Contractor licensing is one of the most important initial steps in becoming a legitimate construction businesses. Holding the proper license helps to protect your payment rights, but it also lets your customers know that you’re a professional with a certain level of expertise. Most states require contractors to hold a license by law. Working without a contractors license is illegal in some cases, and can cause you to lose your rights under mechanics lien laws.
But which license do you need? What are the contractors license requirements in your state? What do you need to do to operate your construction business above-board?
This guide provides the answers to questions about state contractors license requirements. Learn the different licenses and requirements for each state, where to get licensed, and the penalties for unlicensed contracting.
Table of Contents
Why contractors need a license
On the surface, a contractor license might seem like just another hurdle in starting a business. But the truth is, there are plenty of good reasons why they exist. Most of these reasons are to ensure that the contractor is capable and responsible on several different levels.
One of the most important reasons contractors have to carry licenses of some type is for safety’s sake. The state regulatory boards want to ensure that a contractor knows the proper header thicknesses, how to wire an electrical panel, how to ensure a gas-fired water heater is running properly, and how to handle many other potentially dangerous situations.
By testing the contractor’s trade knowledge, the state gains a baseline on a contractor’s industry know-how. Contractors that don’t carry licenses may very well know what they’re doing, but there isn’t any proof of that at the state level.
For that reason, states will track down unlicensed contractors, shut down their jobs, and force them to pay fines before pursuing licensing.
Building isn’t the only aspect of running a contracting company. Contractors also need to run fair and ethical businesses, and states need to ensure they do so to protect consumers. What better way to see if a contractor knows the rules than making them prove it on a written exam?
Most states that offer contractor licensing exams have at least two main sections: trade knowledge and business law. Trade knowledge ensures that contractor applicants know how to do the job properly. The business law section typically covers best practices, tax rules, business ethics, and other vital aspects of fair business.
Between the trade and business sections, contractors have to prove their worthiness to carry a license and contract with the public.
Contracting is highly regulated, and one of the best ways for states to keep track of individual contractors is through licensing.
States want contractors to carry certain insurances, such as liability insurance and worker’s compensation. Some states and cities require contractors to secure bonds as well. And you know the state isn’t going to forget about its taxes.
By making these regulations part of carrying a license, the state can ensure all new contractors are on the up-and-up. And, by requiring contractors to renew their licenses every one, two, or three years, the state can also ensure they maintain those compliances.
From a contractor’s point of view, the best reason to carry a license is to protect their lien rights. Some states that require contractors to carry licenses won’t grant lien rights to unlicensed contractors. An unlicensed contractor could potentially do an excellent job and treat their customer like gold, but they could be totally out of luck if the customer doesn’t pay.
And, even if unlicensed contractors are able to file a mechanics lien, the story doesn’t end there. Consider what happens if they have to take the customer to court. If the contractor isn’t carrying the license that the state requires, the court might not look so fondly upon their claim.
Types of state contractors licenses
When it comes to licensing, each state has different requirements and rules. Certain projects don’t require a license in some states, while other states take a much firmer stance. The types of licenses are fairly consistent from state to state, with some exceptions. The two basic types:
- General contractor license
- Subcontractor license
States often have different subcontractor license types for particular trades.
General contractors license
A general contractors license is a requirement in many states for anyone taking the prime contract on a construction project. In some cases, it depends on the project’s value, and this threshold determines whether or not a general contractor needs a license.
Some states also require separate licenses for commercial and residential work. In those states, general contractors will have to take tests and maintain eligibility for both licenses if they wish to take both types of contracts.
General contractors may also need to hold a license bond. Download a guide to license bond requirements in each state.
The requirements around a subcontractor license vary quite a bit from state to state. Some states, like California, require almost all subcontractors to carry and maintain a license to operate within the state.
Other states are far more relaxed about subcontractors, leaving licensing up to individual municipalities.
In general, subcontractors requiring licenses include:
- Water, sewer, and gas plumbers
- HVAC technicians
- Mold, asbestos, and hazardous waste contractors
Like with general contractor’s licenses, some states set project value thresholds to determine whether a license is a requirement.
Also important to note: Having contractor liability insurance is an absolute requirement for getting licensed in many states, no matter the license.
Reciprocal contractor licenses
Many states have contractor license reciprocal agreements with other states, giving contractors an easier pathway to licensure in another state. Sometimes a state will recognize a contractor’s existing license without requiring additional steps. More commonly, though, the license reciprocity only exempts the contractor from taking a written exam, but still requires an application or review. Every state has their own rules.
Licensing, registration, and certification: What’s the difference?
The terms “licensed,” “registered,” and “certified” float around quite a bit in the contracting world, but they’re not entirely interchangeable. Depending on where you live and work, you might need to carry a license and certification for certain projects, while other states may only require you to register your business to get to work.
The definition for each of these terms changes on a state-by-state basis, but here’s the basic rundown.
The process of getting a license is usually pretty stringent. You need to meet certain requirements, including experience, insurance, and education. You may also need another tradesperson to vouch for you. Most importantly, getting a license usually requires you to take and pass a test or prove your work history.
Like all things in this guide, testing requirements vary from state to state. They generally require you to show you’re knowledgeable in your specific trade’s practices, codes, and regulations. They sometimes require you to pass a section based on business practices.
Registering your business is usually the bare minimum requirement you might need to meet to operate in your state. It usually requires little more than filling out paperwork at your local county clerk’s office or state office and paying a small fee.
This is a general process to register any type of business, but does not provide proof that you’re qualified to complete a construction project. A business registration doesn’t prove expertise or knowledge. Some states have more stringent requirements for registration — like proving your work history or taking a course — but in others, it’s not even a requirement.
Certifications aren’t typically required in most states unless a certain aspect of your trade has environmental, health, or safety impacts like asbestos or mold removal.
While environmental agencies and trade organizations will hold certification courses, many contractors’ certifications come from private businesses.
For instance, a particular window manufacturer may certify that ABC Contracting can install their windows and products. In this case, it brings some legitimacy to your business and certifies that you know how to install the products — but it doesn’t speak to your overall capabilities the way a license does.
