By Attorney Edward Jesson
In North Carolina, the Licensing Board for General Contractors controls who can apply for and hold a general contractor’s license and what the criteria is for those seeking to obtain a license. In general, in North Carolina, if you are wanting to bid on or perform construction projects with a value in excess of $30,000.00, you must obtain a general contractor’s license. Of course, if you are involved in plumbing, electrical, or HVAC work (or various other trades), you must obtain a license from the relevant board controlling those trades.
We have frequently been asked if a company or individual who doesn’t own a general contractor’s license can simply “lease” or “borrow” a license from someone who does hold a general contractor’s license. The answer is “no.”
The definition of a general contractor in North Carolina is “any person or firm or corporation” who plans on performing work in excess of $30,000.00. In order to hold a general contractor’s license, among other things, the license holder has to pass a test. A “firm or corporation” is not able to sit down and take a test—a person must. Therefore, this is where “qualifiers” come into play. In North Carolina, a business applicant must identify in its application a person who has successfully passed the exam (or who plans to take the exam) who will act as a qualifier for the business. A qualifier must be a responsible managing employee, officer, or member of the personnel of the business applying. A responsible managing employee is a person who is working for the applicant business for a minimum of 20 hours per week or a majority of the hours operated by the business. If the person is not an owner, officer, or partner, the person must be a W2 employee. Similarly, a member of the personnel refers to a W2 employee. Therefore, the qualifier cannot be an independent contractor and cannot be “leased” or “borrowed.”
Under these circumstances, for example, XYZ Building, Inc. would be the named license holder but “Mr. Jones” would be the qualifier—the individual who had actually passed the Board’s exam. If that qualifying individual is no longer employed or associated with the company, the company’s license will remain in effect for 90 days in order for the company to make arrangements to get another qualifier in place. However, and very importantly, during that 90 day period, the license holder company cannot bid on or obtain any more work until its license is fully reinstated.
Not just anyone can act as a qualifier for a company. Moreover, simply hiring someone who holds a general contractor’s license does not mean that the company is properly licensed with the Board. XYZ Building, Inc. would have to submit an application to the Board that lists Mr. Jones as its qualifier, and Mr. Jones would have to fit the criteria to actually be a qualifier. Without going through the proper steps, XYZ Building, Inc. may be guilty of the “unauthorized practice of contracting,” which is a class 2 misdemeanor in North Carolina. Additionally, XYZ Building, Inc. may not have any recourse against a homeowner who fails to pay them because they were not properly licensed.
If you need assistance complying with the North Carolina Licensing Board for General Contractor’s rules or have already received notice from the Board that you are in violation of its rules, the attorneys at Jesson & Rains may be able to help.
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Kelly Rains Jesson