I believe after all of the push and shove, I have a final document that all contractors should refer to if they deal in the area of referral fees. The following is from a consensus of several people pretty high up.
There has been a lot of talk about referral fees and whether they are acceptable, not acceptable, or hurting the economy. There have been a number of people complaining about contractors and unlicensed contractors with respect to the referral fee issue.
For quite some time now, there has been some question as to whether one contractor can provide another contractor with a referral fee. We have been receiving many phone calls and emails about this very issue. Although the consensus believes (I use the word "believes" because I do not know if it would be accurate to say exactly what the law says) that the answer should be No, we thought it best to actually spell it out.
The portion of the law that was discussed among several people was Business & Professions Code section 7157. After various discussions back and forth, it was unanimously agreed among us that the answer to this question is that no referral fees should be allowed between contractors - ever. Of course, contractors can be compensated for work that they do. However, they should not benefit from this work in the form of an inducement or referral fee.
Please note that this analysis does not include anything having to do with non-contractors.
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2 comments:
Does this applies to designers?
The issue discussed dealt with Business and Professions Code section 7157. Some will argue that if your business is not ruled by that code section, it will not apply. However, this area of the law is very cloudy and open for great interpretation. In order for you to get an answer more specific to designers, you may want to contact the Contractor's State License Board yourself to see what they say so that you have a better understanding of the governmental agencies mindset.
Good luck.
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