Checklist for Complying with Contractor Licensing and Design Professional Registration Laws

By Paul W. Berning

Following is a checklist for use by construction industry professionals in evaluating license law issues. The checklist tracks through the issues in a chronological manner, from identifying potential regulators through keeping existing licenses up-to-date.

Penalties for non-compliance with licensing laws can be severe. They include losing the right to sue for payment for performed, being ordered by a court to refund amounts already paid for work performed and criminal penalties. Users should consult an experienced construction lawyer if they are unsure how a statute or regulation applies to them.

What agency or regulatory body has a licensing requirement that may apply to my firm?

In answering this question, be sure to consider:

  • State boards of contractor, engineer and architect licensing.
  • Requirements that may be imposed by counties and cities (especially where there is no state licensing requirement).

Does the work my firm is performing now or is considering performing in the future require it to obtain a contractor's, architect's and/or engineer's license?

In answering this question, be sure to consider:

  • The typically broad definitions of key terms such as "contractor," "practice engineering" and "practice architecture."
  • The activities performed by subcontractors or sub-consultants.
  • Whether the license requirement covers work your company has agreed to do, even if the work actually will be performed by others.
  • Whether the license requirement covers work your firm offers to do.
  • Cross-over licensing issues involved with design-build, which may require a design-builder to have contractor, architect and engineer licenses.

Even if my firm does not consider itself a construction, architecture or engineering firm, is it performing or has it contracted to perform work that requires it to be licensed?

In answering this question, be sure to consider:

  • Developers may have to be licensed under certain circumstances, such as when they agree to provide construction services, even if others perform the work.
  • Work performed by subcontractors.
  • The license requirements that pertain to contractors, architects and engineers often include construction management.
  • Equipment sales contracts that also provide for design and construction as part of installation may require licensing.

Does my firm fall under any of the exemptions?

In answering this question, be sure to consider:

  • Owner exceptions.
  • Utility exceptions.
  • Federal projects.
  • Cross-over practice by licensed design professionals or licensed contractors.

Exactly who would be the license holder?

In answering this question, be sure to consider:

  • Whether your firm must have a license in its own name.
  • Whether an employee or principal of your firm must have a license in his or her name, especially in the case of design professional licenses and also for qualifiers for contractor's licenses.
  • Whether both your firm and an employee/principal must have a license.

If I do not or my firm does not have the correct license, can the correct license be obtained?

In answering this question, be sure to consider:

  • Whether the pertinent board or agency licenses the type of entity my firm is.
  • In the case of architecture or engineering, whether some percentage of the firm must be owned by licensed design professionals.
  • In the case of architecture or engineering, whether there are limitations on the name of the firm (especially when the firm name contains the names of individuals who are no longer practicing).

How does my firm obtain the correct license?

In answering this question, be sure to consider:

  • Applications and registration forms.
  • Experience requirements for license qualifiers.
  • Examinations.
  • Bonds and insurance.

Does my firm have on staff or can it locate a qualifier for the license?

In answering this question, be sure to consider:

  • The qualifier's position within the company.
  • Whether the qualifier must have an ownership stake in the company.
  • Whether the qualifier has sufficient involvement with the company and sufficient authority.
  • Whether the qualifier will have sufficient involvement with the project for which a license is needed.
  • Whether the qualifier already has the necessary license and must take some action, such as inactivating it.

If my firm is licensed in another state, can my firm take advantage of rules of reciprocity or comity?

In answering this question, be sure to consider:

  • Licensing or registration agency statutes, regulations and procedures for reciprocity.
  • Procedures for facilitating reciprocity for design professionals though the National Council of Examiners for Engineers and Surveyors (NCEES) and the National Council of Architectural Registration Boards (NCARB).
  • Whether licensees, even if granted some measure of reciprocity, still must pass tests on local laws or procedures.

If my firm has the correct license, is it current?

In answering this question, be sure to consider:

  • Whether the license has expired.
  • Whether all information about licensees required by the licensing agency is correct and up-to-date, including business addresses, officer names and addresses, owner names and addresses, identity of qualifiers, and qualifier addresses.

Is my firm's license in the appropriate classification?

In answering this question, be sure to consider:

  • Size and nature (residential or commercial) of the projects.
  • Specialty contractor licenses (electrical, plumbing, HVAC).
  • Branches of engineering.
  • Boundary lines between architecture and engineering.

Is the firm that actually will perform the work licensed?

In answering this question, be sure to consider:

  • Whether the project will involve a joint venture or other special or one-time entity.
  • Whether joint ventures and other such entities must have licenses of their own, separate and apart from their parent firms.
  • Whether a joint venture or other new entity is being created to perform a design-build project.

If my firm's license situation is not clear, can I obtain an advisory opinion from the relevant board on a "no names" basis?

In answering this question, be sure to consider:

  • Whether to employ outside counsel to contact the licensing agency.
  • Whether to rely on an oral response or to request a written response from the licensing agency.

What obligations does the license law place on my firm after the license has been obtained?

In answering this question, be sure to consider:

  • Requirements concerning abandoning work (that may come into play on a problem job).
  • Required notices to customers.
  • Advertising requirements.
  • Language and information that must be included in contracts, bids or proposals.
  • Requirements to make progress payments and to pay other debts.
  • Requirements that only licensed subcontractors be used.
  • Requirements that worker’s compensation and/or liability insurance be maintained.
  • For architecture or engineering, what documents have to be stamped and by whom.

Once my firm and I have the necessary license or licenses, what must we do to keep them in full effect?

In answering this question, be sure to consider:

  • Periodic renewal and fee requirements.
  • Continuing education requirements.
  • Keeping required bonds and insurance in force.
  • Setting up a calendar or tickler system to remind of these things.
  • Keeping up with changes in license laws in all states where you or your firm are licensed.

If my firm does not need to have a license, do my firm's journeymen, apprentices or supervisors need individual licenses, particularly for trades involving life safety, such as plumbing, electrical, HVAC and framing?

In answering this question, be sure to consider:

  • Licensing requirements from public safety agencies, such as state fire marshals for electricians or state health departments (for plumbers).
  • Licensing requirements arising from apprenticeship programs regulated by state labor departments.

What other regulatory obligations does my firm have?

In answering this question, be sure to consider:

  • Your firm must be qualified to do business in all states in which it is working.
  • Your firm must pay any taxes due in states in which it does work, including for business licenses, payroll and income.
  • Whether your firm needs another license, such as for structural pest control, or environmental permits.

John W. Ralls, Esq. is the co-author of this checklist.