using one's own or employer's license on home vs. owner builder

[jaggedben]

I would like to solicit thoughts on the pros and cons of using one's own contractors license, or one's employers contractors license, to permit a project on one's own home, vs. permitting it as an owner-builder.

A customer who was a contractor once made a comment to me about not wanting to do work on her home under her own license for insurance reasons. But I'm not sure if that really makes sense (that customer didn't always make sense) and I'm trying to think it through on my own.

I don't think that using your license on your home would be against the law (here in California), but has anyone run into it being a violation of insurance agreements?

I would think that if you use your contractor's license then then your contractor's general liability can be used in the event something goes seriously wrong. And that's probably a better situation to be in than to be owner-builder and rely on your home-owners' insurance. I assume with the latter choice you get no coverage if you make any mistakes as builder (is that correct?). Then again, would you want to make a claim as a homeowner against your own business, and make your business' rates go up? Now, if you're an employee then maybe that last issue isn't really an issue for you. And maybe your employer agrees because they know you'll be motivated to give yourself really good service even if you might ask to be paid to do it.

I'm asking in relation to a project on my own home but also in general with respect to employees and giving advice to customers.

Thoughts? Any big issues I'm not thinking of?

 

[petersonra]

It seems to me you are really asking whether it is more beneficial to get a permit under the contractor's name or under the homeowner's name, where it just happens the contractor in question is your employer and the homeowner is you.


If I were your employer I would not want anything to do with your side gig building your own house. There would just be nothing in it for me and there could be some potential for negative consequences.

As for you, do you really want to mix your employment up with your personal life in this manner? Keep them separate IMO.

 

[Coppersmith]

I would not be interested in permitting an employee's home if there was no compensation for me. In that case it's just liability without reward. Besides, the employee can pull a homeowner's permit without my involvement.

Now if I were working on my own home, I would definitely pull a contractor's permit rather than a homeowner's permit. Homeowner's permits and inspections get much more scrutiny. I would also have to appear at the permit office in-person to get a homeowner's permit. I can pull a contractor permit on-line.

 

[__dan]

You would never use the employer's license for your own personal project. Usually a red flag, run the other way type of proposal. It would be like asking McDonald's for a free burger just because you work there.

You would always use your own license for your own project, including your own house which may have an exception for licensing requirements like owner occupied/builder allowed.

In Ct, "any person" may sign the permit (with no license, as owner or owner's agent). I know what the statute says and tried to get it enforced, but this is the accepted practice, "any person".

However, in the CGS, (20-338b IIRC) it also says 'if the permit signer is a licensed contractor he must use his license'. The accepted practice for that is 'must be signed in person' or, if signed by another on behalf of a licensed contractor, 'must also have a signed notarized letter from the license holder'.

Cannot think of any reason for not using your own license.

Insurance may go with the business name and not the license. IDK but that's what I would be looking at. Insurance would be completely different. Homeowner's Insurance will probably give you better coverage and vastly far less cost. Your business liability insurance will want to audit the job and check or charge you for all of your subs. That's where you would have to decide if it's for you on your own home or for the business you normally carry out.

Calling the insurance agent for clarification would be advised if there is any question. If the agent does not advise to use your homeowner's ins and not GC liability (you are the owner and not the GC) it would be time to get another ins agent.

 

[kwired]

Now if I were working on my own home, I would definitely pull a contractor's permit rather than a homeowner's permit. Homeowner's permits and inspections get much more scrutiny. I would also have to appear at the permit office in-person to get a homeowner's permit. I can pull a contractor permit on-line.

That is one thing that will vary from place to place is that rules and procedures will not be the same everywhere.

Here I wired my own home- been about 13 years ago but I pulled permit under my contractor license. For one thing I have the license and homeowner permits aren't as simple to apply for, I doubt any licensed contractor would ever go that route here because of that.

