AB5 - Revises provisions governing contractors who perform work on residential photovoltaic systems used to produce electricity. (BDR 54-253)

A.B. 5 - *AB5* ASSEMBLY BILL NO. 5–COMMITTEE ON COMMERCE AND LABOR (ON BEHALF OF THE STATE CONTRACTORS’ BOARD) PREFILED OCTOBER 29, 2024 ____________ Referred to Committee on Commerce and Labor SUMMARY—Revises provisions governing contractors who perform work on residential photovoltaic systems used to produce electricity. (BDR 54-253) FISCAL NOTE: Effect on Local Government: No. Effect on the State: No. ~ EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted. AN ACT relating to contractors; requiring, rather than authorizing the State Contractors’ Board to require, a contractor who performs work concerning a residential photovoltaic system used to produce electricity to obtain a performance bond and payment bond before commencing the work; revising requirements for such bonds; and providing other matters properly relating thereto. Legislative Counsel’s Digest: Existing law authorizes the State Contractors’ Board to require a contractor 1 who performs work concerning a residential photovoltaic system used to produce 2 electricity, before commencing the work, to obtain a performance bond and 3 payment bond in an amount equal to not less than 50 percent of the amount of the 4 contract if the contractor: (1) is determined by the Board to have committed certain 5 violations; (2) enters into a contract that is later voided by the owner of the single- 6 family residence on which the work is performed; or (3) has five valid complaints 7 filed against him or her with the Board within a 15-day period. (NRS 624.270) 8 Rather than authorizing the Board to require a contractor who performs work 9 concerning a residential photovoltaic system used to produce electricity to obtain a 10 performance bond and payment bond before commencing the work only under 11 certain circumstances, section 1 of this bill instead requires all contractors who 12 perform work concerning a residential photovoltaic system used to produce 13 electricity to obtain a performance bond and payment bond before commencing the 14 work. Section 1 also increases the amount of each of the required bonds to an 15 amount equal to not less than 100 percent of the amount of the contract. Section 1 16 – 2 – - *AB5* additionally requires the bonds to be issued by a surety which is included in the 17 United States Department of the Treasury’s Listing of Approved Sureties. 18 Section 2 of this bill provides that the revised requirements for bonds set forth 19 in section 1 do not apply to a contractor whose license authorizing the contractor to 20 perform work concerning a residential photovoltaic system used to produce 21 electricity was issued before July 1, 2025, until the date on which the license is 22 renewed, unless the contractor: (1) is determined by the Board to have committed 23 certain violations; (2) enters into a contract on or after July 1, 2025, that is later 24 voided by the owner of the single-family residence on which the work is 25 performed; or (3) has five valid complaints filed against him or her with the Board 26 within a 15-day period. 27 THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS: Section 1. NRS 624.270 is hereby amended to read as follows: 1 624.270 1. Before issuing a contractor’s license to any 2 applicant, the Board shall require that the applicant: 3 (a) File with the Board a surety bond in a form acceptable to the 4 Board executed by the contractor as principal with a corporation 5 authorized to transact surety business in the State of Nevada as 6 surety; or 7 (b) In lieu of such a bond, establish with the Board a cash 8 deposit as provided in this section. 9 2. Before granting renewal of a contractor’s license to any 10 applicant, the Board shall require that the applicant file with the 11 Board satisfactory evidence that the applicant’s surety bond or cash 12 deposit is in full force, unless the applicant has been relieved of the 13 requirement as provided in this section. 14 3. Failure of an applicant or licensee to file or maintain in full 15 force the required bond or to establish the required cash deposit 16 constitutes cause for the Board to deny, revoke, suspend or refuse to 17 renew a license. 18 4. Except as otherwise provided in subsection 6, the amount of 19 each bond or cash deposit required by this section must be fixed by 20 the Board with reference to the contractor’s financial and 21 professional responsibility and the magnitude of the contractor’s 22 operations, but must be not less than $1,000 or more than $500,000. 23 The bond must be continuous in form and must be conditioned that 24 the total aggregate liability of the surety for all claims is limited to 25 the face amount of the bond irrespective of the number of years the 26 bond is in force. A bond required by this section must be provided 27 by a person whose long-term debt obligations are rated “A” or better 28 by a nationally recognized rating agency. The Board may increase 29 or reduce the amount of any bond or cash deposit if evidence 30 supporting such a change in the amount is presented to the Board at 31 – 3 – - *AB5* the time application is made for renewal of a license or at any 1 hearing conducted pursuant to NRS 624.2545 or 624.291. Unless 2 released earlier pursuant to subsection 5, any cash deposit may be 3 withdrawn 2 years after termination of the license in connection 4 with which it was established, or 2 years after completion of all 5 work authorized by the Board after termination of the license, 6 whichever occurs later, if there is no outstanding claim against it. 7 5. After a licensee has acted in the capacity of a licensed 8 contractor in the State of Nevada for not less than 5 consecutive 9 years, the Board may relieve the licensee of the requirement of 10 filing a bond or establishing a cash deposit if evidence supporting 11 such relief is presented to the Board. The Board may at any time 12 thereafter require the licensee to file a new bond or establish a new 13 cash deposit as provided in subsection 4: 14 (a) If evidence is presented to the Board supporting this 15 requirement; 16 (b) Pursuant to subsection 6, after notification of a final written 17 decision by the Labor Commissioner; or 18 (c) Pursuant to subsection 7. 