You’ve finished trade school, done an apprenticeship, worked as a journeyman, and have many years of steady experience under your belt. You have a truck and tools, and plenty of people ready to hire you to tackle their project. You are ready to go out on your own as a general contractor. But before you can do so, you have some paperwork to do. This may include registering as a small business, getting liability insurance, and getting a contractor’s license. Or not.
From state to state, the requirements for general contractors couldn’t be more different. For example, In Colorado, Kentucky, Maine, Ohio, New York, and many other states there is no state-level licensing. Some local jurisdictions may have their own licensing; electricians, plumbers, and other specific trades may have requirements; and businesses may need to be registered and insured; but a general contractor can essentially paint a sign on the door of his or her truck and get to work.
In California, on the other hand, you need to be a licensed contractor to take any job worth more than $500. To get that license you’ll need to have four years of work experience, proof of bond, and be able to pass not only a trade exam, but a business and law exam as well.
Some states have different levels of licensing, like Florida, where you can qualify as a “General Contractor,” which gives you license to do unlimited work in residential or commercial construction; a “Building Contractor,” which will allow you to build commercial and residential buildings that are three stories or less; or a “Residential Contractor,” which allows you to work only on one- and two-story homes.
While most states require work experience, some consider education too. For example, in Georgia you can qualify for a contractor’s license through a varying mix of education and experience, and by passing some exams. And in states like Maryland, you don’t need a license to build new homes, you just need to register as a home builder with the office of the Attorney General. But if you want to remodel homes, you need a license with the more common proof of experience and testing. (Next Insurance has a state-by-state list of requirements, up to date as of July 19, 2018, that you can find here.)
This lack of consistency in licensing and registration requirements across the country raises an interesting question: would raising the licensing standards of home building professionals raise the overall quality of new homes and remodeling work? To answer this question, I turned to two professionals, George Whalen and Mike Guertin, who are both involved in registering and educating contractors in the state of Rhode Island, and beyond.
Consumer protection will raise the bar
George Whalen has had a long career in government. He began with 14 years at the Rhode Island State Building Commission, working as an Architectural Barriers Coordinator. In 1991 he was appointed the executive director of the Rhode Island Contractors’ Registration and Licensing Board. In 1995, he became involved with the National Association of State Contractors Licensing Agencies (NASCLA) where he has served two-terms as president. Founded in 1962, NASCLA is a nonprofit organization whose purpose is to promote best practices and license uniformity for agencies that regulate the construction industry. George is a certified, eligible building inspector, and is a member of the Rhode Island Building Officials Association.
During a phone conversation, George explained that the first priority of contractor licensing should be consumer protection, which will raise the bar for the building industry and the quality of work. “Maintaining the goal of health, safety, and welfare of the public is good for the industry,” he said, “It shows that a licensed contractor is skilled, knowledgeable, and knows what they are doing. Licensing gives contractors credibility.” Of course, he points out that to reach the goals of consumer protection, to create integrity for licensed professionals, and to improve the quality of completed project, states must enforce their regulations.
After consumer protection, George believes that there are a few more must-haves for a state’s licensing program. “It must be efficient and cost-effective for the contractor,” he said, “it shouldn’t be a barrier.” While he thinks education, experience, and testing should all be considered, he says that some states get over-focused on one or the other, and cautions that we need to find a balance.
He is also a strong proponent of continuing education for licensed professionals. “The codes are always changing and there is more and more new technology out there,” he said, “continuing education keeps contractors aware of all of this.”
Finally, George believes that contractor licenses should be portable from state to state. One of the projects he worked on at NASCLA was a model test for contractor licenses that states could adopt and create reciprocity with other states. He points to natural disasters, like the recent hurricanes and wild fires that create the opportunity for skilled, licensed contractors, and the need for strong consumer protection in those situations. So far 26 states have adopted the NASCLA test.
George also recognizes the skills gap. “The industry is hurting,” he said, “the average age of a contractor is almost 50. We need to find ways to bring young people into the trades.” He believes that creating and industry with integrity that values education is a big part of how to do that. George’s advice to emerging professionals is to get smart. “Get familiar with the codes and understand why they are important, learn about safety, the laws, and contracts,” he said, “Take education seriously.”
Professional development is the key
Mike Guertin is a builder and remodeler in Rhode Island, author for Fine Homebuilding magazine, the Journal of Light Construction, and Professional Deck Builder, and a presenter at JLC Live, the Remodeling Show, and the International Builder’s show. His home state of Rhode Island doesn’t have licensing for builders. They have a registration that everyone from commercial builders to drapery installers have to get. Mike helped to write the state regulations for pre-registration education (required before any residential contractor obtains a registration) and for continuing education (for all residential contractors to maintain their registrations). He now teaches both the pre-registration courses and the continuing education classes. This experience and his experience teaching all over the country has given him an interesting perspective on this topic.
