RMO License

RMO stands for Responsible Managing Officer.
An RMO is a qualified individual that holds one or more contractor licenses. Sometimes referred to as an RMO License,
Businesses in the state of California can elect to use an RMO or RME (Responsible Managing Employee) to certify their businesses to perform a construction trade.
The person must hold an active license and current bond.
Companies often utilize the services of an RMO when someone currently in a company cannot meet specific requirements for licensing.

The person who holds the license is qualified by the Contractors State License Board and ensures that all duties associated with that trade are performed in adherence to state and federal regulations. In turn, everyone legally associated with that company can contract for that trade as long as they are lawfully working under the licensed business.

Separate Contractor License Number

An RMO Contractor holds their license number and then is issued a separate license number that appears on the CSLB website when the license number is searched. When this number is searched online, the name of the company appears instead of the individual contractor.

20% Ownership Stake

For an RMO to qualify a company, he or she must hold at least a 20% ownership position in the business. This ownership stake is often negotiated based on the terms of the association with the company. In addition to acting as officers of the company, RMO’s act as a mentor and guide to ensure the growth and success of a company. They may qualify individuals associated with the company after five years so that they can get their license. Being associated with a company meaning they are a legal employee on the payroll.

As the state of California requires four years journeyman-level experience, once this experience requirement is met that individual would be allowed apply and take the contractor license exam. Any individuals signing contracts on behalf of a licensed company must be legally associated with that company. If an RMO or RME leaves the company, the company will have 90 days to replace that qualifying person before they are unable to contract over $500 legally

RME (Responsible Managing Employee)

RME stands for Responsible Managing Employee. Effectively operating similar to an RMO, an RME is an employee of the company and may or may not hold an ownership stake in the company. The employees' license certifies the business to contract over $500 for that trade legally.

Similar to an RMO any officer lawfully associated with the business is then qualified to apply for their own license after five years. An RMO or RME remains responsible for all work performed by the business during this 90-day period. An RME or RMO Contractor may not qualify more than three firms in any one-year period. If a 20 percent ownership stake no longer exists, the Contractor State License Board must be informed of the disassociation.

RMO Agency

An RMO Agency is a non-government affiliated business that facilitates the process of qualifying construction companies to perform specific trade duties by connecting them with licensed contractors.
If an individual holds a contractor license, they are legally allowed to qualify up to three separate businesses to perform that specific trade. RMO Agencies may assist in the application process to notify the state board of an RMO contractor qualifying a business.

They often also help non-licensed individuals obtain licenses directly with the CSLB. Applications to the Contractors State License Board can be expedited if the applicant is a military veteran.

Continued Support and Services

Refer to our article on applying for a contractor license for more information on the process and requirements for obtaining a license in the state of California. RMO Agencies often function as consultants and offer on-going support and assistance to the company as well as to the contractor when dealing with the state board.

They also may provide various services:

Draw up Contracts
Preparing disassociation requests
Fees
Insurance and Bond Renewals
Contacting the CSLB. As the RMO or RME must hold an ownership position
Facilitate the negotiations and terms of ownership between the company owner and qualifying contractor.

CSLB

Notwithstanding Section 7065, the registrar may waive the examination for a contractor’s license under any of the following circumstances:

(a)The qualifying individual has, for five of the seven years immediately preceding the application for licensure, been listed on the official records of the board as a member of the personnel of any licensee who held a license, which was active and in good standing, in the same classification being applied for, and who during the period listed on the contractor license has been actively engaged in a licensee’s construction activities in the same classification within which the applicant applies for a license.

(b)The qualifying individual is an immediate member of the family of a licensee whose individual license was active and in good standing for five of the seven years immediately preceding the application for licensure, and the qualifying individual can show all of the following:

(1)The qualifying individual has been actively engaged in the licensee’s business for five of the seven years immediately preceding the application for licensure.

(2)The license is required to continue the existing family business in the event of the absence or death of the licensee.

(3)An application is made for a new license in the same classifications in which the licensee is or was licensed.

(c)The qualifying individual is an employee of a corporation seeking to replace its former qualifying individual and has been employed by that corporation under the following conditions:

(1)For five of the seven years immediately preceding the application for licensure, the qualifying individual has been continually employed by the corporation in a supervisory capacity in the same classifications being applied for.

(2)For five of the seven years immediately preceding the application for licensure, the corporation has held an active license in good standing in the same classifications being applied for.

The corporation has not requested a waiver under this subdivision within the past five years.

For purposes of this section, employees of a corporation shall include, but not be limited to, the officers of a corporation.

CAL. BUS. & PROF. CODE 7068.1.

The person qualifying on behalf of an individual or firm under paragraph (1), (2), or (3) of subdivision (b) of Section 7068 shall be responsible for exercising that direct supervision and control of his or her employer’s or principal’s construction operations as is necessary to secure full compliance with the provisions of this chapter and the rules and regulations of the board relating to the construction operations. This person shall not act in the capacity of the qualifying person for an additional individual or firm unless one of the following conditions exists:

(a)There is a common ownership of at least 20 percent of the equity of each individual or firm for which the person acts in a qualifying capacity.

(b)The additional firm is a subsidiary of or a joint venture with the first. “Subsidiary,” as used in this subdivision, means any firm at least 20 percent of the equity of which is owned by the other firm.

(c)With respect to a firm under paragraph (2) or (3) of subdivision (b) of Section 7068, the majority of the partners or officers are the same.

(d)Notwithstanding subdivisions (a), (b), and (c), a qualifying individual may act as the qualifier for no more than three firms in any one-year period.

“Firm,” as used in this section, means a copartnership, a limited partnership, a corporation, or any other combination or organization described in Section 7068.

“Person,” as used in this section, is limited to persons natural, notwithstanding the definition of “person” in Section 7025.

The board shall require every applicant or licensee qualifying by the appearance of a qualifying individual to submit detailed information on the qualifying individual’s duties and responsibilities for supervision and control of the applicant’s construction operations.

How To, Get A Contractor License with No Experience

While there is no way to obtain a contractor license as an individual without experience, applying for the contractor license through an RMO is the safest and quickest way to qualify your business to begin bidding on projects.

After five years of being associated with the company holding the license, you may then apply as an individual, and once you pass the state exam, you may keep the license as an individual.

For example, if you used an RMO License for five years and then apply as an individual and pass the state exam, you can then hold your own license and even request to hold the specific number that has been associated with your business for the past five years. Maintaining an old license number is often seen as more reputable in the eyes of potential clients assuming there have been no judgments against the license number.

For more information on the application process as well as requirements for obtaining an individual contractor license number check out our articles on the application process. Anyone looking to utilize the services of an RMO Contractor or a currently licensed contractor looking to gain extra income by allowing a business to operate with their license number is encouraged to do their research and go through an RMO agency to ensure that you aren’t risking the reputation or your license or business.

RMO Agencies provide an excellent service and can create extra cash flow for contractors as well as legitimacy to a non-licensed business. With anything in life, it is essential to do your homework.