19  If a licensee is relieved of the requirement of establishing a cash 20 deposit, the deposit may be withdrawn 2 years after such relief is 21 granted, if there is no outstanding claim against it. 22 6. If the Board is notified by the Labor Commissioner pursuant 23 to NRS 607.165 or otherwise receives notification that three 24 substantiated claims for wages have been filed against a contractor 25 within a 2-year period, the Board shall require the contractor to file 26 a bond or establish a cash deposit in an amount fixed by the Board. 27 The contractor shall maintain the bond or cash deposit for the period 28 required by the Board. 29 7. If a contractor who performs work concerning a residential 30 pool or spa : [or work concerning a residential photovoltaic system 31 used to produce electricity:] 32 (a) Is determined by the Board to have violated one or more of 33 the provisions of NRS 624.301 to 624.305, inclusive; 34 (b) Enters into a contract that is later found to be void and 35 unenforceable against the owner pursuant to subsection 5 of NRS 36 624.940 or pursuant to any regulation adopted by the Board with 37 respect to contracts for work concerning a residential pool or spa; or 38 (c) [Enters into a contract on or after October 1, 2021, that is 39 later voided by the owner of the single-family residence pursuant to 40 subsection 6 of NRS 624.875 or pursuant to any regulation adopted 41 by the Board with respect to contracts for work concerning a 42 residential photovoltaic system used to produce electricity; or 43 (d)] Has five valid complaints filed against him or her with the 44 Board within any 15-day period, 45 – 4 – - *AB5*  the Board may require the contractor to comply with the 1 provisions of subsection 8. 2 8. If the Board requires a contractor described in subsection 7 3 to comply with the provisions of this subsection, the contractor 4 shall, before commencing work concerning a residential pool or spa 5 , [or work concerning a residential photovoltaic system used to 6 produce electricity,] obtain: 7 (a) Except as otherwise provided in this subsection, a 8 performance bond in an amount equal to not less than 50 percent of 9 the amount of the contract, conditioned upon the faithful 10 performance of the contract in accordance with the plans, 11 specifications and conditions set forth in the contract. The 12 performance bond must be solely for the protection of the owner of 13 the property to be improved. 14 (b) Except as otherwise provided in this subsection, a payment 15 bond in an amount equal to not less than 50 percent of the amount of 16 the contract. The payment bond must be solely for the protection 17 of persons supplying labor or materials to the contractor, or to any 18 of his or her subcontractors, in carrying out the provisions of the 19 contract. 20  A bond required pursuant to this subsection must be provided by 21 a person whose long-term debt obligations are rated “A” or better by 22 a nationally recognized rating agency. The contractor shall maintain 23 the bond for the period required by the Board. The contractor shall 24 furnish to the building department of the city or county, as 25 applicable, in which the work will be carried out, a copy of any 26 bond. In lieu of a performance or payment bond, the contractor may 27 obtain an equivalent form of security approved by the Board. 28 9. A contractor who performs work concerning a residential 29 photovoltaic system used to produce electricity shall, before 30 commencing the work, obtain: 31 (a) A performance bond in an amount equal to not less than 32 100 percent of the amount of the contract, conditioned upon the 33 faithful performance of the contract in accordance with the plans, 34 specifications and conditions set forth in the contract. The 35 performance bond must be solely for the protection of the owner 36 of the property to be improved. 37 (b) A payment bond in an amount equal to not less than 100 38 percent of the amount of the contract. The payment bond must be 39 solely for the protection of persons supplying labor or materials to 40 the contractor, or to any of his or her subcontractors, in carrying 41 out the provisions of the contract. 42  The bond required pursuant to this subsection must be provided 43 by a surety who is authorized to transact surety business in this 44 State pursuant to NRS 679A.030, who is included in the United 45 – 5 – - *AB5* States Department of the Treasury’s Listing of Approved Sureties 1 and whose long-term debt obligations are rated “A” or better by a 2 nationally recognized rating agency. The contractor shall 3 maintain the bond for the period required by the Board. The 4 contractor shall furnish to the building department of the city or 5 county, as applicable, in which the work will be carried out, a copy 6 of any bond. 7 10. As used in this section, [“substantiated] : 8 (a) “Substantiated claim for wages” has the meaning ascribed 9 to it in NRS 607.165. 10 (b) “Work concerning a residential photovoltaic system used to 11 produce electricity” has the meaning ascribed to it in 12 NRS 624.855. 13 (c) “Work concerning a residential pool or spa” has the 14 meaning ascribed to it in NRS 624.915. 15 Sec. 2. 1. The amendatory provisions of section 1 of this act 16 do not apply to a contractor whose license authorizes the contractor 17 to perform work concerning a residential photovoltaic system used 18 to produce electricity was issued before July 1, 2025, until the date 19 on which the license is renewed, unless the contractor: 20 (a) Is determined by the Board to have violated one or more of 21 the provisions of NRS 624.301 to 624.305, inclusive; 22 (b) Enters into a contract on or after July 1, 2025, that is later 23 voided by the owner of the single-family residence pursuant to 24 subsection 6 of NRS 624.875 or pursuant to any regulation adopted 25 by the Board with respect to contracts for work concerning a 26 residential photovoltaic system used to produce electricity; or 27 (c) Has five valid complaints filed against him or her with the 28 Board within any 15-day period. 29 2. As used in this section: 30 (a) “Board” has the meaning ascribed to it in NRS 624.010. 31 (b) “Contractor” has the meaning ascribed to it in NRS 624.020. 32 (c) “Work concerning a residential photovoltaic system used to 33 produce electricity” has the meaning ascribed to it in NRS 624.855. 34 Sec. 3. This act becomes effective on July 1, 2025. 35 H