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Make sure your contracting business doesn’t work for free!

by | May 16, 2013

Your contractor’s license is the most important first step.

In California, a contractor was recently ordered to repay over $750,000 when it became evident that the company had operated without being properly licensed in the state of California. In Oregon, a contractor has been barred from seeking over $285,000 in compensation when his license was suspended during the course of a contract.  Don’t let this happen to your contracting business! OnlineEd will tell you what the risks are, and what you can do to mitigate them.

In a 2012 court decision, a California constructing contractor was ordered to repay the entire $750,000 contract earned while performing work while unlicensed.  The sole proprietor was contracted to construct a temporary access road and parking lot for a casino. After submitting a bid in March 2007, the contracting company finished its work and was paid in full around May. However, an application for a license was submitted while work was ongoing, and the contracting company first received its contractor’s license in October 2007.  The court subsequently ruled that the company be required to refund all of the money paid by the client  upon completion of the contract.

While harsh, this action is consistent with California courts’ previous decisions that contractors should be held liable for their licensure to the point of being denied payment or being required to refund payment already received.

Similar legislation is in place in Oregon, and can be seen in another 2012 court decision which upheld a ruling barring a contractor from commencing action seeking compensation earned while operating without being properly licensed. While constructing a residence, the contractor’s license to perform construction work was suspended for two weeks because of expired liability insurance. Because of this suspension, the court held that the contractor was unable to seek compensation allegedly owed to him through legal means, losing out on an amount over $280,000.

These worst-case scenarios are cautionary tales, but they should not be ignored. Licensure costs time and money to obtain, but the alternative is far more expensive. Making sure that your contracting business is properly licensed throughout the entire process – from bid to completion – will protect your business from substantial losses. OnlineEd.com can help with your Oregon contractor needs here.

Once you have obtained or renewed your license, make sure you fulfill all of the continuing requirements to avoid a suspension. The CCB lists some common mistakes and oversights that can cause your license to be suspended:

  • Expired liability insurance.
  • Cancellation of your bond.
  • Hiring employees while in an “exempt” employer status
  • Deletion of RMI (Responsible Managing Individual) form due to disassociation or death.
  • License or renewal fees returned as “insufficient” or other non-payment issues.
  • Maintaining a non-exempt status with no workers’ compensation.
  • Failure to maintain your corporate or LLC (Limited Liability Company) filing.


Make the most of your business; ensure you are properly licensed and continue to double-check your license frequently. Don’t get caught in a mistake and end up working for free!


For more information on obtaining an Oregon contractor license, please visit the OnlinEed web site at: www.OnlineEd.com or give them a call at 866.519.9597

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