In an email, I asked Mike a few questions about what he thought of the potential of contractor licensing to help to ensure that new homes and remodels maintain a certain level of quality. He replied with a few written pages that show his passion for the subject. My first question was how well does licensing meet the goal of elevating the quality of work in the building trades. Here’s a slightly edited version of Mike’s reply:
I believe that licensing and registration can have an impact on the overall quality of homes and remodels. But it is dependent on who needs to be licensed and/or registered, what training and education level is required, what the local building codes, warranty periods, construction standards require, and what the inspection process for the work is.
In most states, licensing is only applicable to the general contractor and critical life safety and health trades like electricians, plumbers, and HVAC professionals. That leaves dozens of trades without a licensing or a registration process including framers, siders, roofers, window installers, insulators, and drywall professionals.
Where the life safety and health trades are licensed, it’s not only the owner of the company who is licensed, frequently the workers also need credentials in the form of staged licensing (apprentice, journeyman, master, etc.). At each license level there are usually state exams and required continuing education. In addition there are inspections of the work by the local trade inspector. Licensing coupled with inspections seems to ensure a level of quality.
On the contractor licensing side, usually only the owner, president, or other person in the organization needs to be licensed or registered. All workers under the employ of that company don’t need a license or registration. Take big-box stores for instance, in states where they offer installation of their products, someone from H.Q. obtains the license and is essentially in charge of all work they subcontract out. One person may hold licenses in several states that they never set foot in and have no day-to-day supervision of the work. The supervision is left to unlicensed associates who may or may not have any experience in the trades they are supervising. Couple that with the number of trades that don’t require licensing, layer on a lack of effective code enforcement, and the level of quality that gets passed can be very low.
This is where code enforcement comes into play. Plumbing, HVAC, and electric inspectors often spend 30 minutes to inspect the work of the trades at each stage of construction and most of the work is exposed for visual inspection. A building inspector is theoretically supposed to inspect the roof, siding, flashing, framing, foundation, insulation/fire–blocking/draft–stopping, drywall, and a host of other things. But at the inspection time most of the work is covered. They can’t check to verify the nailing schedule for plates to studs, or the installation of underlayment and flashing if it is already covered beneath drywall, roofing, and siding. Sometimes all of these critical elements are left to unlicensed, unregistered tradespeople, without oversight, who are paid based on production.
Next, I asked Mike how could we improve licensing to improve homes. To this, he replied:
I think the model that the life safety and health trades have for licensing and inspections, where all workers are licensed and have required continuing education and where there are rigorous inspections would improve the quality of work that go into home construction.
Require that each trade worker be trained and licensed and increase the inspection regime. Without enforcement of codes and standards there will continue to be a race to the bottom mainly because of cost-conscience consumers. Look at the automobile industry. Simple things we take for granted like headlights, seat belts, windshield wipers, and fuel efficiency weren’t required 100 years ago. But as government got involved on behalf of consumers laws, regulations and rules were placed on the industry that increased safety, and in turn, quality.
Finally, I asked Mike what advice he would give to a young person who would like to be self-employed in the trades. Here, his reply focused on professional development from a range of sources:
You can earn a living by focusing on being the low-bid for any project but it will be hard to grow a business. There are price conscious consumers who don’t care about quality. Or they may want a low price and expect high quality. In either case, you will be working for low compensation. There are also quality conscious consumers who are willing to pay for professional quality work. You will earn more money, build a good reputation, and be able to grow your business by focusing on better clients. In order to compete in a quality market, you have to sell your knowledge and ability to perform the work. Knowledge comes from professional development. Take training classes, read books and magazine articles, search out mentors who can teach you better and more efficient methods to execute high level craftsmanship. And practice. The only way you can get good at something, whether it’s setting tile or running a business is to do it and focus on applying the things you’ve learned through professional development.
Education is the consensus
It’s no surprise to learn that these professionals believe that appropriate licensing, along with enforcement, and real inspection of work performed, is one of the keys to growth in reputation and in quality in the building industry. George believes that this will also lead to economic growth in the industry. Whether or not a license is necessary is not a matter of debate. If you live in a state that has a requirement for licensing or registration, you will have to take those steps before you start your own contracting business. If you are hoping to do quality work for good clients, it seems that your license should be a credibility booster. But both George and Mike agree that it is not enough, you need to be well-educated and up-to-date on codes, materials, and best practices. And you can do this even if you live in a state that doesn’t require any form of license or registration. It will be good for your clients, good for your business, and good for the building industry.