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What you should know about the CSLB’s mandatory arbitration program

It’s important for licensed contractors here in California to understand that the courtroom isn’t the only forum in which they might need to address the complaints of homeowners, subcontractors, employees or fellow contractors.

Indeed, any of these parties may choose to address their grievances — failure to abide by the terms of a contract, poor workmanship, failure to pay, etc. — with the Contractors State License Board.

Furthermore, if the aggrieved party opts to go this route, there’s also a chance that the matter will be handled via mandatory arbitration.

For those unfamiliar with arbitration, it’s a process in which a specially trained and neutral third party — the arbitrator — considers the arguments of both sides and renders a final decision.

While arbitration is considerably less formal than traditional litigation, its structure is similar, such that each side has a more limited opportunity to do things like call witnesses and present evidence.

Proponents of arbitration argue that it’s not only faster and less expensive, but that the decision rendered is both binding and enforceable in a court of law.

Contractors should also know that current law dictates that complaints filed against them with the CSLB, and resolved via arbitration will not be disclosed to the public and not result in license suspension/revocation provided there is no failure to comply with the arbitrator’s award.

As to whether a complaint filed with the CSLB must be resolved via arbitration, the Business and Professions Code dictates that this is the case if:

  • The demand for damages doesn’t exceed $15,000
  • The contractor’s license was in good standing at the time of the underlying incident
  • The contractor has no history of similar or repeat violations
  • There are no disciplinary actions currently pending against the contractor
  • The two parties have not previously executed a contract calling for disputes to be resolved via private arbitration

We’ll continue discussing this topic in future posts, exploring more about the process and the award.

If you are a builder looking for answers about mandatory arbitration or a legal professional seeking assistance with preparation for an arbitration hearing, be certain to consider all of your options.