Hiring Unlicensed Home Improvement Contractors can hurt the community more than help.

Michael F. Sabitoni, President of the Rhode Island Building and Construction Trades Council, wrote a piece for the Providence Journal last year entitled “Contractors behaving badly: Secret economy cheats workers, state.”

It dealt more directly with a few local incidents in Rhode Island with contractors receiving kickbacks from their workers, who were under paid, and in some cases not national citizens. This basically, again, unearthed that this practice is rampant in the construction industry and that many workers, or laborers, are paid under the table. By doing this it allows the contractor and the laborers to skip out on many taxes.

If you’re doing a home improvement project at home and the contractor you hire isn’t licensed with the state you’re setting yourself up for a great deal of financial hurt.

Firstly: By not having a license they’re not recognized in the state as a proper HIC business. This also should shoot up a red flag of warning that they are also not properly insured. Many states link the two together, you must have insurance to get your HIC license for the state and before you can do ether, you must be locally registered and state registered as a business with the Chamber of C\ommerce.

Secondly: If something goes wrong in the project, damage, abandoning the work and contract, or not fulfilling obligations you have a few options. I always suggest trying to work something out directly with the contractor. Many things can be simply corrected just with straight forward. However, if things get bad and lawyers need to be called, the state can’t help you to locate, find, prosecute, or help you mediate with an unlicensed contractor.

Thirdly: The contractor, who isn’t licensed, doesn’t pay fees/dues every year to have their license renewed. This is essentially more tax money that the local government will have to find elsewhere. Combine this with the other money that’s not being paid in local, state, or federal taxes by paying workers under the table and you can see hundreds to thousands of dollars being withheld (depending on the size of the business it can be much more!).

Just last year $4.5 million was missing, in Illinois, based on the amount of money that wasn’t declared by license and unlicensed contractors. The licensed contractors can at least be reprimanded and forced to pay this money. But the unlicensed contractors get away with your cash to make their wallets fatter.

In my series or blogs that I’ve done with consumer protection issues I’ve strongly urged people to change the way they shop for contractors. Doing a little bit of research can not only help you get a better project done, but provide reassurance that you’re not hurting your town or state tax payers (your neighbors).

Be Aware: Offers that sound too good to be true (i.e. Basement Finishing for under $9k, or total bathroom remodeling for some small amount) often are. Contractors can be skipping out on both quality materials and on proper employee wages in order to cut costs and get more jobs. If something sounds too good, it probably is.

Do you research: HIC numbers are public knowledge and any company that is properly licensed should have evidence of it on their person, vehicles, or a wallet copy that can be verified online with your Department of Public Safety.

Don’t Sign Anything: If you’re not convinced or having double-checked the contractors’ credibility, don’t sign anything. Reschedule for a revisit; give yourself time to find the answers and the verification you’re looking for. But be upfront about it!

Companies would rather have you as a comfortable customer than an uncomfortable panicked whistle blower. If a company wants to do business the right way, they provide the customers will all the information they need to know that they’re covered and protected in their purchase. Unlicensed and uninsured contractors create more liability and won’t be able to provide proper information that would set you at ease.

Bottom Line: It’s better, overall, to do business with a licensed and insured contractor.



Recent Construction Industry News in Rhode Island:
New partnership to provide training to contractors and enhance safety during construction of new Warwick Intermodal Station

Basement Waterproofing Contractors and Foundation Repair Contractors take a wrong turn with SEO

Being in the Waterproofing industry I'm constantly interacting with other companies online. Innovated designs, solutions, some fail, some don't. There are many licenses that are needed by companies to work in the Waterproofing, Foundation repair, Radon Mitigation, Asbestos removal, and other home improvement industries. Recently, I wrote a post about how improperly licensed waterproofing companies are putting the consumer at risk.

SEO, Web Site Optimization, and Getting Ethical:
Today, I'm talking about the people in the back room, doing the marketing or taking over the public distribution of the branding of these companies online.

I recently made a more personal opinion post on Ezine's Members forums about what I've been running into.

The Problem: Companies are jumping the Gun to get out ahead:
New companies, wanting a leg up, and even older companies needing to create new leads and sustainability in a down economy are taking SEO (Search Engine Optimization, a branch of Web Site Optimization) and other website optimization specialists and bringing them to work at their Headquarters. Lovingly called "In-House SEO," it became a special topic at this year SMX.

The problem comes not from the planed "currently running" SEO; it comes from the SEO and web site optimization that's implemented BEFORE the company is actually ready to do business. Some optimization and SEO companies have become so efficient, and there's so much information out there on the Internet, that even business owners are jumping in and pulling their weight. Again, the problem is that businesses are doing this in anticipation, making the sites live, and the sites rank well right off the bat, but the business is left in the dust trying to catch up.

Consumers need to step up their "Pre-Shoping" to protect themselves:
Consumers need to be aware and need to take note of this. Not all websites lead you to qualified people. Some websites are intentionally designed to fish for leads and then source them out to companies for a fee; this is the way these sites make money.

If a site is qualified, you can take the name of the company (sometimes listed in full at the bottom of a site) and actually find the license of the company listed in that state's Department of Public Safety or Department of Consumer Protection.

It is so important for consumers to be doing the right research when finding waterproofing and foundation repair contractors.

Many states are fighting large numbers of "seasonal" contractors who migrate from state to state and do work with improper licenses, and un-intentionally stealing work from local state licensed carrier contractors.

Bottom Line:
Protect yourself as a consumer: Ask for License Numbers.

Protect yourself as a consumer: Double check the name of the company or owner of the company against the databases at the Department of Public Safety or Department of Consumer Protection.

For business owners: DON'T JUMP THE GUN! Get your licenses first, operate the right way in your state, and THEN gather business from online and other referral processes. Doing business online doesn't leave you exempt from state or federal law.