The Arizona Registrar of Contractors has
released new rules that went into effect November 5, 2017. While
some of the changes are intended to make the ROC rules clearer
and more user-friendly, others are substantive, including
alternatives to dual-licensing and a brand-new rule about
disclosing documents and other information in advance of a
Unbundling Contractor Licenses
The Registrar's new rules undo changes,
made in 2014, that combined many residential and commercial
licenses into dual-license scopes. Under the ROC's previous
administration, the agency adopted rules that combined many
residential and commercial licenses into a single "dual"
For example, under the 2014 rules, a
drywall contractor would need the CR-10 Drywall license,
covering both commercial and residential projects, even if the
contractor performed only one kind of project (commercial) and
never performed the other (residential).
Many contractors were unhappy with the
2014 license combinations, because of the negative financial
impact. Commercial contractors that were forced into the new
dual licenses were required to pay into the Residential
Contractors' Recovery Fund, even if they never performed any
On the other side, residential
contractors that were forced into the dual licenses were
required to increase their bond amounts to cover the commercial
scope, even if they never performed any commercial work. (In one
public comment, a residential-only contractor stated that his
bond premium rose from $100 to $525 premium, adding, "Ouch! Just
doesn't seem fair to us little guys.")
Under current Director Jeff Fleetham,
the unbundling of the combined license scopes gives contractors
more freedom to choose the right scope for their businesses. For
example, the drywall contractor that performs only commercial
work can now choose the commercial C-10 drywall license, as the
new rules do not force him to get the dual-scope CR-10 and pay
into the Recovery Fund. Likewise, for the residential-only
drywall contractor, the residential R-10 is available. And what
about the drywall contractor who performs both residential and
commercial work? The dual CR-10 license is still an option.
Opting Out. For
contractors that were forced into a dual classification by the
2014 rules, the ROC now offers Rule R4-9-111, "Opting Out of
Dual-License Classifications." This new rule allows the holder
of a dual license, at renewal time, to keep the dual license or
designate it as either commercial-only or residential-only.
Choosing to go commercial-only or residential-only is a one-time
choice and cannot be reversed: "If a license is designated as
either commercial or residential under this Rule, that
designation is permanent." Rule R4-9-111(B) (emphasis
Fairer, More Efficient ROC Hearings?
When facing a license suspension or
revocation or a Recovery Fund award or restitution order, the
contractor is entitled to a hearing, to tell its side of the
story and to defend its license against a complaint.
Unfortunately for contractors, the ROC
has never issued a rule that requires the complaining party to
disclose information or documents before the hearing. As a
result, ROC hearings have often taken on a "Wild West"
atmosphere, where surprises pop up and anything can happen -
usually to the detriment of the contractor.
To bring more fairness and
predictability to the hearings, the ROC has adopted Rule
R4-9-118, "Prehearing Disclosure Requirement." The new rule
requires each party (the contractor and the complainant) to
disclose, in advance of the hearing, their witnesses and the
facts to which those witnesses will testify. The rule also
requires the parties to exchange any documents or photographs
that they intend to use at the hearing.
All disclosures must be made at least a
week before the hearing, to give each side a chance to prepare
(and to encourage settlement). If a party fails to make a
required disclosure, the rule allows the hearing officer to
exclude surprise evidence at the hearing and even to dismiss the
Only time will tell whether the new rule
actually makes hearings fairer, but it seems like a step in the
right direction. At the very least, contractors should have a
better chance to understand and prepare for the case against
them; further, requiring complainants to show their cards before
a hearing could make it easier to settle complaints before the
In addition to the
substantive changes described above, the ROC has made some
largely stylistic revisions that make the rules easier to
understand and to navigate. (All of the rule changes that went
into effect November 5, 2017, are described in the
September 22, 2017,
edition of the Arizona Administrative Register).
Overall, the Registrar's recent rule
changes appear to be good for Arizona contractors, as they tend
to provide for greater clarity in the regulations, more
flexibility in licensing, and a fairer disciplinary process.
Jamie Hanson is a former Chief
Counsel for the Arizona Registrar of Contractors.