Business licenses and insurance
It’s important to understand that this guide will point out the requirements for professional licensing only. Your state may require you to register your business with your county clerk’s office, obtain a business license, or carry a contractors license — and in some cases, all three.
Most states require contractors to carry worker’s compensation and liability insurance, as well as particular bonds while holding a contractor license. Check with your state’s licensing body to determine what you’ll need to carry.
State-by-state: Contractor licensing rules & penalties
Below are the requirements for contractor licensing in each particular state. You’ll find the requirements for general contractors and subcontractors, the penalties for working without the appropriate license, and how licensing can affect mechanics lien rights.
Contractor licensing in Alabama is a function of the Alabama Licensing Board for General Contractors. Established in 1935, the board oversees more than 8,000 state-licensed contractors, administers trade exams, and establishes the requirements for licensing.
In Alabama, a General Contracting License is a requirement for any prime contractor on a commercial project valued at more than $50,000. On residential projects, that value lowers to $10,000, and $5,000 for swimming pools.
Subcontractors also need a license when working for general contractors for any work over $50,000. There are several subcontractor license classes. They include carpentry, masonry, and what the state considers specialty construction like electrical and mechanical (including HVAC and plumbing).
The penalties for contracting without a license in Alabama are pretty steep. Working without a license — or with an expired or revoked license — is a Class A Misdemeanor, according to Alabama Code §34-8-6.
Worse yet, unlicensed contractors working on a project that requires a license have no recourse for non-payment. They aren’t eligible to file a claim under Alabama’s mechanics lien laws.
In Alaska, the Department of Commerce, Community, and Economic Development’s Division of Corporations, Business, and Professional Licensing oversees contractor licensing.
Alaska considers General Contractors as regulated professionals, meaning they must hold a license. They’re able to perform new construction, commercial work, and residential remodeling projects. If they oversee new home construction or take residential remodeling projects in excess of 25 percent of the home’s value, they must also obtain a Residential Contractor Endorsement. They can keep someone on their staff with the endorsement.
Specialty contractors are also considered regulated professionals, so licensing is a requirement by state law. Essentially, subcontractors need to carry a specialty license with endorsements for their trades.
Some examples of trade classifications are acoustical and insulation contractor, masonry contractor, plaster contractor, painting contractor, and welding contractor. If a contractor’s performance requires three or more of these trades, they must have a General Contractor or Residential Contractor License. Electrical and Mechanical contractors must also have Administrator Licenses.
A General Contractor-Handyman License is a requirement for projects with a total value of less than $10,000.
In Alaska, fines for working unlicensed where required can add up quickly. The civil fine is $1,000 for a first offense, and then $1,500 for each subsequent offense. Worse yet, each day counts as a separate violation, so two days without a license could cost between $2,000 and $3,000.
However, Alaska’s mechanics lien law does not explicitly require a license, which means unlicensed contractors can typically file liens for non-payment.
The Arizona Registrar of Contractors (ROC) handles licensing, examination, and trade requirements in Arizona. The ROC administers examinations, sets trade standards, and handles complaints and investigations for contractors in the state.
Arizona requires all contractors working in the state on a project in excess of $1,000 to carry a contractor license. The state offers separate licenses for residential and commercial work, as well as dual licenses that cover both. Both general contractors and subcontractors need appropriate license classes for their business and trade.
License classifications include General Residential Contractor, General Commercial Contractor, Carpentry Contractor, Fire Protection Systems Contractor, Plumbing Contractor, and Roofing Contractor.
There is an exemption for projects less than $1,000, as long as there are no building permits required.
As far as penalties go, the state of Arizona considers unlicensed contracting a Class 1 Misdemeanor, punishable by up to six months in jail, a maximum fine of $2,500, and an 83 percent surcharge. The minimum penalty for a first offense is a $1,000 fine, plus that 83 percent surcharge.
In addition, unlicensed contractors performing work where a license is a requirement have no rights under mechanics lien laws in Arizona.
Licensing in Arkansas is a function of the Arkansas Contractors Licensing Board. There are two bodies: The Residential Contractors Committee, which handles residential contractor licensing, and the Contractors Licensing Board, which regulates commercial contractor licensing.
General contractors in Arkansas need to carry a state license for work on any project worth more than $2,000. If you’ll be taking the prime contract on a commercial project in excess of $50,000, you’ll have to carry a Commercial License. You’ll need a Residential Builders License to build a single-family home. For work on an addition or other structural changes to an existing single-family home, you’ll need a Residential Remodelers License.
As a subcontractor, you can work for a licensed contractor without carrying a license of your own. However, you will have to register. If the prime contractor does not hold an Arkansas contracting license, you’ll have to apply for a Home Improvement License for your specific trade.
In Arkansas, working unlicensed where a license is required is a misdemeanor, according to § 17-25-103. It’s punishable by a fine between $100 and $200 for each offense, and each day constitutes a new offense.
As of July 1, 2020, the state elevated this offense to a class A misdemeanor, but the fines and punishments aren’t clearly defined yet.
Mechanics liens laws in Arkansas do not require a license, so unlicensed contractors do typically have recourse in the event of a payment dispute.
Licensing for contractors in California falls under the scope of the Contractor State Licensing Board (CSLB). Since 1929, the CSLB has had the authority to establish trade standards, issue licenses, review complaints, and investigate unlicensed contractors and bad business practices.
Read more: How to get a California contractors license
All contractors working on projects valued at more than $500 require licenses, with just a handful of exceptions. There are three main classes:
- Class A for General Engineering Licenses
- Class B for General Building License
- Class C for specialty trades and subcontractors
You can incur several penalties for unlicensed work in California. The CSLB can issue civil fines and penalties between $200 and $5,000. It’s illegal to contract without a license in California, so you could see a misdemeanor charge punishable by up to six months in jail and a $5,000 fine for a first offense. A second offense is a mandatory 90-day stay in jail and a fine up to 20 percent of the contract price up to $5,000.
