What’s new in licensing & how it could affect your growing business
by Jerri-Lynn Wier
December 14, 2018

For contractors operating in multiple states, keeping up with changes in licensing requirements and the administrative preferences of licensing boards can be a challenge. To help your teams stay ahead of the game and ensure compliance, you must stay abreast of new laws and amendments. The following highlights recent changes in the regulatory landscape. Some make licensing or starting a business easier, while others pose new issues to consider.

Texas

This summer, Texas made it easier for new and out-of-state businesses to register under the entity name of their choice. Under prior law, the use of names that were “deceptively similar” to that of an existing business were barred. Texas Administrative Code 79.38, effective June 1, dictated the name must merely be “distinguishable.” By lowering the bar and more clearly defining the terms, the change was expected to reduce rejected filings due to name conflicts.

South Carolina

South Carolina recently eased application requirements for general contractors with Statute 40-11-262, signed into law May 18, which allows contractors to submit a surety bond in place of a financial statement for both renewals and initial applications. The change is effective with the present renewal cycle. The change makes it easier for companies that recently formed an employee stock ownership plan (ESOP) to affirm their financial status, among other benefits.

Also in May, the South Carolina Contractor’s Licensing Board announced that it would begin enforcing requirements for mechanical contractors (air conditioning, heating and packaged equipment) to display their mechanical license in an area accessible to the public at their principal place of business. The contractor’s mechanical license number must also be displayed on all commercial vehicles, invoices and proposal forms.

North Carolina

The North Carolina Licensing Board for General Contractors also enacted display requirements in 2018. Under 21 NCAC 12.0501, approved April 1 and announced in fall 2018, general contractors must include license numbers “on all contracts, advertisements and licensed websites.” For guidance, The Carolinas Association of General Contractors (AGC) provides helpful context. After 93 years of paper filings, the licensing board also unveiled NC Contractors Licensing Central, an online license renewal system. As of October, the board no longer mails out paper renewal application forms.

Alabama

Alabama also ceased mailing paper renewals in 2018, requiring contractors to download renewal forms online.

New Jersey

In March, the New Jersey Department of Community Affairs eliminated permit and inspection requirements for roofing and siding work on one- and two-family residences. The new requirement classifies those project types as minor work and ordinary maintenance.

Oregon

Oregon eased licensing requirements for contractors under House Bill 4144, signed into law in April. Effective January 1, 2019, individuals with at least 8 years of construction experience may apply for a new residential contractor’s license without having to complete the prerequisite training. The individual will still need to pass the test for a Construction Contractors Board license and must form a business as a sole proprietor. The law further provides license fee waivers and other financial support measures, designed to help construction professionals transition into ownership.

Minnesota

Minnesota increased licensing requirements for work done under the state’s Property Assessed Clean Energy (PACE) program by requiring that all installations be completed by contractors licensed through the Department of Labor and Industry, which took effect May 1.

Hawaii

Hawaii will begin licensing home inspectors in July 2019. Under Senate Bill 2043, it will be unlawful to engage in home inspection without a home inspector license, subject to a $1,000 fine for each offense.

Indiana

Indiana recently passed legislation requiring registration of underground utility excavation contractors. In addition, Public Law 93-2018 requires those conducting excavation or demolition under contract with a communications service provider or utility to include a statement in an entity filing with the secretary of state that says the contractor and their employees will comply with Indiana’s 811 “Call Before You Dig” statute (among other requirements).

Virginia

Effective July 1, Virginia’s amended VCA 54.1-1115, the statute governing prohibited acts by contractors, states that a “construction contract entered into by a person undertaking work without a valid Virginia contractor’s license shall not be enforceable” unless the contractor “gives substantial performance within the terms of the contract in good faith” and was unaware of license requirements. Other provisions are provided under the clarified statute as well.

California

The Ninth Circuit Court of Appeals recently reversed a district court’s ruling that excavation related to installing ground cable was beyond the scope of a contractor’s low-voltage C-7 California contractor’s license. The case, MP Nexlevel of California, Inc. v. CVIN, LLC, concerned $18.1 million in payments for a 1,371-mile fiber-optic cable network installation project. Following a dispute, the owner sought to deny payment for the project under California’s unlicensed contractor law, asserting that the contractor’s license didn’t cover excavation work. A district court agreed.

On appeal, the contractor’s case was bolstered by a representative of the Contractors State License Board, who testified that the board had always interpreted the C-7 license statute to include the kind of excavation and trenching work performed by the contractor. The official indicated that any work done outside the scope of the license in the case would fall within the “supplemental and incidental” exception. The Ninth Circuit reversed the lower court’s decision, sending the contractor back to court in pursuit of payment. The outcome of this particular case will be significant for low-voltage contractors operating in California.

There’s much at stake for contractors when it comes to state regulatory requirements. Ensure your business is properly registered and licensed for all of your activities by getting expert assistance with every aspect of entity management and licensing while also leveraging the appropriate compliance software.