Licensed vs. Unlicensed Contractors
What is a "Licensed Contractor"? If you're trying to figure it out, or why you should even care, you need to keep reading. Licensing is not for the contractor- it's for the customer. Understanding the licensing requirements and how to do an adequate background check on contractors is something we believe all consumers should understand before they hire any service company.
This post will cover the following:
Greene's Plumbing, Heating & Electrical holds an Ohio license in plumbing, HVAC, and electrical (Lic. #24118), so we will only be focusing on these three license areas. These are three of the five main licenses a contractor can hold through the Ohio Construction Industry Licensing Board (OCILB).
What Does "Licensed" Mean?
When a contractor has their license, it usually means they have served a full 5 year apprenticeship. Plumbing licenses can be obtained without a 5 year apprenticeship if the individual is a state recognized engineer and has several years of related business experience. The 5 year apprenticeships must be served under the same licensed contractor for 5 consecutive years. Apprentices should have inspected work documented for all 5 years, as well.
Once the apprenticeship is complete and the individual is considered a "journeyman", the individual may take the test for the license they served the apprenticeship for. To pass the test, one must prove knowledge of the codes and general trade practices, as well as any important safety information. The electrician and HVAC tests will also include information about the science of how equipment and systems work. The electrician test is considered to be the most grueling of the three because oversight in that trade could lead to house fires or electrocution. Electricians do not pass the test easily due to the dangerous nature of their trade.
After the tests have been passed and the license has been granted by the state board, classes are to be taken each year to keep the license active. Courses are offered throughout the year and usually discuss new technology entering the industry, updates to the codes, or refresher courses on general safety or trade information. The credits will only count if they are endorsed by a certified training agency and/or state recognized. Without these education credits, the license will be considered inactive. During this inactive period, the license may be renewed through an increased amount of continuing education the following year. If the license is inactive for too long, it will be lost.
Finally, the license must be associated with a business/employer. One of the requirements for holding a license is that the individual, or the company employing the individual, must have a certain amount of business and liability insurance. That number varies depending on the license being held, but without the minimum amount met, the license can be suspended or revoked.
Why Do Customers Hire Unlicensed Contractors?
More often than not, customers do not know they are hiring someone without a license. The contractor is not required to say anything, and probably never will. Customers assume people running a business have adequate certifications and training to do their job, so they do not ask. But what about customers that do know and hire them anyway?
There are many reasons people give for knowingly hiring an unlicensed contractor. The most common is the price difference. They do not charge as much primarily because they do not have to keep insurance or take continuing education courses. With the lack of overhead costs, they can afford to keep their prices low.
Another reason customers give to justify hiring an unlicensed individual is when permits are not required for the work. Licensed contractors must be doing the work if it is going to be inspected, thus, if a permit needs pulled, you should hire a licensed contractor. Without an inspection, however, unlicensed individuals can do the work without being penalized. Customers consider this an opportunity to save money, but without the inspection or license, there's no guarantee that the work has been done correctly.
Why Should People Hire Licensed Contractors?
When a contractor is licensed, it lets you know that they have adequate experience and knowledge in their trade. With a 5 year apprenticeship, continuing education classes, and being tested on codes and safety, licensed companies provide a professional and quality experience for their customers.
Licensed companies are also preferred when the customer is looking for someone who specializes in a certain area. Specialists will know the in's and out's of their trade, along with the codes and safety measures that need to be taken. Their experience could prove valuable if a more complex solution is needed, and they'll be more likely to work with you on your preferences (like hiding pipes, wires, and ducts).
If a contractor is licensed, you know they will be able to pull permits. While some areas are not as strict on who's pulling the permit, most counties are adamant on having someone with a state license. If the situation calls for an inspection, then a licensed professional must be completing the work for the inspection. Inspectors will not sign off on work done by anyone who is unlicensed.
Perhaps one of the most important reasons for hiring a licensed contractor is for the protection of insurance. The business and liability insurance that must be held by licensed companies protects customers from being at fault for any injuries that happen on the job site. In cases where liability insurance is either absent or fails to cover the incident, customers can be held liable for any damages or injuries. If you hire unlicensed, you are liable for anything that goes wrong.
Loans and appraisals for home projects will need reviewed by professionals. Based on our own experience, banks and appraisers are going to value a licensed professional's input much more. With the proper certifications to back them up, banks and other lending organizations are going to accept a diagnosis from someone who is licensed much easier than someone without state certifications.
Similarly, manufacturers will be more willing to honor a warranty if the equipment was installed by a qualified individual. Our suppliers ask for our licensing information and require a series of courses to make sure we know how to install and troubleshoot the equipment. This builds trust between manufacturers and contractors. If a warranty claim needs filed, the replacement parts or unit would be sent with minimal questions asked. On the other hand, someone who is unlicensed may have to jump through some hoops to get the replacement parts, if the warranty is honored at all. Manufacturers may specify in their warranties that a certified or licensed contractor needs to be the installer in order for the warranty to be active.
How Do I Know if a Contractor is Licensed?
Licensed contractors in the state of Ohio are required to list their license in all advertisements like websites, vans, and business cards. The format will look something like this: OH LIC. #24118. You can also call and ask the company for their license number. All you need are those five digits to look up the company's licenses. The Ohio Construction Industry Licensing Board (OCILB) has a look up tool, which you can find here: https://elicense4.com.ohio.gov/Lookup/LicenseLookup.aspx.
You should see a page that looks like this:
In the "Credential Number" section, type in the license you are trying to find. We do not encourage looking for licenses via the company name using this tool. It usually returns a "Nothing Found" screen. If you cannot find the license number, then you can use the last name of the license holder.
Click "Submit". License numbers represent the person who holds them, not the individual trade licenses. By looking up the license, you should be able to find all the licenses held by that individual.
You can then select "Detail" next to any of the licenses to see if they are active, inactive, or if they need renewed soon.
How Do I Find a Licensed Contractor Near Me?
Using the look up tool, select the service you need and specify the county you live in.
By clicking "Submit", you will have a list of all the contractors in your county that are licensed in the trade you need. Be sure to look them up ahead of time, since companies may specialize in industrial, commercial, or residential. You want to find a company that is best suited to meet your needs.