The Delaware Contractor Registration Act is in effect as of July 1, 2021. This means that any person or business that performs construction services or maintenance work in Delaware must be registered with the Department of Labor. Here’s everything Delaware contractors need to know about these new requirements, including how to register and the penalties for non-compliance.
Note: These rules are separate from (and in addition to) Delaware’s requirements for contractor licensing. Contractors will need to make sure that they submit the proper documentation to all of the relevant authorities to legally operate their business in the state.
Delaware Contractor Registration Act
Governor John Carney actually signed the Delaware Contractor Registration Act back in 2019, and it was meant to go into effect in October of 2020. However, 2020 was no ordinary year. So the deadline to register was pushed to this year, and the time is nigh.
Before performing any construction services or maintenance work within the state, the contractor must be registered with the Dept. of Labor. Furthermore, for any contractors on public works projects, the application and fees must be submitted by August 1.
Legislative support for the new Registration Act
One of this legislation’s primary sponsors, Rep. Edward Osienski, discussed how these changes came about.
“Most of the language in this bill is a direct result of a task force,” said Osienski. “It was kind of unique in that you had union and non-union folks at the table, all representing good contractors who struggle with poor contractors who cheat and bend the rules. We all wanted the same thing; a system in place that would curtail the poor actors in the industry. And I think that’s why this legislation was successful.”
According to Sen. John “Jack” Walsh, another sponsor of this bill, spoke on what to expect under the new Act.
“The most significant change under the new law seeks to address misclassification and other types of workplace fraud by establishing a new Delaware Contractor Registration Act,” Walsh said.
This new way of tracking contractor activity will:
- Require contractors to pay a small annual fee and apply for a certificate of registration to engage in construction activities in Delaware
- Require registered contractors to establish compliance with State labor and revenue laws
- Require all contractors who work on a public works contract to comply with the new contractor registration requirement
- Provide contractors and constituents a public portal to view compliant contractors for services
Who needs to register?
Essentially, anyone who performs construction or maintenance services within Delaware must register with the Department of Labor. The Act defines these services as follows:
- Construction services include all building or work on a building, structure, or improvement of any type, including bridges, dams, plants, highways, parkways, streets, tunnels, sewers, mains, power lines, pumping stations, heaving generators, railways, airports, terminals, docks, piers, wharves, buoys, jetties, breakwaters, levees, canals, dredging, shoring, rehabilitation and reactivation of plants, scaffolding, drilling, blasting, excavating, clearing and landscaping, including tree cutting.
- Maintenance services include the repair of existing facilities when the size, type, or extent of such facilities is not changed or increased.
How to register
First and foremost, contractors need to submit application, which can be done in two ways:
- Register online at the Delaware One-Stop Registration Portal
- Fill out the application form and mail it to: Department of Labor, Office of Contractor Registration, 655 S. Bay Road, Suite 2H, Dover, DE 19901
Information you’ll need
You’ll need to gather all of the information required to complete the application. This includes all of the following:
- FEIN/ITIN or Social Security Number(s)
- NAICS Code
- Contractor’s business name, address, telephone number, & email address
- Business type: Corporation, LLC, Sole proprietorship, etc.
- If an out-of-state business: Registered Delaware Agent
- DE business license number
- Worker’s Compensation Insurance Policy number and a copy of the policy
- DE State Unemployment Insurance Account Number
- An OSHA compliant safety plan or evidence that one is being created
- List of any labor law or fraud violations in the past 2 years
- Along with the dates and outcomes of each violation
The amount that a contractor has to pay for registration and renewals depends on the type of projects the contractor accepts. For the first two years, the annual fees are as follows:
- Private contractors: $200
- Public contractors: $300
If, after the first two years, the contractor maintains their registration and hasn’t had any violations reported against them. The fee schedule changes to a 2 year registration period in the following amounts:
- Private contractors: $300
- Public contractors: $500
Violations & penalties under the Act
Lastly, let’s talk about violations and penalties under the DE Contractor Registration Act. The statutes provide a specific list of activities that would constitute a violation of the Act. This includes:
- Failure to comply with any requirement under this chapter
- Willfully making a misstatement or omits a material fact in an application for or renewal of a certificate of registration
- Failure to provide all information, including records, forms, or documents, requested by the Department under the Act
- Performance of work without full compliance with the Act
- Contracting with or use of a subcontractor who is not registered under this chapter
- Fails to cooperate or interfere with an investigation by the Department
- Violation of a criminal or civil law or regulation related to the ability of the contractor to comply with the labor laws of this State
If a contractor commits any of the above-listed violations, they can face a fair amount of consequences and penalties. First, the contractor’s registration may be denied, suspended, or even revoked. Furthermore, the Department of Labor may require the contractor to post a surety bond before taking on any more work.
Lastly, the contractor may be subject to administrative fines. A general violation can be penalized for up to $1,000 per violation, and it the violation is deemed a “knowing violation,” the fines can range anywhere from $5,000 up to $85,000 per violation.
Bottom line: Get registered as soon as possible!