Montana Administrative Register Notice 24-101-262 No. 4   02/23/2012    
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In the matter of the amendment of ARM 24.33.121 construction contractor registration fees, 24.33.131 evidence of compliance with laws, and the adoption of NEW RULES I through IV construction contractor registration requirements









TO:  All Concerned Persons 


            1.  On March 16, 2012, at 9:00 a.m., a public hearing will be held in the Sacajawea Room in the basement of the Walt Sullivan Building, 1315 E. Lockey Avenue, Helena, Montana, to consider the proposed amendment and adoption of the above-stated rules.


            2.  The Department of Labor and Industry (department) will make reasonable accommodations for persons with disabilities who wish to participate in this public hearing or need an alternative accessible format of this notice.  If you require an accommodation, contact the department no later than 5:00 p.m., on March 9, 2012, to advise us of the nature of the accommodation that you need.  Please contact the Employment Relations Division, Construction Contractor Registration, Attention:  Dallas Cox, P.O. Box 8011, Helena, Montana 59604-8011; telephone (406) 444-9586; TDD (406) 444-5549; facsimile (406) 444-3465; or e-mail dcox@mt.gov.


            3.  The rules proposed to be amended provide as follows, stricken matter interlined, new matter underlined:



            (1)  The fee for the issuance, renewal, or reinstatement of a construction contractor certificate of registration is $53.00.

            (a)  The fee is nonrefundable for applicants.

            (b)  An applicant will have a maximum of six months to submit the required information for approval.  After six months, the applicant must resubmit the $53 fee and a new application.

            (2)  If a business structure changes to require an FEIN (or not require an FEIN), a new application and $53 application fee must be submitted.


            AUTH:  39-9-103, MCA

            IMP:     39-9-206, MCA


REASON:  The department determined it is reasonably necessary to amend this rule to clearly set forth ICCU procedures.  Although these fees and processes are not new, they were not previously set forth in rule.  The department is standardizing this six-month deadline with that for independent contractor exemptions.  The fee is not refundable because it is necessary to sustain the contractor registration program and consistently administer education purposes as required by statute.


            24.33.131  EVIDENCE OF COMPLIANCE WITH LAWS  (1) remains the same.

            (a)  verification by the department by use of the national council on compensation insurance National Council on Compensation Insurance (NCCI) national workers' compensation database that the entity applying for construction contractor registration has current workers' compensation coverage; or

            (b) through (d) remain the same.

            (i)  A current exemption certificate must be valid for at least six months from the date of the construction contractor application.


            AUTH:  39-9-103, MCA

            IMP:     39-9-201, 39-9-202, MCA


REASON:  The department is adding (1)(d)(i) to clarify that people applying for construction contractor registration (CCR) must have at least six months remaining on their independent contractor exemption certificates (ICEC).  Previously, the department required that ICECs met or exceeded the length of time of the CCR, and later changed to a one-year ICEC time frame to match the length of workers' compensation policies.  Following negative comments from customers, the department began requiring at least six months remaining on an ICEC.  The department is amending this rule now, when it is setting forth CCR processes in rule.  Implementation cites are being amended to accurately reflect all statutes implemented through the rule and to delete reference to a repealed statute.


            4.  The proposed new rules provide as follows:


            NEW RULE I  CONTRACTOR REGISTRATION APPLICATION REQUIREMENTS  (1)  Applicants must identify a business structure in the application.  Acceptable business structures include the following:

            (a)  sole proprietorship;

            (b)  partnership;

            (c)  limited liability partnership;

            (d)  member-managed limited liability company;

            (e)  manager-managed limited liability company; and

            (f)  corporation.

            (2)  Applicants applying as sole proprietorships, partnerships, and member-managed limited liability companies must submit social security numbers (SSN).

            (3)  Applicants applying as corporations and manager-managed limited liability companies must submit employer identification numbers (FEIN).