On top of that, working in California on a project valued in excess of $500 without a license means you’re forfeiting your rights under California’s mechanics lien rules. You’ll have no fall back if a payment issue arises.
There is no state licensing board or even a state license for a general contractor in Colorado. All general contracting licensing is done at the municipality level. For instance, Denver contractors need to go through the Community Planning and Development department for their licenses.
A first offense for performing plumbing or electrical work without a license is a Class 2 misdemeanor, according to CRS 12-58-116. That means it’s punishable by 3–12 months in jail and a fine between $250 and $1,000. A subsequent offense is a Class 6 felony, punishable by 12–18 months in jail or a fine between $1,000 and $10,000.
Fines and penalties may also apply to unlicensed contractors working in municipalities that do require licenses.
The good news is, Colorado mechanics lien law does not specifically state that you need to have a license to file a lien, so unlicensed contractors can file liens for payment disputes.
In Connecticut, there is no requirement to carry a license as a General Contractor. However, Connecticut classifies contractors as either major or minor contractors. Major contractors can work on commercial and public projects. Minor contractors, also known as home improvement contractors in CT, work on private homes and small multi-family units.
Both major and minor contractors need to register their business with the state’s Department of Consumer Protection.
Specialty contractors like electricians, plumbers, home inspectors, and sheet metal workers do need specific licenses.
Penalties for contracting without the appropriate license in Connecticut could land you in hot water with the Department of Consumer Protection. The first violation can earn a $1,000 fine, and the second and third violations can be up to $1,500 and $3,000, respectively.
Connecticut mechanics lien laws do not specifically require a contractor to have a license to file a lien. But, on residential projects, the contractor must register with the Department of Consumer Protection and comply with the Home Improvement Act or New Home Construction Contractors Act.
Delaware does not have a specific trade license for General Contractors. However, they will have to register the business with the Division of Revenue before contracting.
Specialty trades like electrical, plumbing, and HVAC-refrigeration do require specific licenses to operate in Delaware. Licensing for these trades goes through the Delaware Department of Professional Regulation. You’ll have to apply and pass an exam for a license.
Because licensing is a matter of the municipality, fines and penalties for contracting without a license are also a local matter. However, lien claimants do not have to hold a contractors license to file under mechanics lien rules in Delaware.
Contractor licensing in Florida falls under the Construction Industry Licensing Board (CILB). It oversees the licensing and regulation of the construction industry. The CILB accepts and reviews applications, reviews disciplinary cases, and conducts hearings and investigations.
In the state of Florida, almost all contractors need to carry a license. Licensing falls under two categories: registered and certified. Registered contractors can work in specific, local jurisdictions. Certified contractors can work through the state.
Florida offers Division I certifications for general contractors. Division II certification is for trade-specific contractors and subs. Both require an application process and a written exam. Registered contractors can skirt the exam by getting a Certificate of Competency from the local licensing office.
There is an exception for handyman services: As long as you’re not working on a foundation, structural walls, plumbing, electrical, asbestos abatement, or other tasks that require licensing, you might not need one — regardless of the project value.
Unlicensed contracting is no joke in Florida. The first offense is a first-degree misdemeanor punishable with up to a year of jail or probation. Subsequent offenses could result in a third-degree felony, with a maximum jail sentence of 5 years and civil penalties up to $10,000.
On top of the civil and legal penalties, working without a license on a project where one is a requirement will also forfeit your Florida mechanics lien rights. You could be in jail, broke, and actually owe money to the state. In some cases, you might even owe the customer three times the contract value if your work was defective.
Licenses for Georgia contractors is a matter handled by The Georgia State Licensing Board for Residential and General Contractors. Established in 2004, it regulates the construction contracting industry within the state. It administers testing and sets the requirements for licensing.
While Georgia prohibits anyone from performing residential or commercial contracting work in excess of $2,500 without a license, the legal and civil penalties aren’t entirely clear.
However, unlicensed contracting in excess of $2,500 will deem the contract unenforceable. None of the terms or payments outlined in the contract are valid, which means no lawsuits — and you’ll be forfeiting your rights under Georgia mechanics lien laws.
The Department of Commerce and Consumer Affairs, Professional and Vocational Licensing Board oversees contractor licensing in Hawaii. It accepts and reviews licensing applications, administers testing, and investigates complaints.
Hawaii requires contractors performing work valued over $1,000, or a project that requires a building permit, to hold a license. There are three types of licenses:
- Class A for engineering contractors
- Class B for General Contractors
- Class C for specialty and subcontractors
Performing unlicensed contracting work in Hawaii is a misdemeanor. Although the penalties aren’t explicitly clear, you could end up with fines or jail time for unlicensed work.
While Hawaii does take unlicensed work very seriously, it does not bar unlicensed contractors from filing a Hawaii mechanics lien in the event of a payment dispute.
Idaho does not have a state licensing requirement for general contractors. They require contractors working on projects valued more than $2,000 to register their business with the Idaho Contractors Board.
However, anyone performing electrical, HVAC, or plumbing contracting work does require a state-issued license, however. Public works projects require and working as a construction manager both also require special licensing.
According to the Division of Building, anyone who performs electrical, HVAC, or plumbing work without a license is subject to civil penalties. The same goes for public works projects and construction management.
Another thing that the state leaves up in the air (in some cases) is whether unlicensed contractors have payment rights under Idaho’s mechanics lien rules. For instance, if a contractor is not registered at the outset of the project, but registers midway through, the work performed after registration is lienable.
In Idaho, if a licensed sub is working for an unlicensed general contractor, things get murky: If the licensed sub knew the general didn’t have a license, the sub doesn’t have any lien rights. If the sub didn’t know, lien rights are intact.
Illinois leaves much of its licensing requirements up to the individual municipalities. Aside from plumbing and roofing, the bulk of licensing is a local matter. Plumbing licensing is a Department of Health matter, while roofing falls under the Department of Financial and Professional Regulation.
