R-E-C-I-P-R-O-C-I-T-Y ~ Find Out What It Means To You

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Is a licensed contractor in good standing in State A permitted to offer to contract for or to perform work requiring a contractor’s license in State B? reciprocating.pngA number of states have reciprocity agreements with each other pursuant to which a contractor license applicant holding a contractor’s license in good standing in a comparable classification in State A (recognized by the licensing agency as a reciprocity state) may have the trade portion of the written licensing exam waived in State B. Even with reciprocity, the license applicant generally must comply with all of State B’s other licensing requirements, including submitting a license application and passing the law portion of the written licensing exam. What this could mean is that even though the contractor is properly licensed in State A, the contractor is not properly licensed in State B.

In an abundance of caution, contractors should always carefully review the states’ licensing agency’s/regulator’s websites — different state agencies may issue licenses to contractors, electrical contractors, plumbing contractors, etc. — to determine whether a license is required for the trade(s) the contractor would like to contract for and to perform in that state. Not all states license contractors, some require licenses for only certain trades or simply require the contractor to register with the regulatory agency. If it is unclear whether a license is required, contractors should always carefully consider whether to seek confirmation from the licensing agency/regulator – on a blind basis if the contractor is concerned that the licensing agency’s/regulator’s answer may pose a problem for its current operations. If it is unclear whether the contractor might qualify for reciprocity, again, contacting the licensing agency for confirmation may save the contractor time and money if it turns out that it is exempt from the trade portion of the written licensing exam.

If a license is required, some state’s licensing laws may prohibit offering to contract to perform a trade if a license would be required to perform the trade. By way of example only, California defines “contractor” very broadly to include “any person who undertakes to or offers to undertake to, or purports to have the capacity to undertake to, or submits a bid to, or does himself or herself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, parking facility, railroad, excavation or other structure, project, development or improvement … or fabrication into, any structure, project, development or improvement herein described of any material or article of merchandise. this term includes a subcontractor and specialty contractor.” The California Contractors State License Board is authorized to investigate and to issue citations, including civil penalties, to unlicensed individuals acting in the capacity of a contractor who are not otherwise exempted from the licensing requirements, California’s Contractors’ State License Law, Bus. & Prof. Code § 7000 et seq. In addition, unlicensed activity could qualify as a misdemeanor (Bus. & Prof. Code §§ 7118.4, 7118.5, 7118.6, 7121.6, 7121.7, 7027.1, 7028, 7028.1, 7028.15, 7028.17) and felony charges may filed against anyone who illegally uses another person’s contractor license or who tries to mislead consumers into believing that he or she is a licensed contractor.

Last but certainly not least, the state may prohibit an unlicensed contractor from enforcing its contractual rights under a contract which requires it to be a licensed contractor and yet hold it responsible for any shoddy or incomplete work and subject to claims by the owner and/or general contractor. By way of example only, the Florida Supreme Court, in Earth Trades, Inc. v. T&G Corp., Case No. SC10-1892 (Jan. 24, 2013), recently reinforced a state law that provides that “[a]s a matter of public policy, contracts entered into on or after October 1, 1990, by an unlicensed contractor shall be unenforceable in law or in equity by the unlicensed contractor.” Fla. Stat. § 489.128(1) (2005); compare to Cal. Bus. & Prof. Code § 7031. The Court found that “[u]nder the amended version of [Fla. Stat. §] 489.128, the fault of the person or entity engaging in unlicensed contracting is not substantially equal to that of the party who merely hires a contractor with knowledge of the contractor’s unlicensed status.” Accordingly, “the defense that parties to a contract are in pari delicto was not available to the unlicensed contractor governed by section 489.128, Florida Statutes;” under the in pari delicto doctrine, a party who has participated in wrongdoing may not recover damages resulting from the wrongdoing.

Additional State Resources – State Reciprocity Guidelines:

Photo: stcynine, Taken Dec. 4, 2008 – Creative Commons