            (4)  Applicants must answer YES or NO to whether they are applying as "Bid Only" status.

            (a)  "Bid only" status refers only to out-of-state construction contractors who are not yet performing any work in Montana.  With this status, a contractor may only bid work in Montana.  Once a job is awarded, the status must be updated and if the contractor has employees, the contractor must obtain and show proof of a Montana workers' compensation policy.

            (5)  Applicants must answer YES or NO as to whether they:

            (a)  are doing construction work in Montana;

            (b)  have employees;

            (c)  lease employees from a professional employment organization (PEO);

            (d)  obtain workers from a temporary service contractor (TSC); and

            (e)  perform work on commercial, industrial, or government jobs.

            (6)  Applicants must provide the name or names of all applicants and percentage of entity ownership for all owners.

            (7)  Applicants must provide current e-mail addresses, if applicable.


            AUTH:  39-9-103, MCA

            IMP:     39-9-102, 39-9-201, MCA


REASON:  The department determined it is reasonably necessary to adopt New Rule I to clearly delineate the application requirements for construction contractor registration.  These requirements are not new and are established in statute, but were not previously set forth in rule.  The department concluded that this new rule will clarify the statutory requirements and address questions posed by applicants.

            Because the entities that are eligible for construction contractor registration are enumerated in statute, the department must first determine an applicant's business structure as proposed in (1).  The department verifies with the Secretary of State all member-managed or manager-managed limited liability companies and corporation statuses, and whether the corporation or manager-managed limited liability company DBAs are registered as principals.

            The department is adopting (2) and (3) to clarify the identification number requirements for the different types of applicants.  Because corporations and manager-managed limited liability companies are considered separate entities, they are issued federal employer identification numbers and not social security numbers.

            The department is adopting (4) to address confusion about applicants with "bid only" status.  Any person, firm, or corporation bidding a construction job in Montana must be registered with the department as a construction contractor.  However, a valid Montana workers' compensation insurance policy is not required until work is actually being performed in the state.

            The department is proposing (5)(a) to determine if applicants are doing construction work in the state and avoid registering contractors who are not required to be registered in Montana.  Because the department verifies applicants' compliance with workers' compensation and other labor laws, it is reasonably necessary to add (5)(b) - (d) to obtain information on the applicants' categories of employees.

            The department is proposing (5)(e) to obtain information necessary to calculate standard prevailing rate of wages for building construction services.  This information is required by statute at 18-2-413, MCA, and is reasonably obtained from registered construction contractors.

            To comply with requirements of the department's xTier computer system, it is necessary to provide 100 percent ownership for sole proprietorships, partnerships, and member-managed limited liability companies.  For corporations and manager-managed limited liability companies, the department must determine if the corporate officers and managers are exempt from the workers' compensation act under 39-71-401(2)(r), MCA, by owning 20 percent or more of the shares.  The department may also request articles of organization or operating agreements from corporations and manager-managed limited liability companies before approving an application.


            NEW RULE II  ADDITIONAL APPLICATION INFORMATION  (1)  If an application is missing any required information, the applicant will have 30 days to submit  the missing information.  After 30 days, incomplete applications will be deemed denied.

            (2)  Applicants will have six months from the date the program receives the application to submit the missing information for approval of their construction contractor registration.


            AUTH:  39-9-103, MCA

            IMP:     39-9-201, MCA


REASON:  The department determined it is reasonably necessary to adopt New Rule II and establish a reasonable, standardized timeline for application processing to ensure the smooth workflow of the contractor registration unit and improve customer satisfaction.


            NEW RULE III  REPORTING CERTIFICATE CHANGES  (1)  Certificate holders must report all changes to a certificate in writing to the department within ten days of the change.  Such reportable changes include, but are not limited to:

            (a)  address;

            (b)  name;

            (c)  FEIN;

            (d)  status;

            (e)  phone number;

            (f)  addition to ownership; and

            (g)  workers' compensation insurance carrier change.

