Licenses • Failure to disclose financial information leads to action.
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A Pleasant Grove-based construction firm has been put on probation for failing to disclose full financial information including birth dates of its hundreds of owners.
Universal Contracting LLC received a contractor license from the Utah Division of Professional Licensing (DOPL) in January 2012. At the time, Universal provided financial statements for one owner. But within 90 days, Universal added more than 700 new owners. That apparently raised a red flag for DOPL.
By Utah law, contractors must prove they are financially stable in order to get and keep a contractor license. While DOPL requested complete financials for each of Universal's hundreds of owners, Universal refused, arguing with the division's interpretation of Utah code.
After a hearing before the Utah Construction Services Commission in February, Universal Contracting's attorney, Daniel Watkins of the firm Peck Hadfield Baxter & Moore of Logan, noted the division has never reviewed Universal's corporate books and instead has insisted on credit reports from individual owners of the limited liability corporation.
"If there are issues that our owners' personal finances are affecting Universal's ability to conduct business as a contractor, great," Watkins said. "But before you request that we spend $30,000 on credit reports, can't we first establish whether or not [financial stability] is an issue? The unequivocal answer [from the division] has been, no."
He accused DOPL of picking on Universal because it operates as an LLC instead of a more traditional employer-employee business model. Critics of construction LLCs say by making all of a business's workers owners, companies avoid paying unemployment insurance, workers compensation and payroll taxes.
A decision issued Tuesday by a five-member Construction Services Commission defended DOPL's actions, concluding that state statute identifies financial responsibility in terms of a company's "total history."
"[Universal] contends that…the Division should be precluded from considering the financial condition of any individual owner. The Commission disagrees," the decision stated.
DOPL also searched court records with the names Universal Contracting named as its owners and found that 132 appeared to have financial judgements against them, 232 had criminal records and 35 had filed bankruptcy.
According to the commission order, Universal Contracting's contractor license is on probation for a year. It now has 45 days to submit credit reports and financial information, including birth dates for its current owners. It also must pay more than $6,700 in outstanding fees.
Universal Contracting President Cory Atkinson said the decision is "disappointing" for the company, which he said now has nearly 1,000 owners. In an email, he noted Universal has never had any formal complaints about the quality of its work or about late payments to its creditors.
The state "uses every opportunity that it is given to impose additional burdens on Universal Contracting despite its unblemished record," Atkinson said. "The existing laws give the state of Utah discretion, but that discretion has consistently been used in the most restrictive way possible."
He added that Universal provides the opportunity of business ownership to its owners, "many of whom are of Latino heritage." Atkinson accused the state of trying to put the company out of business.
"To our knowledge, there is no other contractor in ... Utah that is attempting to comply with the extensive regulatory requirements that have been imposed on Universal Contracting," he said.
An email accompanying the decision indicated state officials had no further comment. "At this time the Department of Commerce is going to let the document speak for itself," department spokeswoman Jennifer Bolton wrote.
In September, Universal Contracting challenged SB35 passed by the 2011 Legislature. The lawsuit filed in federal court argued the "immigration-related" parts of the state's construction licensing law violate the Supremacy Clause of the U.S. Constitution.