Homeowner electrical permits here are only good for the owner's principal residence. If you are building a new home they won't give you a HO permit - it isn't your principal residence until it is finished and you move in. If you want to try to play games with them and convince them you are living in there ..... all I can say is good luck, I'll be waiting for you to call me when you have already installed most the wiring and it is full of code violations, plus they won't give you a permit or authorize POCO to energize the service without a permit. Then depending on the situation I may not want to be involved anyway and tell you I can't get to it anytime soon.

 

[brantmacga]

It would be like asking McDonald's for a free burger just because you work there.
.

Well, they get one free meal per 8/hr shift. ?

Source = McDonald’s is our largest customer.



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[jaggedben]

Well that is all clear as mud...:lol:

Seems like no one agrees with the customer who didn't want to use her own license on her own house. Okay.

Seems like no one can give me a specific reason why it is a bad idea for an employee to ask an employer if a project can be handled through the company. I've just been given vague dislikes. Obviously employer has to be on board and have either a financial reason or an adequate level of trust in the employee to allow it at cost. As far as the McDonald's comment, nobody said 'free', and it seems to me that employer discounts are something that exist in all industries, depends more on company culture than anything else, but I don't know why it should be different with contracting. The question is whether there is some fundamental reason not do it because of law or it majorly skews the financial risk.

Why mix personal and work business? Well, maybe because the business is set up with things you may want like insurance (both general liability and workers' comp) and material pricing, and because the bureaucracy would be more friendly. Maybe you need a bit of experienced help and would like to work with guys you know and pay them legitimately through the business. Those are the 'pros', but is there a specific 'con', other than maybe it depends on how good the employee/employer relationship is?

Anybody know how homeowners insurance typically treats small owner-builder permits for a house that is already built? We are not talking about a home build here. Guess I should call my insurance agent, but thought people here might know. Google doesn't filter out all the chaff related to people flipping homes.

 

[Fulthrotl]

Well that is all clear as mud...:lol:

the mud varies from state to state.

in CA, if a homeowner goes to pull their own permit,
there is considerable effort made to make sure they
are actually *doing the work themselves*.

varies by city.

i've done work under other people's permits, as i was
licensed in my own right, and the liability is with the
person holding the permit, contractor or homeowner.

i remember one job, a to the studs kitchen remodel,
and the owner permitted it themselves. after they got
caught.

they absolutely didn't want to permit anything. fine.
their funeral. they had a bin out back for the demo.

i mentioned to the homeowner that the trash company
gives a list every morning of every active trash bin they
drop.

inspectors, while making their rounds, drop by those
addresses that do NOT have permits issued.

he told me "yadayadaydaaaaa bla blabla... i know what
i'm doing". ok.

it was about ten am when the inspector walked into the
kitchen, said "good morning, randy, what's up?"

i said i was waiting for him, and the homeowner is upstairs
for him.....

there was a 100% fine on the permit he pulled that afternoon.
cost him about $1k for the kitchen remodel permit.
and he became a chew toy for code enforcement. bigly.

that little crummy 1,100 sq ft condo ended up having a total
electrical bill almost $30k, not including the permit.

 

[growler]

I would think that if you use your contractor's license then then your contractor's general liability can be used in the event something goes seriously wrong. And that's probably a better situation to be in than to be owner-builder and rely on your home-owners' insurance. I assume with the latter choice you get no coverage if you make any mistakes as builder (is that correct?). Then again, would you want to make a claim as a homeowner against your own business, and make your business' rates go up?

Thoughts? Any big issues I'm not thinking of?

I wouldn't worry so much about making mistakes on the project, if you are a qualified builder and not cutting corners that shouldn't happen. What you have no control over is accidents (someone getting hurt or even killed on the job). If you do it like a normal job and keep all the paperwork straight you could be covered by workman's comp. insurance. It would cost more to do the project than taking chances as an owner builder but would be worth it if there is an injury or death.

 

[growler]

Well that is all clear as mud...:lol:


Seems like no one can give me a specific reason why it is a bad idea for an employee to ask an employer if a project can be handled through the company. I've just been given vague dislikes. Obviously employer has to be on board and have either a financial reason or an adequate level of trust in the employee to allow it at cost.