For instance, licensing in the city of Chicago falls under the scope of their building department. Aurora, Illinois’ licensing body is the Department of Building and Permits. General contractors, subcontractors, and specialty trades should check with each individual municipality for licensing requirements.
In most cases, operating without a license where required is punishable by civil fines at the individual municipal level. However, roofing contractors performing work while unlicensed could face a fine of up to $10,000, according to the Illinois Roofing Industry Licensing Act.
Contractors in Illinois are not required to hold a license to file a lien under Illinois mechanics lien statute — except for design professionals.
Indiana only requires plumbing contractors to carry a state-issued license. Plumbing contractors will have to contact the Indiana Professional Licensing Agency. The PLA handles all applications, renewals, and trade standards for plumbing contractors. All other licenses are a matter of the individual counties, cities, and townships.
General contractors, subs, and specialty trades pursuing a license in Indianapolis can check the city’s Department of Business and Neighborhood Services for requirements. Contractors in the Fort Wayne area will need to check the Allen County Building Department website.
Penalties in Indiana for unlicensed contracting work generally fall on the individual licensing municipalities. However, unlicensed contractors can potentially file mechanics liens under Indiana law.
Iowa requires all contractors performing more than $2,000 in work over the course of a year to register their business with the Division of Labor. This includes all general contractors, subs, and handyman contractors.
Specialty trades also require licenses in some cases. The Department of Health, Iowa Plumbing and Mechanical Systems Board oversees licensing for mechanical, plumbing, HVAC, refrigeration, sheet metal, and hydronic contractors. Electrical contractor licenses are the duty of the State Fire Marshal.
Some counties and cities may have their own licensing requirements, but construction contracting in Iowa is largely unregulated.
Violations for unregistered contractors in Iowa start with $500 citations, but can amount to as much as $5,000 for subsequent violations. However, a license is not an explicit requirement for filing a mechanics lien in Iowa, so unregistered contractors do have rights to their payments.
There are no required contractors licenses at the state level other than well drillers and asbestos abatement contractors. Both well drillers and abatement contractors need to contact the Department of Health and Environment for their licensing needs.
Subs and specialty contractors may require licensing at the local level. Contractors in Salina, KS, need to contact the City Clerk’s office for licensing. Both general contractors and specialty trades in the Wichita area need to contact the Sedgwick County Metropolitan Area Building and Construction Department.
For the most part, penalties for unlicensed contracting are at the discretion of the individual licensing municipalities. When it comes to payment disputes, Kansas mechanics lien laws do not require a contractor to carry a license to enact their lien rights.
The only licenses that Kentucky requires at the state level are electrical, plumbing, and HVAC contracting licenses. They all fall under the Department of Housing, Buildings, and Construction.
General contractor, sub, and specialty licenses are under the control of local municipalities. For instance, contractors looking to work in Louisville will have to meet the requirements of the Metro Department of Codes and Regulations. Contractors in the Bowling Green area will have to go through the Bowling Green-Warren County Contractors Licensing Board for licensing requirements.
Penalties for unlicensed work in Kentucky are determined by local municipalities, and they aren’t well defined. Even the state’s penalties for unlicensed plumbers or electrical contractors aren’t explicitly clear.
However, all contractors, regardless of licensing, have rights under Kentucy mechanics lien rules. Design professionals are the only exception, as they do need a license in order to file a mechanics lien.
Licensing for contractors in Louisiana falls under the scope of the Louisiana State Licensing Board for Contractors (LSLBC). Established in 1956, the board’s goal is to protect consumers from incompetent or fraudulent acts while promoting the integrity of the construction industry.
General contractors need either a residential or commercial license. A residential license is a requirement for projects exceeding $75,000. A commercial license is a requirement for projects over $50,000 in value.
Learn more: How to get a contractors license in Louisiana
Subcontractors need a license for work exceeding $7,500, unless it involves hazardous materials or mold: For these situations, once the project value exceeds $1, a license is required.
Home improvement contractors have to simply register their business with the state LSLBC when the total project value is between $7,500 and $75,000.
Contracting without a license in Louisiana is a misdemeanor, according to RS 37:2160. It’s punishable by a fine of up to $500 per day of violation, three months in prison, or both.
Unlicensed contractors do have mechanics liens rights in Louisiana, but there are some caveats. They’re only allowed to recover the minimum value of their work, and the LSLBC does retain the right to penalize them.
Regulating and licensing the construction industry in Maine is, for the most part, the function of individual municipalities. Even at that, not all municipalities are particularly prudent. According to the state’s website, building codes aren’t even universally adopted throughout the state.
There is one rule that all contractors must follow, though: Any project valued more than $3,000 requires a written contract.
There are no licensing requirements for mechanics lien rights in Maine, so unlicensed contractors do have recourse to their payments. However, if the state requires a license (as in the case with plumbers and electricians), they may have to pay penalties.
Licensing in Maryland is a bit all over the place: For example, general contractors can build new construction homes without a license, but they’ll have to register the business with the Home Builder Registration Unit of the Office of the Attorney General.
Home improvement contractors need a license from the Maryland Home Improvement Commission. Individual municipalities and counties handle commercial contractor licensing.
Subcontractors and specialty contractors may require licenses. Plumbers, HVAC-R technicians, and electricians need to apply for a license with the Maryland Department of Labor. Other trades need to check with the local municipality.
Working as an unlicensed contractor where a license is required is a misdemeanor in Maryland. The first offense is punishable by a fine of up to $1,000 and 30 days in jail. Subsequent offenses bump those consequences up to a $5,000 maximum fine and two years in jail.
The only licensing requirements for mechanics lien rights in Maryland pertain to interior designers (which require a certification), and corporations (which must register with the state). Other than that, unlicensed contractors typically have the right to file mechanics liens in payment disputes.
There are several licensing bodies and registries in Massachusetts, and their requirements may seem confusing.
The Massachusetts equivalent of a general contractor’s license is a Construction Supervisor License (CSL) from the Office of Public Safety and Inspections. A CSL is a requirement on all construction 1–2 family home construction projects. It’s also a requirement for work on 1–4 family, owner-occupied projects, but the contractor must also register with the Home Improvement Program.
