Consequences and penalties to expect working as an unlicensed contractor
When you have the talent, skills, and knowledge in various areas of construction, electrical, or plumbing work, etc, it can be very tempting to do under-the-table work and get paid for it without jumping through the hoops of getting licensed and certified.
Maybe you learned everything you know from your father and grandfather growing up, and they never had to have any special certifications back then… But today is a new day, and performing contract work without a license can have a wide array of consequences to all involved in the work, if caught.
Believe it or not, hiring unlicensed contractors is very common all over the world. With unlicensed contractors. But aside from lower costs, why would people want to hire unlicensed contractors? There are just too many risks involved.
For one, the homeowner who hired the unlicensed contractor can be held liable for any injuries acquired on the job to a worker. Also, the homeowner could have to come out of pocket for additional funds to fix repairs the unlicensed contractor was originally supposed to fix but due to lack of skill or knowledge.
A scenario like that is the result of contracting fraud, and according to the Department of Defense, there were more than 15 million contracts with contractors who had been indicted in 2018 and the value of those contracts went well over $334 billion.
That is the very reason why homeowners need to look at all the important considerations before hiring any kind of construction contractor. But, of course, they don’t’ always do that… But that’s also why local governments have put provisions in place to properly penalize individuals and “businesses” that provide contractor services without the proper business license.
In states like Florida, unlicensed contract work can result in a felony or misdemeanor, depending on the logistics of the situation. But it is pretty safe to say that everything from jail time to court-ordered restitution, there are serious legal consequences of contracting without a license. Here are some of those legal consequences you can experience.
Penalty 1: Criminal sanctions
The criminal sanctions for contracting without a license vary from state to state but are generally similar in scope. Depending on the severity situation, if you are charged with a misdemeanor, you can be subject to a penalty of around $1000 and a jail sentence or probation for up to a year. If you are charged with a felony, you can be subject to a penalty of around $5,000 and a jail sentence or probation of up to five years.
Penalty 2: Administrative sanctions
If you’re contracting without a license, you can also expect administrative sanctions as well. And similar to criminal sanctions, the penalties vary depending on the state you’re in. For example, statutes in Florida fine individuals up to a whopping $10,000 if convicted. If convicted in California, you could face up to $15,000 in fines. And neither of the administrative sanctions include the criminal sanctions, so you could be looking at double sanction charges.
At that point, you’ll begin to wish you had gone on and got licensed from the start of your business because none of the sanctions are worth it.
Penalty 3: Additional damages
If convicted of contracting without a license, you’ll not only get state government sanctions but you’ll also get penalties from the individuals you tricked into your services as well. The people who hired you can file for court-ordered restitution, claim unfair and deceptive practices, and treble damages… To avoid all of this, just get your license.
Moral of the story
The moral of the story here is that there is no reason for you to be contracting without a license. Meeting the requirements to obtain your contractor’s license and exam prep completion isn’t an impossible feat, and it’s certainly much more affordable than paying anywhere from $1,000 to $5,000 in criminal sanctions.
This will not only place you on the right side of the law but it also legitimizes your business and services. You’ll no longer have to settle for lower prices when you provide quality work. Also, once you get licensed, be sure to get bonded as well. This will just give you financial peace of mind.