Your state and local municipality advise you to protect yourself and hire only licensed contractors to work on your home. Some municipalities will not provide you with permits unless you do have a state licensed contractor to sign or pull the permit. Your state and local agencies may actually give you the impression that they are the agents tasked to enforce state statutes, civil and criminal laws related to the licensing requirements. You might even be under the impression you will be protected by your state agency responsible for the punishment of any violation of state statutes related to contractor fraud and misrepresentation.
Let's call out a few of the classic issues homeowners have with contractors and how the licensing board might classify the issue.
- Shoddy workmanship; civil issue.
- Contractor does not provide proof of insurance; civil issue.
- Contractor does not provide proof of workers compensation; civil issue.
- Contractor threatens, scams, bully's, lies, misrepresents, commits fraud; civil issue.
- Contractor does not complete work; civil issue.
- Contractor does not honor contract terms and payment schedule; civil issue.
- Contractor changes work ordered against the will of the homeowner; civil issue.
- Contractor does not follow design plans; civil issue.
- Contractor uses unlicensed unskilled labor; civil issue.
- Contractor does not provide basic workplace literacy standards; civil issue.
From LSLBC Compliance, Enforcement Division, Louisiana State Licensing Board for Contractors.
"This Board does not involve itself in or dispute civil and/or criminal matters. We only have jurisdiction regarding licensing."
What this means for homeowners is that the state of Louisiana Licensing Board for Contractors will tell you via text, website, email or by phone if the person that has identified themself as being a contractor is actually licensed to be a contractor. That's all they will do, don't expect anything else. It's on the homeowner to make sure Residential Codes are being followed, proper health and safety and following some industry standard in building techniques.
If you require a permit you can file for homeowner contractor waiver and pull the permit so your sub-contractors that aren't licensed don't get audited. It's a common and well known practice for licensed contractors to hire independent contractors which are classified as unlicensed contractors if you read the revised statutes regarding licensing. The state says anything over $7,500 in labor and material costs requires a licensed contractor. But your licensed contractor that outsources all the work to do your home doesn't ask for licenses from the sub-contractors because their is no enforcement once a permit is pulled by someone that is legal to pull it.
Basically you are paying a middleman unless the workers are actually W2 employees which is rare in the industry.
If a person claiming to be a licensed contractor and doesn't present proof, then does not pull a permit with your city or parish the state licensing board for contractors will never receive notice to review if the contractor has proper insurance and an active license. The state licensing board will only review licenses when the contractors name is placed on the actual permit and submitted to the state by your local permitting office. If you are not required to have a permit then according to the checks and balances you are not required to have a licensed contractor. Best way to proceed with the least amount of bureaucratical issues is to request a permit in the homeowners name, secure the proper insurance for any injury claims or material theft then hire who you want to work on your home as long as it's not outside the skillset of the person you hire.
The State of Louisiana Licensing Board for Contractors collects a license fee and will fine a company for not having a license but will not assist a homeowner or make sure your health and welfare is protected.
The state does not provide proof to you that the contractor is actually in the trade business, that's up to you to research and collect references. You actually have to ask the contractor if they will be at your job site every day using tools and materials. That's when you find if your contractor is simply a side hustle for the person arranging for others to do the work.
If you are under the impression that your state licensing board will assist you with disputes you are seriously wrong. In fact, it's a good idea to get this in your checklist of things to learn right away. If you give a deposit and the contractor never returns you will have to go after the person in civil court. If you report them to the police then to the state you will have to wait for the police to make their arrest and the state to file it's penalties and collect their money. Then you can take that information into civil court and try to recovery from your ignorance and blind trust. But let me share with you one thing, even a licensed contractor can have financial issues and ask for money up front and not complete the work. They could drag their feet 45 days before you would have the right to file against them. That's if they presented you with a valid contract and you hired an attorney to represent you. Once this issue becomes a legal issue you're going to find you are on your own, the state and your local municipality will not assist you in your civil filings.
Most homeowners simply cut their losses, file and insurance claim and learn from the experience and try to never repeat the blind ignorance trust mistake again. Money as a down payment is for staging and should have a security bond or at least a minimum of a certificate of liability insurance naming you as the certificate holder. But, no matter what you read, your excitement will get the best of you and you will place a deposit, so do your best to make sure your deposit is money you can afford to pay expecting nothing in return. You are to pay for progress as defined in your contract. If you have to prepay for materials and supplies you should be given an invoice itemizing the items with their related costs. Never pay in advance for labor more than a full day of work. It's important that you establish a baseline with your workers so they don't expect to get paid on a Monday for work that Friday. It's not how the world turns and it shouldn't be something you do. Keep this in mind, you are not their Payday Advance or Payday Loan service. Try it yourself, when you go into work on Monday ask for Friday's check.
