Unlicensed contractors and contractors that neglect to maintain adequate workers’ compensation and general liability insurance can bring a world of problems for workers, consumers and carriers, but enforcement can be difficult, if not impossible. Representative Paula Davis, (R-Baton Rouge) in an effort to provide consumer protections, brought HB675 this Legislative Session, which is on track to hit the Governor’s desk this week.
Louisiana Comp Blog spoke with Rep. Davis to discuss the measure – which could indirectly benefit workers’ comp carriers by ensuring that contractors without coverage cannot slip through the cracks.
Comp Blog: What was the impetus for this bill? Did an organization bring it to you?
Rep. Davis: A constituent came to me with the idea for this legislation. This constituent had hired a contractor for a renovation, over the $75,000 threshold for licensure, and that renovation was projected to take about three months. The project wound up taking close to a year. As time wore on, this constituent, who is a lawyer, became suspicious that the contractor wasn’t licensed. He checked the Louisiana State Licensing Board for Contractors website and discovered that he hadn’t been licensed in years. The constituent then fired the contractor and hired a new one who followed all of the rules – the new contractor’s insurance producer sent over the GL and comp certificates and the license number was right on the contract.
This constituent’s experience could really happen to anyone, and it got me thinking, especially after the historic flooding we had around Baton Rouge, that there needed to be something a little more solid in place to prevent situations like this. It may not get rid of every bad actor, but it is at least additional consumer protection.
Comp Blog: What are the specific mechanisms in this bill to catch the bad actors?
Rep. Davis: The bill requires any contractor who is required to be licensed in the State of Louisiana to provide the consumer with a name, a contracting license number, classification, and current certificates of insurance for GL and workers’ comp – whether or not the consumer asks for it.
The bill also requires the permit offices to pull the contractor’s license before issuing any permits. Most permit offices were already doing this, but it seemed prudent to put that in the law as an extra speed bump. I worked with the permit offices in order to draft that language and make sure it fit their capabilities and met their concerns.
Comp Blog: What happens if a contractor is found to be out of compliance with this new requirement?
Rep. Davis: The penalties can be revocation and suspension of a contractor’s license, plus some monetary penalties.
Comp Blog: It looks like the bill will pass. Are you optimistic about passage? How about enforcement when it becomes law?
Rep. Davis: The bill has enjoyed near-unanimous support since I introduced it. Homebuilders and the Contractor’s Association were in support as well because it can be this small number of contractors that don’t follow the rules that make their members look bad. The bill is scheduled for concurrence tomorrow (June 2nd) and I’ll be asking the body to adopt a minor amendment and it should get to the Governor.
As for enforcement, education is the key to success for a bill like this. Consumers and businesses need to know their obligations and their rights.