Untangling Licensing Law Confusion

Licensing statutes and regulations for contractors across the United States are not uniform. Each state, and oftentimes each county and city, has its own licensing requirements. Some of these laws are specific to electrical contractors, but where the electrical contractor acts as a general contractor, different sets of regulations may apply. Efforts to create some consistency in these laws have not been effective, but not for lack of trying. For example, this past month, the American Subcontractor Association (ASA) held its Fourth Construction Industry Legislative Conference in Washington, D.C., focused on changing licensing laws. The reasons for these laws are extremely varied. A “license” may be simply a form of taxation. An argument can be made that licensing statutes are designed to keep out-of-state contractors from competing in a local market. Other laws require testing to require a contractor to have at least minimum competence in his field. Aside from the reasonableness of these licensing laws, failure to comply with the requirements can lead to disaster for thecontractor. Where to find the laws? “Statutes are like sausages. It’s better not to know how they are made.” There is no general guide to find out what licensing requirements and restrictions exist throughout the states. In some places, licensing is through a county court clerk, State Revenue Commission, the Department of Public Health, or in a rare act of clarity, a Contractors License Board. For nonresident contractors, there may be excise taxes or bonding requirements. For residential construction, there may be a fund which requires a contribution. Where asbestos may be encountered, a different set of rules applies. Similarly, for public works, there are often additional licensing restrictions. Failure to comply Again, we consider regulations on a state-by state-basis. In Louisiana, it is illegal even to bid a job without a contracting license. To do so makes the contract void and unenforceable. (Translation: although the work was properly performed, and although the owner may have known you were not licensed, you cannot collect.) The same is true for many home improvement licensing statutes. In Washington, D.C., for example, failure to have a home improvement license with the accompanying bond makes the contract void. In other states, there is an opportunity to cure the default by obtaining a license after-the-fact, or by reviving a lapsed license. Mississippi has a law making a crime out of violating the licensing law. (Miss. Code Ann. § 31-3-21 (Supp. 1998)) Design/build considerations A recent Illinois court decision raises an interesting issue about so-called design/build contracts. In that case, a consultant aired national advertisements touting his talents as an expert on structural failures. His advertisements made it clear that he was not a graduate engineer. The court held that, by offering consulting services without an Illinois engineering license, he was violating the law and was required to withdraw his ads. What does this mean for electrical contractors? At a minimum, if “design” services are offered, a licensed engineer or architect should be an associate of your company. Conclusion Electrical contractors are increasingly developing multi-state businesses. An early knowledge of other jurisdictions’ licensing laws is extremely important. No assumption can be made that a joint venture with a licensed contractor is sufficient, or that hiring a licensed out-of-state electrician will satisfy state law. The summaries contained in this article are designated as a starting point for your own research. Electrical Contracting Licensing Regulations The following is a sampling of licensing regulations for electrical contractors: State 1. What agency issues the license 2. Statutory Reference 3. Other information Alabama 1. Alabama Electrical Contractors’ Licensing Board 2. Alabama Code 1975, Sec. 34-36-1, et seq. 3. Exam required. Only issued to individuals. Counties and Municipalities may issue licenses, but holder of statewide license is deemed qualified to work anywhere in state. Alaska 1. Department of Commerce and Economic Development 2. Alaska Stat., Sec. 08.18.026 and 08.40.005 et seq. 3. Anyone performing electrical contracting must employ a licensed “Electrical Administrator.” An exam is required for the license. Arkansas 1. Board of Electrical Examiners 2. Arkansas Code of 1987 Ann., Sec. 17-25-101 et seq. 3. Firm may get license if it employs a Master Electrician as superintendent or manager. An exam is required to become a Master Electrician. All Nonresident Contractors must notify the Contractors Licensing Board and file a bond of at least 10 percent of the contract amount with the Commissioner of Revenues. Colorado 1. State Electrical Board 2. Colorado Rev. Stat., Sec. 12-23-101 et seq. 3. Exam required. Delaware 1. State Board of Electrical Examiners 2. Delaware Code, Title 24, Sec. 