            (2)  If a change is not reported to the department within ten days, the certificate may be suspended.


            AUTH:  39-9-103, MCA

            IMP:     39-9-201, 39-9-206, 39-9-301, 39-9-303, MCA


REASON:  The department is adopting New Rule III to ensure that current, accurate information is on file with the department.  The department is required under 39-9-303(2), MCA, to "inform a person, firm, or corporation whether a construction contractor is registered."  Changes must be reported timely so the department is able to provide reliable information regarding accurate, legitimate certificates.


            NEW RULE IV  CERTIFICATES OF REGISTRATION  (1)  Issued certificates will display one of the following statuses:

            (a)  "BID ONLY" means the contractor is registered only to bid construction work in Montana and cannot perform actual work until the contractor upgrades the certificate to one of the following statuses.

            (b)  "EMPLOYEES ONLY" means the contractor carries workers' compensation coverage on employees and is registered to have employees.

            (c)  "LEASED EMPLOYEES" means the contractor uses employees from an employee-leasing firm.  These employees are presumably covered with workers' compensation and unemployment insurance through the leasing company.

            (d)  "NO EMPLOYEES, MAY HIRE EXEMPT WORKERS ONLY" means the contractor does not carry workers' compensation coverage on any employees.

            (2)  Along with a certificate, each certificate holder will receive a construction contractor wallet card and a vehicle decal.  The department shall review requests for more than one decal or card on an individual basis.

            (3)  To increase public visibility of the construction contractor registration program, the department may provide one participant gift per year to each registered contractor (i.e., baseball caps, flashlights, etc., as determined by the department).


            AUTH:  39-9-103, MCA

            IMP:     39-9-204, MCA


REASON:  The department determined it is reasonably necessary to adopt this new rule to set forth and clarify for the public the four statuses of construction contractor registration.  Although these statuses are not new and have been used since the inception of contractor registration, they were not previously set forth in rule.

            The department is proposing (2) to clarify the procedure for issuing only one wallet card and vehicle decal per registered contractor.  Requiring department review to issue duplicate cards and decals will conserve resources and program funds and ensure consistency in the process.

            The department is proposing (3) to clarify for applicants and certificate holders that promotional materials may be provided to registered contractors annually, and that the form of the gifts is at the department's sole discretion.


            5.  Concerned persons may present their data, views, or arguments either orally or in writing at the hearing.  Written data, views, or arguments may also be submitted to the Employment Relations Division, Construction Contractor Registration, Attention:  Dallas Cox, P.O. Box 8011, Helena, Montana 59604-8011; telephone (406) 444-9586; TDD (406) 444-5549; facsimile (406) 444-3465; or by e-mail to dcox@mt.gov, and must be received no later than 5:00 p.m., March 23, 2012.


            6.  An electronic copy of this Notice of Public Hearing is available through the department web site at http://dli.mt.gov/events/calendar.asp.  The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems, and that technical difficulties in accessing or posting to the e-mail address do not excuse late submission of comments.


            7.  The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed.  Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies the person wishes to receive notices regarding all department administrative rulemaking proceedings or other administrative proceedings.  The request must indicate whether e-mail or standard mail is preferred.  Such written request may be sent or delivered to the Department of Labor and Industry, Office of Legal Services, Attention:  Mark Cadwallader, P. O. Box 1728, Helena, Montana 596240-1728; faxed to the office at (406) 444-1394; e-mailed to mcadwallader@mt.gov; or made by completing a request form at any rules hearing held by the agency.


            8.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.


            9.  The department's hearings bureau has been designated to preside over and conduct this hearing.



/s/ DARCEE L. MOE                                 /s/ KEITH KELLY

Darcee L. Moe                                           Keith Kelly, Commissioner

Alternate Rule Reviewer                         DEPARTMENT OF LABOR AND INDUSTRY



            Certified to the Secretary of State February 13, 2012


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