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| Montana Administrative Register Notice 24-35-349 | No. 19 10/04/2019 | |
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BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On October 25, 2019, at 10:00 a.m., the Department of Labor and Industry (department) will hold a public hearing in conference rooms A and B of the Beck Building, 1805 Prospect Avenue, Helena, Montana, to consider the proposed adoption of the above-stated rules.
2. The 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 October 18, 2019, to advise us of the nature of the accommodation that you need. Please contact Jenny Harris, Employment Relations Division, P.O. Box 8011, Helena, Montana 59604; telephone (406) 444-9012; facsimile (406) 444-4140; Montana TTD (406) 444-5549; or e-mail [email protected].
3. GENERAL STATEMENT OF REASONABLE NECESSITY: There is reasonable necessity to adopt NEW RULES I through XII in order to implement Chapter 294, Laws of 2019 (Senate Bill 269) by its January 1, 2020, effective date. The Department of Labor and Industry (department) has drafted NEW RULES I through XII with the assistance of a group of stakeholders from the home inspection industry and real estate sales. The department researched home inspector licensing and registration programs in other states. The department also researched home inspector continuing education programs and requirements in other states. The department conducted five stakeholder meetings in the drafting process over a five-month period. The department concludes that proposed rules are consistent with accepted industry practices, but do not impose a duty of "best practices" that go beyond the minimum requirements provided by SB 269. The department believes that the stakeholders are in general consensus that the proposed rules are appropriate and reasonable in light of the statutory requirements of SB 269. This general statement of reasonable necessity applies to NEW RULES I through XII. Where appropriate, additional statements of reasonable necessity are provided for individual rules.
4. The proposed new rules are as follows:
NEW RULE I DEFINITIONS As used in this subchapter, the following definitions apply: (1) "Day" means a calendar day. (2) "Department" means the Department of Labor and Industry. (3) "Expiration of registration" means the registration was not timely renewed and is no longer active due to the passage of time. (4) "Home inspection business" means a sole proprietorship, a partnership, a limited liability company, a corporation, or any other business entity, which is required by law to register with the department before being able to lawfully perform home inspection for others. (5) "Home inspection work" means the same as "home inspection" as provided by 39-9-102, MCA. (6) "Home inspection worker" means an individual who has demonstrated to the department that the individual is qualified to perform home inspection work. (7) "ICEC" means the independent contractor exemption certificate issued by the department pursuant to 39-71-417, MCA. (8) "Initial application" means the first time a home inspection business applies to the department for registration as a home inspector. (9) "Registration" means the status held by a home inspection business after the home inspection business has successfully registered with the department. (10) "Reinstatement of registration" means reactivation of a non-expired registration, following suspension of the registration by the department. (11) "Renewal application" means an application by a registered home inspector to be registered for an additional two-year period after the home inspector has been properly registered via an initial application. (12) "Roster" means the list of home inspection workers who have been identified by the home inspection business as employees. The roster may include an individual who is separately registered in their individual capacity as a home inspection business as provided by [NEW RULE V], but who is authorized to work under the registration name and number of the registrant. (13) "Suspension of registration" means the registration is no longer active as the result of an action taken by the department in response to conduct of the registrant.
IMP: 39-9-212, MCA
REASON: There is reasonable necessity to adopt NEW RULE I in order to provide clarity to the rules. SB 269 refers to "home inspectors" as meaning both the person performing the work and the business entity that provides individual workers to customers. NEW RULE I draws the distinction between a "home inspection worker" and a "home inspection business" so as to more clearly identify individual requirements versus the broader business requirements which individuals do not have to personally fulfill.
NEW RULE II FEE SCHEDULE (1) The following fees are charged by the department for home inspection businesses: (a) initial application $80.00 (b) renewal application 80.00 (c) reinstatement of suspended registration 40.00 (d) change of address no charge (e) change of home inspection worker roster no charge (f) photocopies, per page 0.25 (2) All fees are nonrefundable.
AUTH: 39-9-103, MCA IMP: 39-9-206, MCA
REASON: There is reasonable necessity to adopt NEW RULE II in order to establish fees as required by SB 269. The department estimates there are approximately 400 home inspectors in Montana, and that in most instances, home inspection businesses do not hire their own employees to conduct inspections. The department estimates that during the first biennium of program operation, the program will generate approximately $32,000 in registration fees. Based on its operation of the construction contractor registration program, the department believes that the registration and renewal fees are commensurate with the program's expected costs. As provided by 39-9-206, MCA, 15 percent of program fees must be used for consumer and industry outreach and education. No additional fee is being charged for a change of address or change of roster in order to encourage home inspectors to provide the department with current information.