You can't permit a job for someone else (even an employee). Either you have a contract to do the work or you don't. You or the employee can always ask the contractor if he/she is willing to take on a project at reduced price because of a employee relationship. Or the employee could just ask for a raise or more benefits .

 

[kwired]

Well that is all clear as mud...:lol:

Seems like no one agrees with the customer who didn't want to use her own license on her own house. Okay.

Seems like no one can give me a specific reason why it is a bad idea for an employee to ask an employer if a project can be handled through the company. I've just been given vague dislikes. Obviously employer has to be on board and have either a financial reason or an adequate level of trust in the employee to allow it at cost. As far as the McDonald's comment, nobody said 'free', and it seems to me that employer discounts are something that exist in all industries, depends more on company culture than anything else, but I don't know why it should be different with contracting. The question is whether there is some fundamental reason not do it because of law or it majorly skews the financial risk.

Why mix personal and work business? Well, maybe because the business is set up with things you may want like insurance (both general liability and workers' comp) and material pricing, and because the bureaucracy would be more friendly. Maybe you need a bit of experienced help and would like to work with guys you know and pay them legitimately through the business. Those are the 'pros', but is there a specific 'con', other than maybe it depends on how good the employee/employer relationship is?

Anybody know how homeowners insurance typically treats small owner-builder permits for a house that is already built? We are not talking about a home build here. Guess I should call my insurance agent, but thought people here might know. Google doesn't filter out all the chaff related to people flipping homes.

I would guess insurance is often silent (homeowner's, workers compensation and contractor liability) until a claim gets filed, then they want some of those details and try to get out of paying claim if they don't like what they see. Having a permit and passing inspections should be a big help for homeowners insurance though.

Worker's comp and liability - unless there were other employees helping and it was documented that they were on the payroll for this project, it would get more complicated in order for them to accept that as a claim covered by the policy. Owner himself using a permit issued to his employer but doing the work on his own isn't ordinarily covered and since he isn't working for the employer liability insurance ordinarily wouldn't apply either. He needs his own personal insurance just like any other homeowner would need while constructing their own home.

 

[gadfly56]

It seems to me you are really asking whether it is more beneficial to get a permit under the contractor's name or under the homeowner's name, where it just happens the contractor in question is your employer and the homeowner is you.


If I were your employer I would not want anything to do with your side gig building your own house. There would just be nothing in it for me and there could be some potential for negative consequences.

As for you, do you really want to mix your employment up with your personal life in this manner? Keep them separate IMO.

^^^^That right there. I can't see any upside for the employer, just a certain assumption of risk for which he is receiving no compensation.

Regarding your own license, I'd use it if I had it. Charge yourself a dollar so you can establish a contractual relationship between you as the corporation and you as the homeowner.

 

[__dan]

Seems like no one agrees with the customer who didn't want to use her own license on her own house. Okay.

Seems like no one can give me a specific reason why it is a bad idea for an employee to ask an employer if a project can be handled through the company ...

It's not clear if you are proposing work you do yourself or work you will hire out.

Anything you hire out, even simple tasks can get very complex and expensive quickly. That's why (it should be obvious) it's far cheaper to hire specialty, experienced trade contractors. Do it right the first time with less trouble. You would not hire your EC to do hydronic heating or your buddy the plumber to do painting. Civilization is founded on the division of specialized labor (Adam Smith). Wire something for some other customer and hire out the foundation pour.

You may hire your own company or any other for what you will not do yourself, with obvious gain

The lady who would not use her license likely was not performing the work personally herself and hiring it out. She was partitioning or isolating her risk. Any problem with the house or contractors should not also come with a one two blow and also cost her the professional position at work. It's the same reason you don't put your retirement money all into your employer's company stock. The risk of losing both the job and the equity.

I subbed for a GC that built raised ranches and was ready to close in two weeks from the foundation up. If your company specializes in the work you want done, hiring them is obvious. If your company has a different specialty and you would be asking them for something they do not normally perform, it's an obvious red flag. Whatever you want to be covered for by insurance, your insurance agent is the person to talk to.

