VOLUME 47, ISSUE 3
October 14, 2016
Law and Public Safety
Division of Consumer Affairs
Division of Consumer Affairs
Proposed Amendments: N.J.A.C. 13:45A-17.2, 17.7, 17.9, and 17.10
Proposed New Rule: N.J.A.C. 13:45A-17.5A
Home Improvement Contractors: Initial and Renewal Applications; Identification Badges and Notice Statement; Duty to Update Information; Refusal to Issue, Suspension or Revocation of Registration; Hearing; Other Sanctions
Authorized By: Steve C. Lee, Acting Director, New Jersey
Division of Consumer Affairs.
Authority: N.J.S.A. 56:8-138.1.
Proposal Number: PRN 2015-151.
Submit written comments by November 12, 2016, to:
Steve C. Lee
Division of Consumer Affairs
124 Halsey Street
PO Box 45027
Newark, NJ 07101
The agency proposal follows:
Division of Consumer Affairs (the Division) is proposing to amend the home improvement contractor registration rules and to promulgate a new rule to implement P.L. 2013, c. 144 (N.J.S.A. 56:8-[page=186] 138.1), which mandates that home improvement contractors (including home elevation contractors) display State-issued identification badges when performing or engaging or attempting to engage in the business of selling home improvements in this State. Under the proposed amendments and new rules, an individual acting on behalf of a registered home improvement contractor business entity (entity) must wear a badge when engaged in the sales of home improvements. The Division believes the proposed amendments and new rule are consistent with the Legislature's intent to protect consumers from individuals fraudulently representing themselves as home improvement contractors when they are not properly registered. The proposed amendments and new rule also protect the public by giving consumers the ability to determine whether an individual who is attempting to sell the consumer a home improvement project represents a registered home improvement contractor.
At N.J.A.C. 13:45A-17.2, Definitions, the Division is proposing an amendment to define the terms "badge declaration," "entity," "sale of home improvements," and "State-authorized vendor or vendors."
Proposed new N.J.A.C. 13:45A-17.5A sets forth the requirements relating to identification badges. Proposed new N.J.A.C. 13:45A-17.5A(a) requires that, on or after six months after the contract for badge creation and other ancillary services related to the badge is awarded, each individual acting on behalf of an entity wear an identification badge on his or her upper left torso when performing, engaging, or attempting to engage in the sale of home improvements.
Proposed new N.J.A.C. 13:45A-17.5A(b) requires that all entities complete an electronic badge declaration form upon registration, identifying the individuals required to wear badges. Proposed new N.J.A.C. 13:45A-17.5A(b) also directs the entities to the Division's website to obtain information identifying the State-authorized vendor or vendors who will be issuing and managing the badges on behalf of the Division. Proposed new N.J.A.C. 13:45A-17.5A(c) sets forth the conditions that must be satisfied before a badge will be issued by the State-authorized vendor or vendors. Proposed new N.J.A.C. 13:45A-17.5A(d) requires that badges be unalterable and lists the information to be printed on the badges.
Proposed new N.J.A.C. 13:45A-17.5A(e) establishes that a badge is valid for two years, and sets forth the renewal process. This section also prohibits an entity from allowing an individual to sell home improvements without a valid badge; an entity that permits such selling without a badge will be deemed to be in violation of the subchapter and subject to the penalty provisions of N.J.S.A. 56:8-143.
Proposed new N.J.A.C. 13:45A-17.5A(f) prohibits the transfer of badges between individuals and sets forth the procedure that must be followed when the association between a salesperson and an entity is terminated.
Proposed new N.J.A.C. 13:45A-17.5A(g) sets forth the procedure that must be followed when an individual changes his or her name, or if a badge is lost or stolen. In the case of a lost or stolen badge, until the badge is replaced, the individual is prohibited from engaging in the sales of home improvements.
Proposed new N.J.A.C. 13:45A-17.5A(h) requires an entity to surrender for destruction all badges that have been issued on its behalf if the entity's registration has been suspended, revoked, or not renewed, and sets forth the procedure for surrendering the badges. Proposed new N.J.A.C. 13:45A-17.5A(h) and the proposed amendment to N.J.A.C. 13:45A-17.10 require an entity to obtain new badges if the entity's registration is subsequently reinstated.
Proposed new N.J.A.C. 13:45A-17.7(c) requires an entity to electronically inform the Division when there is an addition or deletion to its list of individuals required to wear badges. This subsection also sets forth the procedure to be followed for informing the Division of any change to the list.
The Division proposes to amend N.J.A.C. 13:45A-17.9 to make noncompliance with the badge requirements grounds for the Director to refuse to issue or renew, or to suspend or revoke a registration, or to assess a penalty or impose other sanctions. The Division proposes to permit an entity to prove that it used its best efforts as an affirmative defense to a charge of failing to return badges to the State-authorized vendor.
The Division proposes to amend N.J.A.C. 13:45A-17.10 to require individuals associated with entities whose registration is reinstated to obtain new badges when required.