NEW RULE III INITIAL APPLICATION FOR HOME INSPECTION BUSINESS REGISTRATION (1) In order to be registered by the department, a home inspection business shall complete a registration application and pay the registration fee as provided in [NEW RULE II]. (2) The applicant shall provide the following information to the department: (a) legal name of the home inspection business; (b) type of business structure (sole proprietorship, partnership, LLC, etc.); (c) mailing address of the business; (d) physical address of the business, if different than the mailing address; and (e) telephone number. (3) The applicant shall provide a roster identifying each person who will perform home inspection work on behalf of the applicant. (4) The applicant shall provide proof of training or examination for all home inspection workers on the roster, demonstrating that each worker on the roster meets the minimum initial qualifications as provided by [NEW RULE VI]. (5) The applicant shall provide proof that the applicant is a member of a national association for home inspectors. (6) The applicant shall provide proof of required insurance coverages. Proof of insurance is demonstrated by: (a) the policy declaration page; (b) a binder of coverage; or (c) a certificate of insurance issued by an authorized agent of the insurer. (7) The following are the minimum per incident amounts of insurance coverage required for a home inspection business: (a) for commercial general liability insurance, $100,000; and (b) for errors and omission insurance, $100,000. (8) An applicant may demonstrate proof of compliance with the workers' compensation insurance requirements by submitting either: (a) proof of Montana workers' compensation insurance coverage; or (b) proof that each home inspection worker listed on the roster holds a valid independent contractor exemption certificate issued by the department, where home inspection is a listed occupation for that worker. (9) All insurance policies must be underwritten by an insurer authorized to provide that coverage under the laws of Montana. (10) Application contents are public record open to inspection, except for personally identifiable information protected from public disclosure. (11) An applicant may complete an incomplete application during the six months following submission of the application before a new application fee will be charged. The applicant is not allowed to operate a home inspection business until the application is completed and approved by the department.
IMP: 39-9-212, MCA
NEW RULE IV APPROVAL OF APPLICATIONS (1) In order to be registered, the applicant shall submit a fully completed application to the department and pay the required fees. (2) An application may be made in person during regular business hours, at the department's offices at 1805 Prospect Avenue, Helena, Montana, or submitted via mail to: Registration Section, Employment Relations Division, Department of Labor and Industry, P.O. Box 8011, Helena, MT 59604-8011. (3) The registration period is two years and expires on the two-year anniversary of the initial registration. (4) An applicant is not allowed to operate a home inspection business until the application is approved by the department. (5) An applicant who is aggrieved by the department's denial of an application may request a hearing as provided by [NEW RULE XI].
IMP: 39-9-212, MCA
NEW RULE V REGISTRATION REQUIRED FOR SUBCONTRACTORS AND INDEPENDENT CONTRACTORS (1) A home inspection worker who engages in subcontracting with a home inspection business of another shall individually register as a home inspection business, as required by [NEW RULE III]. (2) A home inspection worker who is engaged as an employee of a registered home inspection business does not need to separately register as a home inspection business, if the home inspection worker never: (a) subcontracts with a registered home inspection business owned by another; or (b) independently offers her or his services to members of the public.
AUTH: 39-9-103, 39-9-212, 39-71-203, MCA
REASON: There is reasonable necessity to adopt NEW RULE V in order to ensure that the consumer protections provided by SB 269 for required insurance are not circumvented by subcontracting work to a person or entity which is not in compliance with the registration requirements. The rule allows a person to both work as a self-employed home inspection worker but also perform work on behalf of another registered home inspection business.