1401 et seq. 3. Exam and certain levels of training and experience required. Ten hours of continuing education required every two years. A $1,000 bond must be filed before receiving a license. Florida 1. Electrical Contractors’ Licensing Board, Department of Professional Regulation 2. Florida Stat. Sec. 489.501 et seq. 3. Exam required for certification. Certification not required if the electrical contractor is registered. Registration does not require a statewide exam, but requires a license issued by the Florida municipality or county for the type of work for which registration is sought. Specialty licensing includes: low-voltage systems, outdoor signs, residential, lighting maintenance, and elevators. Also, there are a number of exceptions to license requirement. Idaho 1. Idaho Department of Labor and Industrial Services, Electrical Division 2. Idaho Code, Sec. 54-1001 et seq. 3. Exam required. License not required to advertise, but required to bid. Michigan 1. Department of Labor, Bureau of Construction Codes, Electrical Division 2. Michigan Comp. Laws Ann. Sec. 338.883 et seq. 3. Electrical Contractor must hold a master electrician’s license, or employ a master electrician. Minnesota 1. Board of Electricity 2. Minnesota Stat. Ann., Sec. 326.241 et seq. 3. Electrical Contractor must employ a licensed master electrician. Also must file a $5,000 performance bond and have a certain level of liability and property insurance. For Nonresident contractor, 8 percent of contracts greater than $100,000 must be withheld if a bond is not filed. Montana 1. State Electrical Board of the Department of Commerce 2. Montana Code Ann., Sec. 37-68-101 et seq. 3. Electrical Contractors not required to be licensed if all work is performed under the direction of a master electrician, or for residential construction of less than five units in a single structure, a journeyman electrician. Nebraska 1. State Electrical Board 2. Nebraska Rev. Stat., Sec. 81-2101 et seq. 3. Specific levels of experience are required. Exam or evidence of qualification required. Two classes of licenses. State license is not required of electrical contractor who holds a valid comparable license issued by any city or other political subdivision, provided that the contractor operates only within such municipality. Nonresident contractors must file a bond. New Jersey 1. Board of Examiners of Electrical Contractors 2. New Jersey Stat. Ann., Sec. 45:5A-1 et seq. 3. Exam and experience requirements. $1,000 performance bond required. Some exemptions to licensing requirements. North Carolina 1. North Carolina State Board of Examiners of Electrical Contractors 2. North Carolina Gen. Stat., Sec. 87-39 et seq. 3. Limited, Intermediate, and Unlimited licenses available with different maximum contract values. Corporation or business may be licensed as long as at least one licensed person directly supervises all electrical work done. Oklahoma 1. State Department of Health, Occupational Licensing Service 2. Oklahoma Stat., Title 59, Sec. 1680 et seq. 3. Exam required. Five years experience doing electrical construction required. Nonresident contractors are required to file a bond of 10 percent of the contract value. Oregon 1. Building Codes Agency 2. Oregon Rev. Stat., Sec. 479.510 to 479.990 3. Exam required. Rhode Island 1. Labor Department, Board of Examiners of Electricians 2. General Laws of Rhode Island, 1956, Sec. 5-6-1 et seq. 3. Exam required. South Dakota 1. Department of Commerce and Regulation, State Electrical Commission 2. South Dakota Codified Laws, Sec. 36-16-1 et seq. 3. Exam required. Experience required. Each applicant must execute an undertaking in the sum of $10,000 and must have liability insurance. Several exemptions to licensing requirement exist. Utah 1. Department of Commerce, Division of Occupational and Professional Licensing 2. Utah Code Ann., Sec. 58-55-1 et seq. 3. Exam required. Applicant must demonstrate financial responsibility by providing a license bond, cash deposit or financial statements. Contractor must file proof of worker’s compensation insurance, public liability insurance, and registration with the Utah Department of Employment Security, State Tax Commission, and IRS. Washington 1. Department of Labor and Industries 2. Rev. Code of Washington, Sec. 19.28.005 et seq. 3. Application must be accompanied by a $4,000 surety bond, cash deposit or negotiable security. Wyoming 1. Electrical Board, Department of Fire Prevention and Electrical Safety 2. Wyoming Stat. Ann., Sec. 35-9-102 and 35-9-122 et seq. 3. To be licensed, the contractor must be or must employ a master electrician. All of these laws are subject to change atany time. The statutes need to be researched for updates. ITTIG, of Ittig & Ittig, P.C., in Washington, D.C., specializes in construction law. He can be contacted at (202) 387-5508 or e-mail: USBuildLaw@aol.com. Visit his Web site at www.ittig-ittig.com.

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