Hiring Unlicensed Contractors – Risky Business

Unlicensed contractors make it difficult on licensed contractors by pushing fair wages lower while real licensed contractors compete against guys who do not play by the rules or have the same overhead cost

By Gregory Norman

As the founder of a family-owned building, electrical, and plumbing contracting company and as someone who grew up amongst master tradesman that were fully licensed and skilled, I have my fair share of experience with unlicensed contractors—mostly from rebuilding their mistakes.

Let’s start with some examples involving the opening of new locally-owned delis and restaurants. Typically, it starts with the owner strapped for cash with all the upfront costs associated with the build-out of their new place. So, the owner tries to cut costs by applying for a specialized permit that allows him to do the work or personally supervise it without the need to be licensed. This is legal in some jurisdictions and when approved, a permit is issued. Of course, he must agree to build everything to code – “by the book” and get it inspected. Also, he is liable for correcting any mistakes as he is the permit holder. He agrees.

Fast forward to a couple weeks later: a few thousand dollars have been paid out to the very inexpensive, friendly, reliable, but unlicensed “contractor” who was referred by a friend and who stated in no uncertain terms, “I build everything to code.”

Well, the inspector disagrees; he flunks the job and points out that the entire drainage system is incorrect and there are no “air gaps” as indicated by code at the required locations such as the prep sink, dishwasher etc.

Let me explain a little. In a commercial food prep sink, a literal air gap is required. This means the waste fluids from the sink(s) are required to “fall” through the air. This is to protect you from sewage backups that may push raw sewage up the waste line into the food prep area where your salad vegetables or other food may be located. It also prevents bacteria in the sewage drain pipe growing up the line into the prep sink. You do not want harmful bacteria on the food as it can lead to severe illness and death.

My father, himself a master plumber, worked for 20 years as a local plumbing inspector who supervised dozens of large and small restaurants opening in his jurisdiction. During that time, at every restaurant that failed to use a licensed contractor to pull the permit, not once did an unlicensed contractor do the plumbing correctly.

To be fair, sometimes the plumbing was done wrong by licensed contractors who had no prior restaurant plumbing experience but the owners were protected. If a licensed contractor installs the system wrong, because his company pulled the permit, his company is legally and financially obligated to fix it.

Contrarily, the unlicensed contractor has no legal or financial obligations and did not charge enough money to cover re-purchasing the correct products for the installation and re-doing the job correctly. Plus, he must eat crow because he promised whole-heartedly that he “builds everything to code.”

Usually the unlicensed contractor moves onto the next job at this point.

As you can imagine, this is a financial catastrophe for the new small restaurant owner who is paying rent or loan payments on the new building and gets delayed by weeks on opening and generating revenue. Unfortunately, this is a very real problem.

Truthfully, the person doing the work needs to know and apply the code. The construction industry operates with the use of various code books – updated every three years to stay current – that are regulating the industry with intense detail, depending on the specific application and trade. These codes exist to help people. They prevent buildings from falling, roofs from leaking, mold from growing in your shower, sewage from showing up in your dishwasher or salad vegetables.

Code books are a wonderful source of knowledge and what I have found is that each code exists because society learned that not doing it that way resulted in deaths or severe illness or injury. So, it is a road map on how to do it correctly for the benefit of all.

Hiring a licensed contractor and pulling required permits is the ethical decision. Why? It is difficult enough to be a licensed contractor and follow all the rules and do quality work without having to compete with an unlicensed “jack of all trades” who doesn’t pay any of these costs, doesn’t have insurance, doesn’t pay workman’s comp policies, and doesn’t pay taxes.

Unlicensed contractors make it difficult on licensed contractors by pushing fair wages lower while real licensed contractors compete against guys who do not play by the rules or have the same overhead cost. The average contractor usually goes out of business within three to four years; they can’t compete with the unlicensed contractors. So, do yourself and the industry a favor. Recognize that construction is important and if the contractor is the real deal and follows the rules and builds whatever it is you want built correctly, he is worth the increased cost.

Gregory Norman is the President and founder of BathMasters. BathMasters is a Virginia plumbing, electrical and building contractor company with showrooms and warehouses in Northern Virginia and Tampa Bay Florida.

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