NEW RULE VI MINIMUM INITIAL QUALIFICATIONS FOR A HOME INSPECTION WORKER (1) An individual who intends to work as a home inspector shall document one of the following: (a) the individual has passed the National Home Inspector Examination offered by the Examination Board of Professional Home Inspectors; (b) the individual has passed the examination offered by an organization recognized by the department; or (c) the individual has successfully completed a comprehensive educational program for home inspectors approved by the department. (2) Any organization wishing to be approved by the department for the purposes of offering an examination under (1)(b) must apply to the department for approval of its examination. The organization must demonstrate that its examination is psychometrically valid, and covers at least the following topics: (a) roofing; (b) exterior; (c) interior; (d) structural; (e) electrical; (f) plumbing; (g) heating and cooling (HVAC); (h) insulation; (i) fireplace and chimney; and (j) ethical business practices, professional standards, and reports. (3) Any organization wishing to be approved by the department for the purposes of offering a comprehensive educational program for home inspectors consisting of at least 40 hours of instruction under (1)(c) must apply to the department for recognition. The organization must demonstrate that its educational program is comprehensive and covers at least the following topics: (a) roofing; (b) exterior; (c) interior; (d) structural; (e) electrical; (f) plumbing; (g) heating and cooling (HVAC); (h) insulation; (i) fireplace and chimney; and (j) ethical business practices, professional standards, and reports. (4) Any organization wishing to be approved by the department for the purposes of offering a comprehensive educational program for home inspectors under (1)(c) must also demonstrate that it conducts a valid assessment of students' knowledge and understanding of the subject matter being taught in order to demonstrate successful completion. The organization shall describe in detail how the assessment is made, and the criteria by which a student is deemed to have successfully completed the educational program. (5) A list of organizations approved by the department to offer home inspector examinations is available by contacting the department's home inspection program, and can also be found at the department's web site: http://www.mtcontractor.com. (6) A list of formal home inspection educational programs approved by the department is available by contacting the department's home inspection program, and can also be found at the department's web site: http://www.mtcontractor.com.
IMP: 39-9-212, MCA
NEW RULE VII DUTY TO UPDATE ROSTER AND BUSINESS INFORMATION – SUSPENSION – REINSTATEMENT OF REGISTRATION (1) A home inspection business shall provide to the department in writing, within ten days of the occurrence, changes to: (a) the roster of home inspectors performing work for the home inspection business; and (b) the business name, address, contact information, or type of business structure. (2) A home inspection business shall demonstrate to the department that a home inspector added to the roster meets the minimum initial qualifications as provided by [NEW RULE VI]. (a) A person may not perform services as a home inspection worker until the home inspection business is notified by the department that the person has met the minimum initial qualifications as a home inspection worker. (b) A home inspection worker registered pursuant to [NEW RULE V] meets the minimum initial qualifications and may begin work immediately. (3) A home inspection business that does not timely provide information to the department as required by (1) is subject to having its registration suspended. (4) A home inspection business may reinstate a suspended registration by providing the department with any updated information as required by (1) and paying the reinstatement fee provided in [NEW RULE II]. (5) As provided by 39-9-212, MCA, a home inspection business may not operate without being properly registered. Operating a home inspection business without proper registration may result in the imposition of a civil penalty as provided by [NEW RULE X]. (a) The imposition of a civil penalty does not preclude the department from seeking injunctive relief.
IMP: 39-9-212, MCA
NEW RULE VIII RENEWAL OF BUSINESS REGISTRATION (1) Prior to the expiration of registration, a home inspection business may renew its registration by applying to the department and paying the fee provided by [NEW RULE II]. A home inspection business may not conduct operations unless it has a current registration. There is no "grace period" allowed for operating with an expired registration. (2) A renewal applicant shall provide the department with the following information: (a) an updated roster of all home inspection workers performing work on behalf of the renewal applicant; (b) proof of the required 40 hours of continuing education credit for each home inspection worker listed on the roster; (c) proof that the renewal applicant is a member of a national home inspector association; (d) proof that the renewal applicant has insurance coverage as required by [NEW RULE III]; and (e) proof that the renewal applicant is complying with the workers' compensation laws, as required by [NEW RULE III]. (3) Renewal application contents are public record, except for personally identifiable information protected from public disclosure.
IMP: 39-9-212, MCA
NEW RULE IX RECOGNITION OF CONTINUING EDUCATION COURSES (1) Any sponsoring organization that requests continuing education credits be approved by the department for training must complete and submit a request on a form provided by the department. (2) The department shall review the course submission and determine the number of credit hours to be awarded for completion of the course. Course topics must be germane to the skills needed for competency as a home inspection worker. (3) An hour of credit is available for each 50 minutes of continuing education instruction. (4) Courses subject to an award of continuing education credits may include but are not limited to: (a) classroom setting or seminars; (b) self-study, electronic media; (c) correspondence course; (d) computer-based training; or (e) remote training. (5) Continuing education programs offered or recognized by the following associations are deemed to be accepted by the department: (a) American Society of Home Inspectors (ASHI); and (b) International Association of Certified Home Inspectors (InterNACHI). (6) The department will accept continuing education courses offered by any other content provider, where the course has been recognized or accepted by two or more states that require continuing education for home inspectors as a condition of renewal of authority to engage in home inspection in that state. (7) A list of recognized continuing education sponsors is available on the department's home inspector web page. (8) A list of approved continuing education courses from other content providers is available on the department's home inspector web page.