The Division has determined that the comment period for this notice of proposal shall be 60 days; therefore pursuant to N.J.A.C. 1:30-3.3(a)5, this notice is excepted from the rulemaking calendar requirement.
The proposed amendments and new rule may have a positive social impact on consumers who use the services of home improvement contractors by allowing consumers to determine that an individual with a badge seeking to sell them home improvements is acting on behalf of a registered entity. This may discourage unregistered home improvement contractors, or charlatans posing as home improvement or home elevation contractors, from entering into contracts with consumers, taking their deposits, and disappearing. The badge will display the individual's name and photograph, the entity's name and registration number, and the badge's expiration date, making it easier for consumers who wish to check the identity of the salesperson and/or the status of an entity's registration to do so.
The proposed amendments and new rule will have an economic impact on all registered home improvement and home elevation contractors. The entities will pay badge fees to the vendors for the issuance and management of identification badges for all of its salespersons, as well as computer access charges, if any, to complete and maintain the electronic badge declaration. Either the entities or salespersons will pay for transportation costs associated with traveling to the State-authorized vendor for issuance of the badges. The Division notes that many public libraries offer Internet access at little or no charge. The Division anticipates that the proposed amendments and new rule will have no direct financial impact on consumers.
Federal Standards Statement
A Federal standards analysis is not required because the proposed amendments and new rule are subject to State statutory requirements and are not subject to any Federal requirements.
The Division does not anticipate that the proposed amendments and new rule will increase or decrease the number of jobs.
Agriculture Industry Impact
The proposed amendments and new rule will have no impact on the agriculture industry in the State.
Regulatory Flexibility Analysis
If, for purposes of the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq., all registered home improvement contractors are considered "small businesses," then the following compliance requirements apply.
The proposed amendments and new rule will require all registered entities to electronically complete a badge declaration form listing the individuals associated with the entity who are required to wear an identification badge. All such individuals must obtain the badges from the State-authorized vendor or vendors before conducting sales of home improvements. The badges must be renewed every two years.
If an individual who has been issued a badge changes his or her name, loses the badge, or is the victim of theft, he or she must obtain a new badge. If an entity severs its association with a salesperson, it must collect the badge and surrender it to the State-authorized vendor within three business days. If an entity's registration is suspended, revoked, or has not been renewed, the entity must surrender all identification badges associated with the entity within three business days; if the Division reinstates its registration, all of the entity's salespersons must obtain new badges. The badge declaration must be updated within three business days of any change to an entity's sales force. A violation of the badge requirements will be deemed a violation within the meaning of N.J.A.C. 13:45A-17.9 and will subject the entity to the penalty provisions of N.J.S.A. 56:8-143.
In order to comply with this rule, an entity will need access to a computer. The entity will incur badge fees and incidental costs that will [page=187] vary according to the size of the business' sales force (see the Economic Impact statement above).
The Division believes that no professional services are likely to be needed to comply with the proposed amendments and new rule. The Division believes that the proposed amendments and new rule should be uniformly applied to all registrants to protect consumers; and, therefore, no differing compliance requirements for any registrant are provided.
Housing Affordability Impact Analysis
The proposed amendments and new rule will have an insignificant impact on the affordability of housing in New Jersey and there is an extreme unlikelihood that the rules would evoke a change in the average costs associated with housing because the proposed amendments and new rule concern the issuance of identification badges for home improvement contractors.
Smart Growth Development Impact Analysis
The proposed amendments and new rule will have an insignificant impact on smart growth development and there is an extreme unlikelihood that the rules would evoke a change in housing production in Planning Areas 1 or 2, or within designated centers, under the State Development and Redevelopment Plan in New Jersey because the proposed amendments and new rule concern the issuance of identification badges for home improvement contractors.
Full text of the proposed amendments and new rule follows (additions indicated in boldface
thus; deletions indicated in brackets [thus]):
SUBCHAPTER 17. HOME IMPROVEMENT CONTRACTOR REGISTRATION
The following words and terms, as used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:
. . .
"Badge declaration" means the electronic form that a registered entity must complete, as set forth in N.J.A.C. 13:45A-17.5A(b), which identifies individuals performing, engaging, or attempting to engage in the sale of home improvements.
. . .
"Entity" means the business registered or to be registered as a home improvement contractor.
. . .
"Sale of home improvements" means any action taken by or on behalf of an entity with the goal of entering into a contract with a consumer for the performance of a home improvement or home improvements, including, but not limited to: initial contact with the consumer; taking measurements; presenting estimates for the cost of home improvements; and entering into the contract with the consumer for the completion of home improvements.
"State-authorized vendor or vendors" means the business or businesses with which the State has contracted to act on behalf of the Director for the issuance and management of home improvement and home elevation contractor identification badges.
13:45A-17.5A Identification badges
(a) On or after six months after the award of the contract for badge creation and other ancillary services related to the badges, each individual performing, engaging, or attempting to engage in the sale of home improvements, shall wear an identification badge on the upper left corner of the individual's torso in a plainly visible fashion. An individual shall not engage in the sale of home improvements until the individual has obtained and is wearing a valid identification badge.