For projects exceeding 35,000 cubic feet of enclosed space, the overseeing party must be a registered design professional (RDP), like an engineer or architect: A CSL will not suffice.
Specialty contractors will need to register with the Home Improvement Program in most cases. Electricians will require a license from the Board of State Examiners of Electricians. Plumbers will need to contact the Board of State Examiners of Plumbers and Gas Fitters. HVAC and refrigeration techs will have to go through the Office of Public Safety and Inspections.
You need to be sure that you have the proper licenses in Massachusetts; the state doesn’t take kindly to unlicensed contracting. Working without the appropriate state-required license (even if you forgot to renew it) is punishable by a $5,000 fine and up to two years in prison.
That said, there are no specific licensing requirements according to Massachusetts mechanics lien rules. Just be aware that the licensing and registry bodies may penalize you for failing to hold the proper vetting.
The majority of Michigan licensing goes through the Michigan Department of Licensing and Regulatory Affairs (LARA). Along with almost every other profession in the state, it oversees licensing for general contractors and specialty trades.
General contractors in Michigan require either a Residential Builders license or a Maintenance and Alterations Contractors license. Commercial contractors will need to check with the local municipality to determine which licenses they may need to carry.
Almost all subs and specialty trades need to carry a license in Michigan as well. Electrical contractors need to pursue a license through the Bureau of Construction Codes, Electrical Division. Fire suppression and HVAC licenses are a matter of the BCC, Mechanical Division. Plumbers need to contact the BCC, Plumbing Division for licensing.
According to Michigan’s Occupational Code, operating without a license where one is a requirement is a misdemeanor. It’s punishable by not less than $5,000 (up to $25,000), or one year in prison — or both. Any subsequent offense is punishable by the same fine, but jail time extends to two years. If a death or injury occurs while operating unlicensed, the fines remain, but the jail sentence extends up to four years.
If you’re working as an unlicensed contractor on a residential project, you’ll have no rights under mechanics lien laws in Michigan. However, some unlicensed contractors on commercial projects do retain lien rights.
Minnesota’s licensing body is the state’s Department of Labor and Industry (DLI). The main licensing requirements are fairly unique. For instance, commercial contractors need to register with the Contractor Registration Program, but do not need licenses. Also, contractors providing only one “special” skill do not need to carry a license (except for residential roofers).
If you’re a general contractor working on residential building or remodeling projects, you will need a Residential Building Contracting license from the DLI.
Residential building contractors performing less than $15,000 in annual gross receipts do not need licenses in Minnesota, provided they have a certificate of exemption.
Subcontractors must have a Residential Building Contracting License if they are performing work in two or more of the following areas:
- Interior and/or exterior finishing
- Drywall and plaster
- General installation
They also have to register their business with the Contract Registration Program. Electrical and plumbing contractors need to pursue separate licenses from the DLI, while HVAC mechanics are not regulated at the state level.
Unlicensed contractors working without the proper licenses are subject to a misdemeanor charge in Minnesota. While the exact penalties are unclear, one thing is clear: Working unlicensed when the state requires one means forfeiting your rights to a mechanics lien or lawsuit.
With that said, contractors that the state doesn’t require to hold a license do have lien rights under Minnesota law.
Contracting licenses are a function of the Mississippi State Board of Contractors. The ten-member board regulates licensing, enforces licensing laws, and educates consumers.
All contractors and subs on commercial jobs valued over $50,000 require a license. This value lowers to $5,000 for public fire protection systems, and $10,000 for private fire protection systems.
Residential contractors performing new construction over $50,000, remodeling over $10,000, or roofing over $10,000 also require a license. Electrical, plumbing, or HVAC contractors on projects under $10,000 on a residential project do not require a state license, but may be subject to local regulations.
The Board breaks down licensing classifications into the following classes:
- Building Construction
- Highway Street and Bridge Construction
- Heavy Construction
- Municipal and Public Works
- Fire Sprinkler
- Solar and Wind Construction
Many of these have subcontractor classes for specialty contractors, and may require tests.
Though Mississippi isn’t explicitly clear about the penalties for unlicensed contracting, the state does make it clear that it’s illegal. Further, unlicensed contractors have no rights at all under Mississippi’s mechanics lien laws.
There are no state-mandated requirements for general contractor licenses in Missouri. Instead, most licensing regulation is a function of counties and municipalities. In fact, only recently has there even been a statewide electrical license recognized in Missouri.
Locla municipalities are responsible for the regulation of contractors and penalties for unlicensed work. For instance, contractors interested in working in Kansas City will have to contact the City Planning and Development office. The city has different requirements for several trade classes, including fire protection, plumbers, HVAC, and more.
With such lax licensing laws, it’s not surprising that holding a license is not a requirement under mechanics lien rules in Missouri.
Montana is one of the more relaxed states when it comes to contracting licenses. Any licenses that are state requirements fall under the scope of the Department of Labor and Industry (DLI). Plumbing and electrical contractors will need to contact the DLI for licensing.
Instead of licensing, Montana requires construction contractors to register their businesses with the state’s Construction Contractor Registration Program. It requires registration of anyone who adds to or takes away from a structure, project, development, or improvement attached to real estate. It’s the state’s way to ensure that all contractors carry the required worker’s compensation insurance.
Not registering with the registration program can result in a $500 fine for each violation. Also, performing electrical or plumbing work without a license is a misdemeanor, which could result in a minimum $250 fine (maximum of $1,000), imprisonment between 90 days to a year, or both.
There are no explicit licensing requirements for contractors to file a claim under Montana mechanics lien law, so unlicensed contractors do have rights in payment disputes.
Most regulation at the state level in Nebraska pertains to registration as opposed to licensing. All contractors earning more than $5,000 annually, including general and subcontractors, must register their business with the state’s Contractor Registration program.
Electrical contractors are required to get state-issued licenses with the Nebraska State Electrical Division. Plumbers, HVAC contractors, and other subcontractors will have to check with local municipalities for licensing requirements: For instance, Omaha requires licensing for building, electrical, mechanical, and plumbing contractors. Lincoln has similar requirements.