IMP: 39-9-212, MCA
NEW RULE X PENALTIES – CIVIL FINES – INJUNCTIVE RELIEF (1) The following schedule of penalties (civil fines) applies to the home inspector program: (a) failure to register: (i) first offense $ 250 (ii) second offense 500 (iii) third offense and subsequent offenses 1,000 (b) use of a false name or a false identity: (i) first offense 1,000 (ii) second offense 2,500 (iii) third offense and subsequent offenses 5,000 (2) In the event of an inadvertent failure to register, or a de minimus violation to timely update information, the department may, in its sole discretion, reduce or waive a penalty. (3) The imposition of a civil fine does not preclude the department from taking any other enforcement action against the party. The department expressly reserves its right to seek injunctive relief for violations of Title 39, chapter 9, MCA.
IMP: 39-9-206, 39-9-212, 39-9-301, 39-9-401, MCA
REASON: There is reasonable necessity to adopt NEW RULE X in order to provide a uniform and progressive schedule of civil penalties (fines) provided for by statute. The fine schedule establishes a clear basis for the amount of a penalty for a violation, starting at a low amount for the first violation, and increasing to the maximum allowed amount for a third or subsequent violation of the same provisions of law. There is reasonable necessity to establish a "look-back" period, which provides an incentive for home inspection businesses to continue to operate in compliance with the law, and not to engage in repeat violations.
NEW RULE XI DISPUTE RESOLUTION PROCESS (1) A person aggrieved by the department's decision pertaining to that person may request a hearing within 30 days of the date of the decision. All requests for hearing must be made in writing and sent to the department at any of the following addresses: (a) Registration Section, Employment Relations Division, Department of Labor and Industry, P.O. Box 8011, Helena, MT 59604-8011; (b) Registration Section, Employment Relations Division, Department of Labor and Industry, 1805 Prospect Avenue, Helena, MT 59601; or (c) [email protected]. (2) The hearing will be conducted as a contested case pursuant to the Montana Administrative Procedure Act, Title 2, chapter 4, part 6, MCA, and the department's rules. (3) The hearing and related proceedings will be conducted by the department's Office of Administrative Hearings. (4) Because home inspector registration is not a licensing matter, the hearing may be conducted either as a formal or informal proceeding, at the election of the person requesting the hearing.
IMP: 2-4-603, 39-9-212, 39-9-401, MCA
NEW RULE XII EDUCATION AND OUTREACH PROGRAM (1) As required by 39-9-212, MCA, the department shall dedicate 15 percent of the fees received by the home inspection program for education and outreach for consumers and home inspectors. (2) The department shall operate and separately account for the home inspector education and outreach separately from the construction contractor registration program. (3) Where appropriate, the department may coordinate the education and outreach for consumers and home inspectors with similar efforts of the construction contractor registration program, provided that the costs are allocated on an equitable basis between the two programs.
IMP: 39-9-206, MCA
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 Tracy Gonzalez, Employment Relations Division, P.O. Box 8011, Helena, MT 59604; fax (406) 444-4140; or e-mail to [email protected], and must be received no later than 5:00 p.m., on November 1, 2019.
6. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request, which includes the name and e-mail or mailing address of the person to receive notices, and specifies the particular subject matter or matters regarding which the person wishes to receive notices. Such written request may be mailed or delivered to the Department of Labor and Industry, attention: Mark Cadwallader, 1315 E. Lockey Avenue, P.O. Box 1728, Helena, Montana 59624-1728, faxed to the department at (406) 444-1394, or e-mailed to [email protected], or may be made by completing a request form at any rules hearing held by the agency.
7. An electronic copy of this notice of public hearing is available through the Secretary of State's web site at https://sosmt.gov/arm/. 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 a person's difficulties in sending an e-mail do not excuse late submission of comments.
8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor was contacted on April 24, 2019, by e-mail.
9. Pursuant to 2-4-111, MCA, the department has determined that the rules proposed in this notice will not have a significant and direct impact upon small businesses.
10. The department's Office of Administrative Hearings has been designated to preside over and conduct this hearing.
Certified to the Secretary of State September 24, 2019. |
A directory of state agencies is available online at http://www.mt.gov/govt/agencylisting.asp.
For questions about the organization of the ARM or this web site, contact [email protected].
