"Renting" contractors license

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Dilbydog
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"Renting" contractors license

Post by Dilbydog »

I currently work for a large electrical contractor. Reciently the Company has been invited to bid projects where the electrical scope is the majority of the work. Thus, these proposals are requiring that the electrical contractor must also have a General Contracts license, in addition to any applicable electrical license(s). In a past life I worked for a G.C. and I'm one of the few employees, at my current company, who has the qualifications to seek a GC license. My current employer offers to pay for the exam, and provides an annual "bonus" for all license holders. This extends to our Professional Engineers, holders of our various electrical licenses, etc.

My question is in regards to personal protection. Does anyone here have any experience where your employer conducts business under a license in your name? And if so, what can be done to limit personal exposure to risk?

Thank you
ralph124cf
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Re: "Renting" contractors license

Post by ralph124cf »

WOW.

Questionable legality, dubious ethically.

Perhaps if your boss will let you have a big say in the bid and promote you to a supervisor to run the job, and pay for your insurance, and give you a significant percentage of the anticipated job profit, (defined in advance) then maybe it might be worthwhile. For a "bonus" for use of the license, no way.

Ralph
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prudent
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Re: "Renting" contractors license

Post by prudent »

Would like to understand better what is meant by "your employer conducts business under a license in your name".

I once worked for a company that was required to have a PE sign off on all design documents, but we didn't always have a PE on staff with a license in the state where we were doing the work. We would locate a PE licensed there and hire them to review and sign off on the drawings. In a sense, that's "renting" a license but there are no ethical/legal issues doing so.
adamthesmythe
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Re: "Renting" contractors license

Post by adamthesmythe »

You would need to thoroughly understand your potential personal liability and how you properly insure against it.

How is this normally done in your field? Is the general contractor insured or indemnified by the company? Does he get stock ownership or other participation?
renue74
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Re: "Renting" contractors license

Post by renue74 »

Your company owner should search out a GC who will partner with them to bid on projects. A GC with experience.

That's the way things works.

If you did it the other way you propose, ideally you would need to incorporate, obtain a bond or other insurance and then place your electrical firm as a subcontractor on all proposals and permits.

Normally in smaller firms, a business owner or someone who owns a percentage of the company obtains a GC license.

The current way you present is pretty shady, but it happens all the time. I've also heard of shady GCs who sell out their permit getting ability to people who don't have licenses.
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Dilbydog
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Re: "Renting" contractors license

Post by Dilbydog »

prudent wrote:Would like to understand better what is meant by "your employer conducts business under a license in your name".

I once worked for a company that was required to have a PE sign off on all design documents, but we didn't always have a PE on staff with a license in the state where we were doing the work. We would locate a PE licensed there and hire them to review and sign off on the drawings. In a sense, that's "renting" a license but there are no ethical/legal issues doing so.
This is essentially my situation. I must clarify that in many states, including the state in question, only individuals may obtain a license. A business or corporation cannot test for and obtain a license. A license will only be given to an actual person. "Renting" was a poor choice of words. We are licensed in several states, and individuals in the company (including the "C" level folks) hold our various licenses. Both for design and construction.
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LadyGeek
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Re: "Renting" contractors license

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (career guidance).

I want to address several comments related to the legality and ethics of the OP's situation. For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

If the OP does not understand why this situation is in shady territory, we will help educate him/her how to do this within the existing legal framework; in which case this discussion can continue.

State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
adamthesmythe
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Re: "Renting" contractors license

Post by adamthesmythe »

I am somewhat acquainted with the situation of a professional engineer, and I am guessing it is similar with a contractor license.

Certain things (structural engineering design, and I assume general contracting supervision) must by state law be done (or signed off on) by a licensed person. That person is required to have particular knowledge BUT is also required to use that knowledge, and to take responsibility for the results. So if the building falls down the owner can sue the engineer or contractor. Because the consequences are so great (even with due professional diligence) almost no one would undertake such responsibility without insurance. Even so there is risk (damages greater than the policy, spending weeks in court, loss of professional reputation).

So OP needs to (1) be sure that this is normal in his field (2) be sure his company provides him with appropriate insurance and (3) be sure he receives appropriate compensation.
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