Monday, August 11, 2008

Dispute Resolution: The CSLB's Arbitration Program

From California Licensed Contractor, Summer 2008

You just received a letter from CSLB that a complaint has been filed against your license and arbitration is being provided as the resolution. Congratulations!

Your case has been determined as eligible for this unique and very fair program that is paid for by the CSLB. Arbitration is an efficient resolution tool if the dispute is about non-licensing issues, such as workmanship, the contract terms, change orders (or lack thereof), and if there are no violations or disciplinary actions required.

Complaints that meet specific criteria and include a potential financial injury of $12,500 or less may be referred to mandatory arbitration at the complainant’s request. Complaints that meet this same criteria and include a potential financial injury that is between $12,500 and $50,000 may be referred to voluntary arbitration if both parties (the complainant and the contractor) are willing to resolve the dispute within this forum.

So, what is arbitration anyway? The complainant (typically a homeowner or, in some instances, another contractor) and yourself will present your case before a neutral arbitrator who is knowledgeable in the trades. You will receive a hearing notice from the administrative agency, the Arbitration Mediation and Conciliation Center, which will provide for a time and place for the hearing. At this assigned time, both the complainant and you will have the chance to present your side of the story to the arbitrator, who will then render a decision that will serve as the final outcome of the dispute.

Is it really that easy? Yes… and no. Both the complainant and contractor have to prove their case. In other words, you must present evidence for your side of the story, such as cancelled checks, contracts, change orders, phone records, reports and any other information that will help the arbitrator get a clear view of what happened on the project. Also, the arbitrator will consider any outstanding contract balance or bond payments, so be sure to have that information as well. Remember, whatever the arbitrator decides will be final. There is no appeal process, so it is very important that you be prepared and bring everything to the hearing.

What does an Arbitration Award mean for your license? If you are required to pay the complainant, and do so within thirty (30) days, then the complaint is not disclosed on your license. But, be careful; if you are required to pay and do not within ninety (90) days, your license can be revoked. However, you might prevail in the arbitration and the complainant may owe you money, which may be confirmed in court as a judgment.

Arbitration may be the best solution to a dispute with a complainant. You are given the opportunity to tell your side of the story and be heard by an arbitrator that knows the building industry and the trades. You may or may not win, but the process is fair to both sides and the outcome will be equitable. So, if you are given the opportunity to arbitrate your dispute, congratulations!

More information about the arbitration program is available at or

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