If a contractor receives a citation for not registering with the Contractor Registration, the fee could be up to $500. They then have the opportunity to contest the citation. If the contractor has never registered, they have up to 60 days to do so, at which point the registry will waive the penalty fee.
There are no explicit requirements for licensing in Nebraska mechanics lien law. Unlicensed contractors are generally allowed to file a lien as a result of a payment dispute.
Construction licensing in Nevada is the responsibility of the Nevada State Contractors Board. The board regulates trade licenses within the state.
It’s illegal to contract without a license in Nevada. The first offense is a minor misdemeanor. The second offense constitutes a gross misdemeanor. A third offense becomes a Class E Felony.
On top of getting hit with a possible felony charge, your payments may be at risk. If you’re required to carry a license but operate unlicensed, you’ll have no right to a Nevada mechanics lien or lawsuit.
New Hampshire doesn’t have a requirement for general contractors. Most licensing requirements fall on local municipalities and counties. However, plumbing and HVAC licenses fall under the control of the Division of Fire Safety. Electrical contractor licensing is the responsibility of the Office of Professional Licensure and Certification.
Even the largest cities in New Hampshire don’t have well-defined licensing requirements. In fact, many cities prefer to manage contractors through permits. Nashua, for instance, requires contacting the Building Safety Department. The same applies to Concord.
Contractor licensing is not a requirement for filing a mechanics lien in New Hampshire.
New Jersey does not require general contractors to hold licenses, though they do need to register their businesses with particular state offices.
Home improvement contractors need to register their business with the New Jersey Division of Consumer affairs. Homebuilding contractors need to register with the New Jersey Department of Community Affairs. Commercial contractors do not have to register.
If a contractor deals in financed home repair contracts, they must have a home repair contractor license issued by the New Jersey Department of Banking and Insurance. This doesn’t apply for cash payments or credit card payments taken over the course of 90 days or less.
The penalty for working without registering is a civil penalty of up to $10,000 for the first offense and $20,000 for each subsequent offense. There can also be criminal charges and additional fees.
There are no licensing requirements for filing a mechanics lien under New Jersey law, so an unlicensed contractor can file a lien for a payment dispute.
Professional licensing in New Mexico is done by the New Mexico Regulation and Licensing Department. Specifically, the Construction Industry and Manufactured Housing Division controls licensing for contractors and subs.
New Mexico requires just about every contractor to carry a license. General contractors and subcontractors can find their classification in the NM Administrative Code, Title 14, Chapter 6. The exception to this rule is for contractors making less than $7,200 annually — they don’t require licensing.
Unlicensed contracting in New Mexico is illegal, and the consequences depend on the value of the project. For projects valued at less than $5,000, unlicensed contractors may see up to 90 days in jail or a fine of $300-$500. For projects over $5,000, the contractor may see a jail sentence of up to six months and a fine up to 10 percent of the contract’s value.
When it comes to payment disputes, unlicensed contractors don’t have a ladder to stand on in New Mexico. They’re unable to file a claim under New Mexico’s mechanics lien rules. They’re also unable to file a suit. In fact, in some cases, the homeowner can event request their money back.
New York leaves most licensing requirements up to its cities and counties. The only construction-related licenses issued at the state level are asbestos abatement contractors and crane operators. Both of these licenses fall under the control of the Department of Safety and Health.
General contractors, subs, and specialty trades need to check their local municipalities for licensing requirements. In New York City, Home Improvement Contractor Licenses are required for any contractor to build, repair, remodel, or make other improvements to residential land or building. Rochester has its own licensing as well. Work in and around Yonkers will require a Home Improvement Contractor license.
Fees and penalties are also a function of the individual municipalities. However, operating a crane without a license is a state misdemeanor, varying between Class A and B, depending on the circumstances.
The rules for New York State mechanics liens make it clear: If your work requires a license, and you don’t have that license during the project, you do not have lien rights. You also cannot file a lawsuit.
Licensing in North Carolina falls under the North Carolina Licensing Board for General Contractors. The board consists of nine members, five of which are general contractors representing each of the classifications, as well as a structural engineer, and three citizens without ties to the construction industry.
General contractors must have a license to take on any projects valued in excess of $30,000. There are five classifications for general contractors: building, residential, highway, public utilities, and specialty contractors. Subs and specialty contractors both fall under the final category.
Licenses come with three limitations: Limited for projects up to $500,000, Intermediate for projects up to $1,000,000, and Unlimited. Each has increasingly stringent requirements.
Electrical, plumbing, HVAC, and fire sprinkler contractors require separate licenses as well. Subcontractors outside of those trades in contract with a licensed general contractor do not need licenses.
Handyman service work for less than $30,000 is exempt from licensing.
The North Carolina Licensing Board for General Contractors can enforce penalties for contracting without a license. The penalties could include civil fines, criminal charges, and even an order barring the general contractor from acting as a contractor moving forward.
However, there are no license requirements according to mechanics lien statute in North Carolina.
General contracting licensing in North Dakota is under the control of the Secretary of State.
North Dakota requires all contractors performing work valued at more than $4,000 to carry a license. Contractors can choose to apply for four classes: Class A for projects over $500,000, Class B for projects up to $500,000, Class C for projects up to $300,000, and Class D for projects up to $100,000.
As far as penalties go, North Dakota considers contracting without a license as a Class A misdemeanor. However, since North Dakota mechanics lien law doesn’t explicitly require a license to file a mechanics lien, unlicensed contractors can potentially file a lien.
Ohio doesn’t have state requirements for general contractors. Licensing for professionals is a matter handled by cities and counties. Commercial electrical, plumbing, HVAC, and hydronics professionals need to carry a state-issued license, however. The Ohio Construction Industry Licensing Board oversees those licenses.
General contractors, home improvement contractors, and subs will have to check with local municipalities to determine their licensing requirements. Contractors in Columbus need to check with the Building and Zoning Department. Cincinnati-based contractors need to check with the city’s Buildings Department.
