Articles

Be Sure You Are Licensed for the Work You Perform

There are a range of penalties you may be subject to for performing contracting work covered by the license law without holding the proper license. These remedies include criminal penalties, injunctive relief, citations and civil penalties. Significantly, you also may be denied compensation for work you have performed because the lack of a proper license can be a defense to a claim for payment.

As the following case illustrates, it is not always clear when compliance with the licensing law has been achieved. In R.E. Hazard, Jr. Enterprises, Inc. v. Insurance Company of the West, Hazard was seeking payment on change order claims totaling $600,000. The owner refused to pay and contended that Hazard could not maintain its lawsuit because it was licensed as a general building contractor, not as a general engineering contractor, and the work in question was the preparation of a site for a commercial subdivision.

The trial court agreed with the owner and granted a judgment in their favor. Fortunately for the contractor, the Court of Appeal reversed holding that general building contractors are authorized to undertake site preparation for future construction and was therefore properly licensed.

Although the general contractor prevailed on this issue, the point is that $600,000 in change order compensation was possibly at risk because of an alleged licensing violation. Again, the lesson is clear: be sure you are properly licensed for the work you perform!

Mr. Kershner is with the Law Offices of Gary Kershner, a member of the Exchange since 1955. The law firm acts as general counsel in litigation and non-litigation matters for a variety of small and medium-size businesses.