Do not cut a check until the following is in your hands:
(it's difficult because you are asking someone to do what is law.)
- Proof of occupational License (if required).
- Proof of business registration and/or business license to include business classification and type.
- Personal guarantee / contract
- Schedule of work
- Schedule of payments
- Materials Reimbursement policy. (If not listed in contract. How do you reimburse for materials purchased by workers?)
- General liability insurance with you named as insurance certificate holder. Valid dates and if expired contractor must renew.
- Workers compensation insurance. (Unless an individual worker acting as an independent contractor.)
- Security Bond (if required)
- Signed by all parties and copies given to all at time of signing.
So why would you go out of your way to hire a licensed contractor?
A Barber has more licensing requirements than a Builder to be granted a occupational licensed.
Barbers complete 1,500 hours of training whereas a contractor only has to have proof of insurance and the ability to take an open book exam and no training. This is why sales professionals, bread bakers, insurance agents, investment brokers, job placement agencies, lawyers, realtors and labor brokers make up many of your construction license holders. No industry experience needed to remodel a home. This is why homeowners need to treat contractors that do not actually work on site as labor brokers and labor providers. You must oversee your project on a daily bases and document everything with time date stamped pictures and notes to include text messages and emails. The licensed contractor that you hired that's actually a Hammond Bread Baker or the Night club manager and the print shop owner with a contractors license isn't going to be much help to you when construction issues surface. One thing I would suggest is ask to see their workers training schedule and their copy of the IRC code book your local municipality wants you to follow. You might find you see your contractor only on paydays and nothing more.
For most home improvement jobs it may be better for the homeowner to act as your own contractor and hire your labor directly from the same labor pool pickup areas as your labor brokers do. If you plan everything, stage your project and have detailed plans with instructions just about any trade skill experience level should work as long as you do not relax on literacy standards for your job site and watch carefully.
Some professional trades are regulated by your state and local municipality. Be sure you understand if you are required to pull a permit for any work that covers any of the four categories listed below. Keep in mind that many municipalities only require licensed professionals for new construction and not for service, repair or installation. Sometimes you'll find someone skilled that is insured that can do the repairs just fine. Keeping in mind that insurance claims would be a civil issue so it's best to have all work reviewed so not to be forced into any legal action to get your home improvements completed.
In the below categories it's always best to hire skilled tradesman that have special training and certifications.
No matter who you hire for your carpentry work you should verify that the specialty trades are licensed and provide their license and insurance with your name on it before they start work. Otherwise, you'll never be able to place any type of civil action on them for shoddy work if it's discovered they did not do the work to at least match residential code and industry standards.
Keep in mind you are the project owner and main contractor not them. They are the trade professionals you hire and you pay. You even judge the quality of their work. Even if you are a layperson it's still your final word that determines a completed project. Savvy homeowners offer the best referrals if you ask me.
It might be a good idea to research your options. Extra insurance coverage that covers material losses as well as injuries may actually cost you less than having a builder offer insurance for workers that are classified independent contractors. I've been told by builders to get builders risk insurance as first coverage which is a discussion in itself to where or who this arrangement assists. If you are hiring your workers as a homeowner contractor it's a good idea to identify with the worker any expectations of coverage.
Post your projects and ask for public reviews. Sharing pictures and plans with the world often leads to better oversight by you when you learn what to look for. From creating a draw schedule and progress report to a quality control audit. It's your home, it's your project, you are hiring a person to do work that either you can't do or you expect them to do better than what you could do.
- Louisiana Statute: Residential contractor fraud RS 14:202.1
- Louisiana Statute: 14:2157. Exemptions
3) Owners of property who supervise, superintend, oversee, direct, or in any manner assume charge of the construction, alteration, repair, improvement, movement, demolition, putting up, tearing down, or maintenance of any building, railroad excavation, project, development, improvement, plant facility, or any other construction undertaking, on that property, for use by the owner, and which will not be for sale or rent, and the control of access to which shall be controlled by the owner so that only employees and nonpublic invitees are allowed access.