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Legal Aid: State & Federal Licensing Requirements

The impact of licensing regulations on the kitchen and bath design industry
By Peter J. Lamont
August 09, 2011

Most people can clearly distinguish between a home improvement contractor and an interior designer or kitchen and bath salesperson or installer. When one generally thinks of a home improvement contractor, they think of someone who builds walls, installs plumbing or electrical, adds an addition or builds out a basement. However, the law has a slightly different take. It is critical that those in the design industry understand they may be considered a home improvement contractor under state and federal laws and are obligated to register and be licensed as such. The fines for failing to obtain a license or comply with registration can exceed $20,000 per day, per violation and may be considered a criminal offense.


THE WHYS AND WHERERFORES

Who exactly decided that an interior designer or kitchen and bath professional should be considered a home improvement contractor? Over the years, consumers have lodged tens of thousands of complaints against kitchen, bath and interior design companies with their state's Department of Consumer Affairs. As a way of protecting their citizens, many states sought methods by which design professionals could be held accountable for their negligence. In addition, state and federal government is always looking for new revenue-producing programs to fund its various needs. The solution was to create regulations and administrative laws that broaden the definition of home improvement contractor to include the services of those in the design industries. These regulations, when violated, trigger statutory penalties and constitute a violation of state consumer protection laws.

Presently, just about every state requires those in the design industry to obtain licensing under its home improvement contractor laws. Some states, such as New York, have expanded the definition of home improvement contractor to include anyone who sells products or negotiates a contract for home improvements. Thus kitchen and bath salespeople in New York must obtain a home improvement salesperson license in order to comply with the New York City Department of Consumer Affairs.

As you would expect, states such as New York, California, Texas and Florida are at the forefront of home improvement contractor legislation. These states typically set the bar for the others. In California, individuals engaged in any statutorily defined home improvement, including design professionals, who are not properly licensed are subject to fines in excess of $25,000. Additionally, states like California and New York have made it a misdemeanor to operate without a home improvement contractor's license. In fact, only last month a California Appeals Court affirmed a lower court's conviction of a California contractor who was operating without a valid contractor's license. The individual was fined $5,000 for each of the five counts of operating without a license and was sentenced to 90 days in jail. If your state has not jumped on the bandwagon, expect it to do so in the very near future.


NEW FEDERAL GUIDELINES

Not to be left out, the federal government has also established new guidelines that affect design professionals. Under the EPA's new lead paint laws, contractors (remember, under your state's law, design professionals may fall within the definition of contractor) who perform renovation, repairs and painting jobs in pre-1978 housing and child-occupied facilities must be certified under an EPA-accredited training program. The fine for failing to have the requisite certification is $37,500 per day. The legislative intent behind this law is to protect homeowners and their families from health issues related to lead paint.

The severe penalties imposed by the EPA put most contractors out of business and subject them to criminal penalties for failing to pay the fine. On May 16, 2011, EPA announced that a Rockland Maine renovator, who was installing kitchen cabinets and related items, is facing severe penalties for not being properly certified. The EPA has stepped up investigations of non-certified contractors and is actually asking people to report suspected violations in an effort to “fight pollution by reporting potential environmental violations.”

Determining whether you need to be licensed can be a complicated process. Many states require design professionals to be fingerprinted and take licensing tests. Additionally, many local city governments have their own separate requirements for being licensed home improvement professionals. In order to ensure your protection with respect to these laws and regulations, you need to first determine if your business or activities fall under the definition of home improvement contractor. You should be able to find this information on your state’s Department of Consumer Affairs website. Next you should obtain the applications from the department and review the requirements for licensure. Once you have obtained your license you must be aware of its expiration date. Most states require the renewal of contractors’ licenses every one to two years.

While design professionals are not typically considered contractors, federal and state laws and regulations, are holding them to the same standards. It is critical that you review your state’s requirements as soon as possible to protect yourself from fines and possible criminal prosecution. You may want to seek the assistance of an attorney to help you obtain and maintain your licenses and certifications.


—Peter J. Lamont, Esq., is a commercial litigation attorney with offices in Hawthorne, NJ, as well as Massapequa, NY. His practice focuses on the representation of small- to large-size companies in the building and design industry, as well as individual designers and architects. To contact him with questions and suggestions on topics for future articles, please email him at plamont@peterlamontesq.com or call him at (973) 949-3770.
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