Contracting without a license where it’s a requirement can get expensive quickly. The OCILB can hit unlicensed contractors with a $1,000 fine per day, per violation. However, there are no specific licensing requirements found in Ohio’s mechanics lien law, so unlicensed contractors do generally have rights to payment claims.
In Oklahoma, electrical, mechanical, plumbing, and roofing contractors have to carry state-issued licenses from the Oklahoma Construction Industries Board. Oklahoma does not require general contractors to carry state-issued licenses.
Since Oklahoma doesn’t license general contractors at the state level, counties and cities handle their own requirements. Oklahoma City contractors need to check with the city’s Business Licensing Department. Broken Arrow contractors should check the Community Development Business Registration and Licensing department.
Penalties and fines are, for the most part, the responsibility of the individual municipalities. However, contracting without a license in Oklahoma is a misdemeanor.
There are no licensing requirements for filing a mechanics lien in Oklahoma, so unlicensed contractors do have rights in a payment dispute.
Licensing in Oregon is a function of the Oregon Construction Contractors Board.
The Oregon Construction Contractors Board is pretty clear about who requires a license: Anyone who works for compensation in any construction activity involving improvements to real property needs a license. This includes carpentry, electrical, plumbing, and HVAC contractors, as well as handyman services and home inspectors.
Licenses are available in residential, commercial, or residential and commercial. Specialty contractors need to choose an endorsement when applying for their license.
Contracting without a license in Oregon is punishable by a $1,000 fine for a first offense. If the property owner files a complaint for damage, that fine can climb to $5,000. The fines can also amount to $5,000 if you’re a repeat offender. Just bidding without a license can be a $500 fine.
On top of fines, unlicensed contractors in Oregon are not allowed to file a mechanics lien.
The only licenses that the state of Pennsylvania requires for contractors are for asbestos and lead removal (with the Department of Labor and Industry), as well as crane operators (with the State Board of Crane Operators).
All other home improvement contractors need to register with the State Attorney General Office.
Beyond those licenses and registry, contractors need to check with local municipalities to determine licensing requirements. Philadelphia requires all contractors involved in construction, demolition, or repair to carry a license.
Penalties and fines for unlicensed work are the responsibility of the municipalities and will vary from location to location. However, working while not registered with the Attorney General’s Office is a violation punishable by fines of $1,000 or more.
Pennsylvania mechanics lien law doesn’t explicitly require a license, so unlicensed contractors do generally have recourse in the event of non-payment.
Rhode Island’s contractor rules focus on registration over licensing. It requires all contractors to register with the Contractors Registration and Licensing Board. The board also requires you to complete five hours of Continuing Education.
Rhode Island does require actual licenses for commercial roofing contractors, well-drillers, and home inspectors through the Contractors Registration and Licensing Board. The Department of Workforce Regulation and Safety issues licenses for electrical contractors.
The first violation for non-registered contractors can lead to a fine of up to $5,000. Subsequent offenses can cost as much as $10,000 each.
Worse yet, an unregistered contractor has no right to a lien claim under mechanics lien law in Rhode Island in the event of a payment dispute.
Contracting licenses in South Carolina are a function of the South Carolina Contractor’s Licensing Board. The board’s role is to protect the health, safety, and welfare of the public through the regulation of construction contractors.
South Carolina requires contractors performing work over $5,000 to hold a General and Mechanical Contractors license. This license class can work on residential, commercial, and industrial projects.
Contractors performing only residential work can contact the Residential Builders Commission for licensing and registration. This commission licenses electrical, HVAC, and plumbing specialty contractors, as well as Residential Home Builders.
Contracting without a license is a bad idea in South Carolina. Contracting without the appropriate license can cost up to $250, but a second offense can bring you before the board.
Also, contracting without a license where it’s required forfeits your mechanics lien rights in South Carolina.
South Dakota’s licensing falls on municipalities. Electrical and plumbing contractors, however, receive licenses from the Department of Labor and Regulation.
While licenses aren’t a requirement at the state level for more trades, all contractors engaged in construction need to register for a South Dakota Contractor’s Tax License with the Department of Revenue.
Because licensing is up to the individual cities and townships, contractors need to check locally for their licensing requirements. The city of Sioux Falls handles contractor licensing and exams through the Office of Planning and Development Services. Rapid City contractors will need to call the licensing office directly.
Most penalties are at the discretion of the municipalities and vary from city to city. However, operating without a contractor’s tax license isn’t a great idea. It’s a Class 1 misdemeanor, punishable by up to $1,000 or a year in jail, or both. Continuing to operate the business after receiving notification bumps it up to a felony with a fine of up to $4,000, or up to two years in prison.
However, there are no licensing requirements in South Dakota mechanics lien laws, so unlicensed contractors do have rights to liens in the event of non-payment.
Licensing in Tennessee is a function of the Tennessee Department of Licensing and Insurance, Board for Licensing Contractors.
General contractors need a state-issued license before bidding on the project or contracting directly with the owner. Subcontractors need licenses before contracting with a general contractor when the project exceeds $25,000.
Subs performing electrical, mechanical, plumbing, HVAC, and roofing require licenses when the project is over $25,000 in value. Masonry subs need licenses when the value exceeds $100,000.
Subs performing drywall, painting, landscaping, and carpentry are not required to obtain a license if they’re working for a licensed contractor.
Penalties are interesting for Tennessee unlicensed contractors. They’re found under Tennessee Code 62-6-120. Contractors caught working unlicensed will be ineligible for a license for six months after the determination.
The contractor himself isn’t the only one penalized. Persons hiring unlicensed contractors for projects exceeding $25,000 are committing a Class A misdemeanor. There are also fines for contracting without a license, which range from $50–$1,000.
Also, unlicensed contractors working on single-family, residential, home improvement projects lose their rights to file a claim under mechanics lien rules in Tennessee. For other projects, there is no specific licensing requirement.
General contractors aren’t required to carry a state-issued license. Licensing for these contractors is a matter of local municipalities. However, all businesses in the state must apply for a Texas Business License.
