Are Contractors Regulated in Louisiana?
Generally, yes. In Louisiana, contractors are regulated by the Louisiana State Board of Contractors (http://www.lslbc.louisiana.gov/). The website has a number of good resources for contractors or those interested in becoming a contractor, such as the state’s licensing laws and a helpful Frequently Asked Questions section.
Not every participant in a construction project is required to have a license. Licenses are only required on the following projects:
- Commercial projects where the party’s undertaking exceeds $50,000;
- New residential construction (ground up) where party’s undertaking exceeds $75,000;
- Residential “improvement” construction when party’s undertaking is between $7,500 and $75,000;
- Electrical contracting work when amount of undertaking exceeds $10,000 (recently lowered from $50,000).
How Do You Become Licensed?
Getting licensed in Louisiana is generally not an easy task – it’s really a three step process. (1) apply; (2) test; and (3) wait.
All applicants for a Louisiana contractors license must request an application pack directly from the Louisiana State Board of Contractors. Although a sample application is available on the board’s website, an applicant must use the actual application mailed to him or her by the board.
Therefore, the first step to getting licensed is to make a formal request to apply. The turn-around time for this is generally 2 weeks.
Filling out the application is fairly straight-forward, but applicants must be aware of these two issues:
1) You will be required to select a “classification.” Unfortunately, the application makes this entirely too confusing.
There are major classifications and sub-classifications. If you are licensed under a major classification, you are allowed to perform work on any of the subclasses. You will be tested on “business law” and the classification(s) selected.
Since many of the sub-classes mix in an ordinary construction project, it is prudent (and usually cheaper) to just select a main classification when applying.
2) You will be required to provide the board with financial data, and the requested financial information must be prepared by an independent account and certified by the same. The Board is looking to see whether your company has at least $10,000 in assets.
In addition to submitting an application, you will be required to sit for an examination. The examination will test you on “business law” and your chosen classifications. Preparation materials are available from the Louisiana Board of Contractors.
What Happens to Unlicensed Contractors?
There are generally 3 types of consequences for contracting without a license in Louisiana:
- Criminal penalties. Although not the most commonly used manner of enforcing the licensing laws, it is a misdemeanor crime to contract without a license in Louisiana.
- Contract problems. In Louisiana, a contract with an unlicensed contractor is null & void – clearly a cause for concern to someone who gets caught without a license and depends on the terms of a contract.
- Civil penalties. The Louisiana Board of Contractors is given broad power to enforce the licensing regulations. Civil penalties can be accessed against the violating party for as much as 3% of the contract price, and work on the project can be ordered to a stop.