Letting another contractor use license

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Tdubya90

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Location
Denver
Occupation
Master electrician
Im debating on whether or not to let an out of state EC use my license number. Would like to get some more experienced folks thoughts on that. Thanks
 
What state are you in? Beyond fines im afraid these guys might not do the work right and then split town leaving the corrections up to me etc. They seem legit but I don't know them.
 
It is very common, and perfectly legal, in many states.

Here in California, it is called being a “Qualifier”. There are very strict rules about how it’s done, compensation is not regulated and is up to the contractors to negotiate.

Yes, the license holder/qualifier is legally and ethically responsible for the work. Which is why, at least in California, the qualifier must own at least 10% of the company and be employed at least 32 hours/ week for that company. You cannot merely pimp out your number.

I have no clue about Colorado regulations.
 
Several times while at electrical supplies houses had people ask if I could pull a permit for them. Nope. To us old timers anybody that pulls a permit for anybody is a prositute. My best customer begged me to pull a permit his friend. Told me even if you were to put a gun to.my head I would refuse. Any way told him that I would stop by and perform a free inspection. The store he wanted a permit for already had the sheetrock on & taped. Every wall box that had two.or more cables were undersized, wires stripped too long, missing JB covers and service panel was a disaster. He finally got somebody to pull an electricsl.permit. Two months after opening place had a big fire and never reopened. After a year or so after I received my license back in the 1970's read the fine print on my likability insurance. Wow. Stated they might only pay a portion of nothing if think it was termed in proper work was performed causing damages. Often wondered who would be responsible if you pulled a permit and one of the workers got injured.
 
If you have an active involvement in the job then it should be fine. If you'll be just passively signing the permits and are not involved many states prohibit such an arrangement. Not knowing them personally would be a red flag for me unless they're going to actually hire you as part of the company. Years ago my father in law was an electrical contractor and he suddenly died after falling off of a roof so my brother in law hired someone as the license holder until he was able to obtain his own license. It can be a huge amount of liability when your name is on the permit and something goes wrong.
 
Here's an engineer's take on this issue (for the moment, disregarding the fact that it is illegal for engineers to do it). It's all about the mathematical concept of "expected value." Look that up, if you wish. You need not actually do the math; just think your way through the concept.

  1. What financial gain can you achieve, if all goes well with the project? This will be a positive number.
  2. What is the probability that all will go well? This will be a number between 0 and 1.
  3. Multiply those two numbers.
  4. What financial loss can you suffer, if something goes wrong with the project? This will be a negative number.
  5. What is the probability that something will go wrong? This will be the answer from the second question, subtracted from 1.0. In other words, answers 2 and 5 should add up to 1.0.
  6. Multiply answers 4 and 5.
  7. Add the answers from questions 3 and 6, then divide by 2.
  8. That is the "expected value" of the financial impact of your accepting this "opportunity." My prediction is that it will be a negative number. In other words, if my prediction is correct, you are most likely to lose money in this deal.
Put in a non-mathematical way, if you stand to lose more than you stand to gain, and if the odds are against a successful project, then run (do not walk!) away.
 
Tdubya90 said:
What state are you in? Beyond fines im afraid these guys might not do the work right and then split town leaving the corrections up to me etc. They seem legit but I don't know them.
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That, and you will be carrying liability for the install. If something goes wrong years later, it will be on your company - and your insurance will use the license sharing as an excuse not to pay.
 
Tdubya90 said:
Im debating on whether or not to let an out of state EC use my license number. Would like to get some more experienced folks thoughts on that. Thanks
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Why not set up a legitimate "Joint Venture"? Or are you talking about selling your license for all of this contractors work?

The last thing I wanted was more competitors on what work was being bid. If this contractor is serious about moving into your state for work he or one of his employees should take your states licensing exam. We had licensed people in multiple states.
 
It is quite legal in California, and in my chats with contractors from Florida, it is more the rule than the exception in florida.

Floridas licensing requirements are so far removed from real world construction, that certain people jump through all the hoops and amass licenses, and then qualify multiple companies.

Here in California, you may only qualify I believe 1 company at a time, or maybe 2, but the working hour requirements remain.
 
Just had a call today from a buddy of mine hinting around about permitting a service change and generator in North Carolina, not too far from me. He’s a good electrician, but my insurance wouldn’t cover it because I’m a sole employee.
 
To the OP, ask yourself what *you* stand to gain from the situation. Can you bid the work yourself? If you can why don’t you bid it yourself?

If you can’t, why? Lack of man power? What does the other company bring to the table? Man power, expertise in a certain field? What are you bringing to the table?

After all the considerations are made, perhaps a joint venture would be more A Propos.

I am currently involved in a joint venture with another contractor. It been an experience for sure. I won’t go into detail on the public portion of the forum. It hasn’t been bad at all, just very different from working on your own.

If you are looking for passive income, I wholeheartedly believe that a license rent would be the most risky and non profitable way to acquire passive income. The risk to reward ratio, if you are not managing the project, is astronomical.
 
Have you asked yourself, "why me," or "how did they come to know my name," or "if they don't get me, what will they do"? If they did not reach out to you because they knew, and liked, something about your knowledge, your experience, and your honesty, then I would surmise that they are just looking for someone to use for their benefit, and they wouldn't care what happens to you if problems arise.
 
Seven-Delta-FortyOne said:
It is very common, and perfectly legal, in many states.

Here in California, it is called being a “Qualifier”. There are very strict rules about how it’s done, compensation is not regulated and is up to the contractors to negotiate.

Yes, the license holder/qualifier is legally and ethically responsible for the work. Which is why, at least in California, the qualifier must own at least 10% of the company and be employed at least 32 hours/ week for that company. You cannot merely pimp out your number.

I have no clue about Colorado regulations.
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It's somewhat just semantics, but strictly speaking the qualifier is not necessarily the license holder, and it is still illegal to 'let someone else use your license.' A different company needs its own license. A person can be qualifier for up to three companies; that'd be three different licenses. If you let someone else put your license number on a permit for a site where you did not have a contract with the client or GC, that'd be illegal.

To be clear I'm also speaking of California and other states will have different rules.
 
Too risky IMHO.

One of my former co-workers pulled a permit for an unlicensed friend installing a furnace in the winter big emergency job. They got the furnace in and the HO wanted heat and they had no duct to connect the furnace, so the "installer" made a plenum out of the furnace cardboard box.

After the fire my coworker had to go before the state board and had to pay an $8000 fine . He got off easy as no one got hurt and the damage to the house was minor. Think about what could have happened.
 
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