While municipalities handle most licensing, the Texas Department of Licensing & Regulation governs licenses for electricians, HVAC technicians, and plumbers.
Since municipalities set their own requirements for licensing in Texas, you’ll have to check with your local licensing office. Contractors working in Austin can contact the City of Austin Development Service Department. San Antonio contractors should check in with the Developmental Service Department for both home improvement contractor and residential building contractor licensing.
Penalties and fines are also the responsibility of the municipality, though there are repercussions for operating without a state-required license. HVAC mechanics working without a Texas required license are committing a Class B misdemeanor, punishable by a fine between $1,000 and $3,500 and up to one year in jail.
While the fines are steep, unlicensed contractors do generally have mechanics lien rights in Texas.
Contracting licenses in Utah fall under the Utah Division of Occupational and Professional Licensing. It requires all construction professionals to obtain a state-issued contractors license.
Both general contractors and specialty contractors apply for licenses from the same division. General contractor licenses come in several variations, including general and residential plumbing, and general and residential electrical.
Subcontractors must choose from the list of specialty trades before applying for their license.
According to Utah Code 58-55-501 et seq., first offenses for contracting without a license are punishable with a fine up to $1,000. Second offenses increase the fine to $2,000. Subsequent offenses are eligible for fines up to $2,000 per day.
There are no specific licensing requirements under mechanics lien law in Utah, so unlicensed contractors still generally have recourse for payment disputes.
There are no state-level licenses for general contractors in Vermont. Some specialty trades like plumbing and electrical contractors do require state licenses, which both fall under the Division of Fire Safety.
Since Vermont doesn’t require a state-issued license for general contractors or other subs, you need to check with your municipality to determine whether or not you need a license. However, even the larger municipalities aren’t very prudent about requiring licenses for general or subcontractors.
Penalties for working unlicensed in Vermont aren’t entirely clear, and they’re up to the municipalities. However, under the Division of Fire Safety’s rules, performing electrical or plumbing work without a license is punishable by a fine of no more than $500. There are no specific requirements around licensing when it comes to filing a claim under mechanics lien laws in Vermont.
Licensing in Virginia is regulated by the Department of Professional and Occupational Regulation Board for Contractors.
General contractors in Virginia are required to carry a state-level license. The same goes for tradesmen working in electrical, plumbing, HVAC, gas fitting, water well construction, and more.
When applying for a license, contractors will have to choose what level of license they want, as well as their specialty.
- Class A licenses allow contractors to work on projects up to $10,000 in value, up to $150,000 per year
- Class B licenses allow work on projects up to $120,000 with a max of $750,000 per year
- Class C licenses are unlimited
Under Virginia Code 54.1-1115, the penalty for contracting without the proper license in Virginia is a fine in the amount not to exceed $500 per day of violation. It is also a Class 1 misdemeanor, and you could also do up to a year in jail.
Virginia mechanics lien rules are even more stringent. Contractors must hold a license to have mechanics lien rights. On top of that, the contractors up the chain must also hold licenses. The filing contractor must also include the license number — plus the date of issuing and when it will expire — on the lien.
Washington focuses its efforts on registering contractors over licensing. The Washington State Department of Labor and Industries (DLI) is the registering body with which all contractors must file.
General contractors and specialty contractors must register with the DLI. Asbestos contractors, electrical contractors, and plumbing contractors need state-level licenses from DLI.
Under RCW 18.27.020, performing contracting work without registering with DLI is a gross misdemeanor in Washington. There’s also no mercy for unregistered contractors when it comes to Washington’s mechanics lien rules: Unlicensed contractors lose their lien rights.
West Virginia contractor licensing is the responsibility of the Division of Labor, Contractor Licensing Board. The board consists of eight licensed contractors and two code officials.
The state requires general contractors and specialty or subcontractors on projects worth more than $2,500 to carry a contractors license. Plumbers and HVAC technicians can get their licenses from the Division of Licensing. Electrical contractors must go through the State Fire Marshal.
Under WVa. Code 21-11, the Licensing Board can issue fines between $200 and $1,000 for any person contracting without a license. A second offense can garner a $500 minimum fine with a ceiling amount of $5,000, as well as possible jail time up to six months. A third offense will result in a fine between $1,000 and $5,000, and a jail stint between 30 days and one year.
However, unlicensed contractors do generally have mechanics lien rights in West Virginia.
Contractor licensing in Wisconsin is handled by the State of Wisconsin Department of Safety and Professional Services.
The Department of Safety and Professional Services requires anyone working on 1–2 family homes, on projects worth more than $1,000, or pulling a building permit to get a Dwelling Contractor Qualifier license. This includes general contractors and specialty contractors. However, if the project’s value is under $1,000, or you don’t have to pull permits, you don’t need to carry a license.
Electrical, plumbing, HVAC, and asbestos abatement contractors need separate licenses as well.
While penalties for working without a license in Wisconsin aren’t entirely clear, you can expect fines and possible jail time for working without a license. However, unlicensed contractors do still have the right to file a mechanics lien in Wisconsin.
State-level licensing only extends to electrical contractors in Wyoming, and it’s done through the Department of Fire Prevention and Electrical Safety.
All other licensing falls under the control of the individual municipalities throughout the state. Contractors in Cheyenne will want to check with the city’s Compliance Division for the general and specialty contractor license requirements. Contractors in Casper need to check in with the Building and Inspections Department for licensing.
As very little licensing is the responsibility of the state, penalties and fines fall under the powers of the municipalities. As far as lien rights go, unlicensed contractors in Wyoming do have rights to mechanics liens.
The Bottom Line: Licensing can protect contractor payment rights
If your state has licensing requirements for your trade, get the proper license before you start work — or even bid on a job. As we’ve outlined, the penalties for performing unlicensed construction work can be steep.
Not only could you wind up paying large fines, but you can lose a contractor’s most powerful payment tool: the mechanics lien. If your customer disputes your work, or simply refuses to pay, you could wind up with little-to-no recourse to collect anything.