1. in the interest of consumer protection and safety, the State of Michigan administers and Occupational Code (Public Act 299 of 1980) through the Department of Labor and Economic Growth (DLEG).
A.PA 299 requires all contractors performing residential work to be properly licensed for their scope of work.
B.PA 299 also requires contractors to include their license number on all advertising and contracts, they must also carry the State issued pocket size license. State licenses are issued by the DLEG.
C. Local building officials advise that homeowners be aware that PA 299 requires that anyone charging $600.00 of more on residential improvements be licensed by the DLEG.
1. Free Work:"a contractor cannot bring or maintain an action in a state court for compensation for services without proving they had a proper license to conduct the business".
2. Officials at the DLEG have verified that an unlicensed contractor is for all intents and purposes 'working for free' as the homeowner is not obligated to pay for those services.
3. An unlicensed contractor cannot obtain a permit from your local building inspector's department. By not following local codes, the homeowner assumes responsibility for faulty work, possibly jeopardizing their home and their homeowner's insurance coverage.
D. Verification of a properly licensed contractor can be made on-line at the State of Michigan web site www.cis.state.mi.us/verify.htm or through the Verification Unit at 517-241-9288.
E.PA 229 grants remedies to consumers, working with local building inspectors, state officials and the Construction Lien Recovery Fund, the consumer is protected from fraudulent construction & business practices and may be able to recover damages resulting from fraud.
1. An unlicensed contractor cannot participate in the ConstructionLien Recovery Fund (and the homeowner cannot collect from the fund); a homeowner may have to pay twice if an unlicensed contractor does not pay his subcontractors or suppliers.
a. Homeowner's who do not understand and participate in A Notice ofCommencement, A Notice of Furnishing, Sworn Statements and Waivers ofLien could be at financial risk.
2. Dealing with a licensed contractor allows the homeowner and contractor to settle workmanship issues through alternative dispute resolution. These cases are settled more often and more quickly than those brought to small claims court.
2. It is not uncommon that if a contractor has not taken the time to become professionally licensed, more that likely they do not carry the proper insurances for their business, their employees or any subcontractors thatthey hire to complete you project (as required by law).
A. Unfortunately, a homeowner assumes all liabilities for damages and injuries caused or sustained by the contractor, their employees or subcontractors that they hire (including your neighbors and their property!).
QUESTIONS FOR CONTRACTORS
1. Not Licensed?
A. Residential Building Contracting is a Regulated Trade subject to a criminal background check. Can you pass?
B.Do you like to work for free? (See 1C1 above)
C. Local municipalities and county prosecutors can impose penalties ranging from fines to seizure of your company assets and equipment!
D. For $60. dollars, 60 bucks per year for a license fee, to make sure you get paid for your work.
1. Check out requirements and licensing information at the www.michigan.gov website, licensing exams in the DLEG area or at www.psiexams.com .
2. PA 299 also requires under Rule 338.1532 'Advertising'
"(1) Advertising shall not misrepresent material fact.
(2) Advertising place in advertising media shall indicate the name and actual address of the licensee as shown on the license. The use of a telephone number or post office box is prohibited...
(3) A licensee placing advertising in or through any advertising media shall furnish to such media the license number issued to him as evidence of being licensed under the act...".
3. Not properly insured? Why would you put customer at financial risk for problems on your job site?
A. You are responsible for the actions of your employees.
B. Do you require your subcontractors to provide their own liability insurance? You could be legally responsible for paying Workmans's Compensation benefits to any injured employees of and uninsured subcontractor.
4. Do you call your employees 'subcontractors' to avoid paying employment taxes? Do you pay them in cash to avoid employment taxes and withholding?
A. Check out the IRS's definition of an 'employee' and 'subcontractor'.
B. Through an audit or a disgruntled'subcontractor-employeecomplaint' you are liable for all taxes (both employee taxes & employer taxes) and of course, fines/penalties.
5. Are your subcontractors 'Licensed'?
A. If not, they look an awful lot like an employee the the Internal Revenue Service, as well as the the State Unemployment Compensation Agency, a Workman's Compensation Liability Agent and to the Courts.
6. Do you properly handle hazardous materials? Do you need to be certified or trained to properly handle such materials?
A. The improper notification to the homeowner regarding the disturbing of lead based paint and asbestos makes you:
1. Liable for the proper cleanup of hazardous material from the job site.
2. Subject to per Diem fines for non-compliance with the law.
7. A properly license and insured professional contractor demonstrates a commitment to their business and craft. In order to stay in business the professional must stay current with the advances in materials, technologies and proper application techniques. The professional contractor must demonstrate financial responsibility; insure the safety of their customers, their property and also the safety of their employees and subcontractors.
A. Do you belong to organizations that advance your professionalism and business education?
PA 299 of 1980, Laws and Rules to Residential Builders and Maintenance Contractors, 2001
Act 497 of 1980, Construction Lien Act
Act 259 of 1931, Building Contract Fund
Act 152 of 1979, State License Fee Act
Residential Builder, Maintenance and Alteration Contractor, and Salesperson Candidate Information Bulletin, PSA Licensure: Certification, www.psiexams.com
Internal Revenue Service, SS-8 Determination Process www.irs.gov