 

[electrofelon]

Y'all are some strict hombres. I'd help one of my guys out by pulling a permit or similar for him. Big deal, it happens all the time.

 

[kwired]

Y'all are some strict hombres. I'd help one of my guys out by pulling a permit or similar for him. Big deal, it happens all the time.

Same here. And why should it be much of a problem if permit is pulled and it passes inspections?

Different if I pulled a permit for an apprentice that worked for me and never even came to check out the work, but if the guy were my journeyman he possibly does jobs on a daily basis that I never really have eyes on - he is qualified to work without additional direct supervision with the license he holds.

 

[GoldDigger]

The solid limit (in most areas anyway) is that if you pull an owner permit you cannot have any other employees "help" you with the job.
If you are not the boss, a permit in the company name should be legal but risk liability if you are the not one working .

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[kwired]

If you are not the boss, a permit in the company name should be legal but risk liability if you are the not one working .

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But if it is your top journeyman that is wiring his own house - pretty good chance he doesn't do anything different then what he does for you on a daily basis should you have a client building an identical house, and it probably gets inspected by another party as well.

Huge difference between filing this permit and filing one for someone not qualified to do the work and leaving them on their own to do the installation.

Insurance issues or other liability problems that could arise are sort of a different game altogether.

 

[gadfly56]

But if it is your top journeyman that is wiring his own house - pretty good chance he doesn't do anything different then what he does for you on a daily basis should you have a client building an identical house, and it probably gets inspected by another party as well.

Huge difference between filing this permit and filing one for someone not qualified to do the work and leaving them on their own to do the installation.

Insurance issues or other liability problems that could arise are sort of a different game altogether.

If you want to be a nice guy and it somehow makes life easier for the employee by all means go ahead. I just personally feel that it's bad practice to do this.

• When you normally file a permit for a job you are doing, the payment you receive covers the small but non-zero risks associated with the job.
• If your company name is on the permit and it's "your" job, what happens if your employee is injured on "your" job?
• Suppose during inspection, the inspector discovers that asbestos has been disturbed, or more than 6 square feet of wall has been demoed (lead abatement)? That inspector may not care about the intent behind securing the permit.

 

[kwired]

If you want to be a nice guy and it somehow makes life easier for the employee by all means go ahead. I just personally feel that it's bad practice to do this.

• When you normally file a permit for a job you are doing, the payment you receive covers the small but non-zero risks associated with the job.
• If your company name is on the permit and it's "your" job, what happens if your employee is injured on "your" job?
• Suppose during inspection, the inspector discovers that asbestos has been disturbed, or more than 6 square feet of wall has been demoed (lead abatement)? That inspector may not care about the intent behind securing the permit.

Electrical only permits won't necessarily have lead or asbestos abatement issues directly associated with them, especially if the inspector that comes is an electrical only type of inspector.

I guess my reply was assuming an EC filing a permit only for the wiring portion of his employees house, and not filing any kind of blanket permit that covers all aspects of the project. Some of this comes down to individual jurisdictions and what the rules are. Some places there is one general permit for all trades, some places there may be a separate permit for different trades. Same can go for inspections.

Here if I were pulling a permit for an employee - it would be for electrical work only. If he wants to inhale a bunch of lead or asbestos the EI won't really care, all he is going to look for is NEC compliance.

 

[gadfly56]

Electrical only permits won't necessarily have lead or asbestos abatement issues directly associated with them, especially if the inspector that comes is an electrical only type of inspector.

I guess my reply was assuming an EC filing a permit only for the wiring portion of his employees house, and not filing any kind of blanket permit that covers all aspects of the project. Some of this comes down to individual jurisdictions and what the rules are. Some places there is one general permit for all trades, some places there may be a separate permit for different trades. Same can go for inspections.

Here if I were pulling a permit for an employee - it would be for electrical work only. If he wants to inhale a bunch of lead or asbestos the EI won't really care, all he is going to look for is NEC compliance.

If the work requires opening a wall or two, you could very quickly hit the 6 sq ft limit. I very much doubt the EI will simply ignore the issue under the guise of "it's not electrical work".