By Jamie Hanson
An Arizona law that went into effect in September 2022 gives new protections to licensed contractors and other business and professional licensees in state agency “licensing decisions.”
The amended A.R.S. § 41-1092.08 gives a contractor 10 days to accept an administrative law judge’s provisional decision before the ROC has a chance to modify it or reject it. If the ALJ’s written decision is favorable, the contractor can accept it, making the decision final – i.e., the ROC cannot change it.
The 10-day window applies “in any appealable agency action or contested case involving a licensing decision.” (While the new provision applies to state agencies and their licensees in general, for the purpose of this article we will restrict our discussion to the ROC and licensed contractors.)
If the contractor does not accept the ALJ’s decision, the ROC can still do what it has always been able to do: accept the decision, modify it, or even reject it. However, under the 2022 amendments, if the ROC intends to modify or reject the provisional decision – e.g., by imposing a penalty or punishment more severe than the ALJ’s recommendation – the ROC must first have a conference with the contractor.
If the ROC seeks to deviate from the ALJ’s recommendation, the ROC runs the risk of an adverse attorney-fee award. Under amendments to A.R.S. § 12-348(A)(2), that statute now provides, “A licensee that prevails in an appeal of an agency’s final decision following a conference pursuant to section 41-1092.08, subsection I is entitled to recover reasonable attorney fees and costs incurred during all stages of the proceeding.” Thus, a state agency that wants to change the ALJ’s recommended decision must weigh that potential liability for its own attorney fees and those of the license holder.
Practical Implications. This new law is good news for contractors, because it gives them more control over the hearing process that affects their license.
Many contractors deal with homeowner complaints about workmanship, and an adverse decision can lead to suspension of the contractor’s license. Under the amended A.R.S. § 41-1092.08, a decision to suspend a contractor’s license after a homeowner’s workmanship complaint is a “licensing decision” that falls under the protection of the 2022 law.
If a contractor successfully defends its license at the administrative hearing, the ALJ decision will recommend that the complaint be dismissed, with no discipline against the contractor’s license. Thanks to the 2022 law, the contractor has the right to accept that favorable decision, without the risk of the Registrar overturning it. (That was a real risk before the law was passed; if it disagreed with the ALJ’s decision, the Registrar would sometimes convert a dismissal into a suspension.)
If the ALJ decision recommends only a “slap on the wrist” decision (a one-day suspension, for example), the Registrar cannot increase that discipline unless the Registrar meets with the contractor in advance. If the Registrar persists in increasing the discipline, then the Registrar could be liable for attorney fees if that decision is ultimately overturned in Superior Court.
Conclusion. Apart from this development in the law being generally more favorable to contractors, it also helps contractors in any negotiations with homeowners during the complaint process.
The new law is a healthy reminder that the homeowner is not in total control of the complaint process, and there are protections in place to preserve the contractor’s right to hold a license.
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