(b) For the purpose of identifying those individuals who are required to obtain and wear an identification badge, each entity shall, upon registration, complete a badge declaration setting forth the name and address of residence of each individual who will perform, engage, or attempt to engage in the sales of home improvements on behalf of the entity. Access to the electronic form shall be available by logging on to the Division website. The name, address, and contact information for the State-authorized vendor or vendors issuing identification badges shall be posted on the Division website.
(c) An individual shall not be issued a badge unless:
1. The registration of the entity with which the individual is associated is in good standing;
2. The individual is listed on the entity's badge declaration, as supplemented and amended from time to time;
3. The badge fee has been paid by the entity to the vendor; and
4. The individual presents to the State-authorized vendor a form of government-issued photo identification containing the individual's current address of residence, which shall match the address listed on the entity's badge declaration.
(d) The Division, through the State-authorized vendor or vendors, shall issue an identification badge that shall be unalterable and shall include the following information:
1. The name, color photograph, and signature of the individual to whom the badge has been issued;
2. The business name and registration number of the entity;
3. The badge's expiration date; and
4. A clear and visible statement that the badge is not for an electrical contractor, plumbing contractor, or HVACR contractor.
(e) The badge shall be valid for two years. Each entity on whose behalf a badge has been issued shall apply for renewal of the badge at least 45 days prior to its expiration date, at which time the entity shall pay the badge renewal fee and shall obtain from the State-authorized vendor a new badge showing an updated photo and expiration date. An entity that permits an individual required to have a badge to work without a valid badge shall be deemed to be in violation of this subchapter within the meaning of N.J.A.C. 13:45A-17.9 and shall also be subject to the penalty provisions of N.J.S.A. 56:8-143.
(f) Identification badges are not transferable. Upon termination of an association between an entity and an individual to whom an identification badge was issued, the entity shall:
1. Inform the Division within three business days of the date of termination by logging on to the Division's website and amending the badge declaration; and
2. Collect the individual's identification badge and surrender it to the State-authorized vendor for destruction within three business days of the date of termination. The address for surrender shall be set forth on the Division's website.
i. Failure of an entity to collect and timely surrender an identification badge shall be deemed to be a violation within the meaning of N.J.A.C. 13:45A-17.9.
(g) If an individual's badge is lost or stolen, or a badge holder has legally changed his or her name through marriage or court order, the entity with which the individual is associated shall, within three business days of the event, report the event to the Division by logging on to the Division's website and:
1. In the case of a name change, amend the badge declaration; or
2. In the case of a lost or stolen badge, report the loss or theft.
i. In the case of a lost or stolen badge, the individual shall not perform, engage or attempt to engage in the sales of home improvements until the individual obtains and is wearing a new badge.
(h) An entity whose registration has been suspended or revoked, or has not been renewed shall, within three business days of that suspension, revocation, or nonrenewal, surrender all identification badges issued under the registration number of the entity to the State-authorized vendor. The address for surrender shall be set forth on the Division's website. All surrendered badges shall be destroyed. Any subsequent reinstatement of registration shall require the issuance of a new badge.
13:45A-17.7 Duty to update information
(a)-(b) (No change.)
(c) Whenever there is a deletion or addition to the list of individuals required to wear identification badges pursuant to N.J.A.C. 13:45A-17.5A, the entity shall inform the Division within three business days of the deletion or addition by logging on to the [page=188]
Division's website and amending the badge declaration. Any additions to the list shall be accompanied by the badge fee. Any individual added to the entity's list of individuals required to wear a badge shall not perform, engage, or attempt to engage in the sales of home improvements on behalf of the entity until the individual has obtained and is wearing a badge.
13:45A-17.9 Refusal to issue[,]; suspension or revocation of registration; hearing; other sanctions
(a) The Director may refuse to issue or renew, or may suspend or revoke any registration issued by the Division upon proof that an applicant or registrant or any of its officers, directors, principals, or persons with an ownership interest of 10 percent or more in the home improvement contractor business:
1.-8. (No change.)
9. Has failed to comply with the badge requirements set forth in N.J.A.C. 13:45A-17.5A. It shall be an affirmative defense to a charge of failing to return a badge to the State-authorized vendor that the entity used its best efforts to collect and surrender the badge;
Recodify existing 9.-10. as
10.-11. (No change in text.)
(b) (No change.)
(c) Except as provided in (b) above, prior to refusing to issue or renew or suspending or revoking a home improvement contractor registration or assessing a penalty[,]
or other sanction, the Director shall notify the applicant or registrant and provide an opportunity to be heard.
(d)-(e) (No change.)
13:45A-17.10 Reinstatement of suspended registration
A registration that is suspended by the Director may be reinstated upon the contractor satisfying the conditions for reinstatement as determined by the Director and paying all outstanding fees, fines, penalties, and restitution, including the payment of the reinstatement fee specified in N.J.A.C. 13:45A-17.14.
If a suspended registration is reinstated, all individuals associated with the reinstated entity required to wear badges pursuant to N.J.A.C. 13:45A-17.5A shall obtain new badges.