors. But whether CSLB arbitration is available to a specific dispute depends on a multitude of factors. This article will discuss CSLB arbitration generally.
The Road to a CSLB Arbitration Generally Starts With a CSLB Complaint
The Contractors State License Board is responsible for the intake and investigation of complaints against licensed and unlicensed contractors alike. Complaints against a contractor may be submitted by homeowners, other contractors, subcontractors, and employees. The board has jurisdiction over a licensed contractor’s projects for up to four years for patent defects and up to 10 years for latent defects. The board also has jurisdiction over unlicensed contractors for up to 4 years from the date of the illegal act.
After a complaint has been filed, the CSLB will determine if it has jurisdiction over the dispute, and, if so, the CSLB will notify the respondent by mailing a letter directly to the licensee’s address on file with the CSLB. This letter will contain questions concerning why the licensee acted in the way that it did, the licensee’s explanation of the complaint, and finally the licensee’s statement on how it did not violate the Contractors State License Law. This letter will also urge the contractor to try and resolve the complaint immediately, which should be done without delay.
How Does a CSLB Complaint Turn into A CSLB Arbitration?
If there is no resolution between the complainant and respondent, the complaint will be assigned to a consumer services representative (CSR), who will then make contact with both parties to collect further information and evidence. Depending on the severity of the contractor’s actions, as well as the contractor’s license history, the complaint may be recommended to the CSLB-sponsored arbitration program. Depending on the case facts, if the contractor’s license is in good standing and isn’t a repeat offender, it is possible that a warning letter may be issued instead of a referral to arbitration.
Can a Licensee Be Ordered to Mandatory CSLB Arbitration?
Yes. Pursuant to Business and Professions Code section 7085, the criteria for mandatory arbitration is as follows:
• The financial remedy is less than $15,000;
• The contractor’s license was in good standing at the time of the alleged violation;
• The contractor does not have a history of repeated or similar violations;
• The contractor does not have any pending disciplinary actions; and
• Neither side has entered into a contractual agreement to privately arbitrate.
Mandatory arbitration happens when the CSLB orders an arbitrator to make a final decision in a dispute between two or more parties. Mandatory arbitration will be used to resolve complaints where the financial remedy sought is less than $15,000. It is required that the complainant participate in the mandatory arbitration, and a failure to do so will result in the CSLB closing the complaint. If the respondent refuses to participate and the complainant obtains an award against the respondent, the award will be enforced as though the respondent had participated in the arbitration.
What Important Time Limits Apply to Mandatory CSLB Arbitration?
If the complainant does not return a completed “submission to mandatory arbitration” form within 30 days from the mailing date, the complaint may be closed and the CSLB may stop looking into the dispute entirely. If the respondent does not return a completed “submission to mandatory arbitration” form within 30 days from the mailing date but the complainant does, the complaint will be resolved through arbitration and any award by the arbitrator will be enforced as if both sides participated.
Can Parties Voluntarily Agree to CSLB Arbitration?
Yes. Pursuant to Business & Professions code section 7085, the criteria for voluntary arbitration is as follows:
• The dispute involves a financial remedy between $15,000 and $50,000;
• The contractor’s license was in good standing at the time of the alleged violation;
• The contractor does not have a history of repeated or similar violations;
• The contractor does not currently have a disciplinary action pending against them; and
• The parties have not previously entered into a contract to privately arbitrate the matter.
Voluntary arbitration happens when the CSLB appoints an arbitrator to make a final decision in a dispute between two or more parties who all agree to participate and abide by the arbitrator’s decision. Voluntary arbitration is generally used to resolve complaints where the financial remedy sought is between $15,000 – $50,000.
What Important Time Limits Apply to Voluntary CSLB Arbitration?
Both parties must return a properly executed “submission to voluntary arbitration” form to the CSLB within 30 days from the date the form is mailed. In a voluntary arbitration, the parties will then receive a list of potential arbitrators to select and a request for their availability for the arbitration hearing to be set. Statutory law requires this information be returned to the agency within seven (7) days, at which time a written hearing notice with a date, time, and place for the voluntary arbitration will be sent to the parties. Note, in a mandatory arbitration, the arbitrator will generally be selected by the arbitration provider, followed by a notice of hearing.
What Can I Do with My CSLB Arbitration Award?
If the complainant is awarded payment from the contractor, it is required to be paid within 30 days following the arbitrator’s decision. Pursuant to Business and Professions Code section 7085.6, a contractor’s failure to timely pay the arbitration award will suspend its license.
A CSLB arbitration award is final and binding, meaning both parties must abide by its terms. If either party fails to comply with the terms of the award, the other party may petition the Superior Court to have the award confirmed and entered as a civil judgment. After doing this, the court then has jurisdiction to enforce the arbitrator’s award through regular collection procedures.
Importantly, pursuant to Business and Professions Code section 7071.17, subdivision (j)(1), if a judgment is entered against a licensee or any personnel of record of a licensee, then the license’s qualifying individual and personnel of record for the licensee at the time of the activities on which the judgment is based will be automatically prohibited from serving as a qualifying individual or other personnel of record on any license until the judgment is satisfied.
Final Thoughts About CSLB Arbitration
The Contractors State License Board arbitration program is designed to be used for disputes regarding workmanship and contractual disagreements. Cases involving disciplinary issues and civil remedies are generally not under this program’s jurisdiction. If either side is currently involved in a bankruptcy proceeding, they will be barred from participating in the CSLB’s arbitration program. While CSLB arbitrations can be effective and efficient, it is important to first define your objectives to determine whether they can be accomplished through a CSLB arbitration, given the program’s financial and legal limitations.