Those pesky licenses, registrations and permits that states, counties and municipalities require of construction contractors are enough to make you consider letting the next guy do the job.
Knowing what is expected of you from a given state in terms of licensing is the first hurdle you have to jump over, and no small one, since some states like to make this information as tough for contractors to find as a bent nail in grass. To give you an idea of the diversity of requirements out there—and to explore the rules in three populous states where lots and lots of contractors do business—we go into detail below on New York, California and Texas contractor licensing requirements.
Finally, as contractors are often interested in expanding their territories to neighboring states, we also take a close look at how these three states handle licensing reciprocity.
New York Contractor Licensing
Believe it or not, New York State does not require licensing for most contractors on a state level (it’s New York City, unsurprisingly, where requirements get hairy). Only asbestos contractors and crane operators must obtain a state-level license in New York. For other types of contractors, including general contractors, licensing is regulated at the city and county level.
New York City issues a variety of licenses for different sub-industries in construction, and has various licensing requirements for different types of work.
NYC Contractor License
Since New York City contains so many people—and contractors—in its five boroughs, let’s take a closer look at how the Big Apple treats licensing.
Like we hinted at above, New York City issues a variety of licenses for different sub-industries in construction, and has various licensing requirements for different types of work. So here we go.
What is considered a General Contractor in NYC and do I need a license?
For licensing purposes, New York City makes a distinction between new builders of one-, two- and three-family homes and builders of other types of structures.
New Build General Contractors who work on one-, two- and three-family homes in New York City must obtain General Contractor licenses. Builders working on all other types of new builds can go to work with either a Safety Registration with a Construction Endorsement or a General Contractor license. All of the above licenses and registrations are obtained through NYC’s Department of Buildings.
To make things more complicated, some residential contractors must also have a Home Improvement Contractor license. This license is issued through the city’s Department of Consumer Affairs.
In contrast with new build contractors, unique rules apply to remodeling contractors, too (of course). Most need a Safety Registration with either a construction or demolition endorsement. (Those doing remodeling work in one- to four-family homes as well as condos or co-ops require Home Improvement Contractor licenses.) Contractors who handle other small alteration jobs require an Insurance Tracking Number, at minimum.
Demolition and concrete contractors require safety registrations with demolition and concrete endorsements, respectively.
What are the New York state contractor license requirements in other cities and counties?
Home improvement contractors—a classification that applies to the majority of general contractors throughout New York State—require a license to work in New York City and Buffalo, and in the counties of Suffolk, Nassau, Westchester, Putnam, and Rockland.
Other cities in New York State have their own rules and require licensing for certain types of contractors but not other types. The best thing to do is to check out the respective website of your county or municipality. If you can’t find the answer there, you might have to place a phone call.
California Contractor License
The Golden State is one of the states that does require licensing at the state level. California contractor licenses are issued through the Contractors State Licensing Board (Department of Consumer Affairs). At least this means there is, for the most part, one body controlling all licensing.
The Golden State is one of the states that does require licensing at the state level.
Who must be licensed as a general contractor in California?
All businesses or individuals who construct or alter any building, highway or road, or other structure—or who perform an excavation—must be licensed by the California Contractors State License Board (CSLB) if the total cost of labor and materials is $500 or more. (Yep, even if you do several small projects, the total cost must be less than $500 or you gotta get licensed.)
This means that all contractors—including subcontractors, specialty contractors and persons engaged in the business of home improvement on another person’s property—have to be licensed before submitting bids.
Beware, too, of the serious penalties California levies on contractors operating without a license. Those who are reported to or found by the board’s fraud arm will have to appear in court and are subject to six months in jail as well as a $5,000 fine, plus an administrative penalty of $200 to $15,000; if illegal activity continues, the fine increases.
In California, a contractor’s license requires that you take an exam. The exam is required for anyone seeking a license who within the past five years have not passed the law and/or trade examinations. Prerequisites for the exam include four years’ experience in the field verified by a qualified, responsible person.
California co-regulates contractors working with asbestos and other hazardous substances along with the U.S. Department of Labor and other entities. Under the CSLB, asbestos contractors must take an open-book exam as well as EPA-accredited asbestos abatement course, and complete formal certification.
Texas Contractor License
The only contractors who require licensing at the state level in Texas are electricians, plumbers, HVAC, and sprinkler installers. General contractors and others are licensed on the local (municipal and county) levels.
In Austin, contractors don’t have to be licensed, but they must register with the city before obtaining their first permit.
To find out if a Texas municipality requires licensing or what you have to do to get licensed, the best approach is to visit the business section of your city’s website and look for details on contractor or construction licensing.
In Houston, for example, contractors are not required to seek licensing or registration, but must seek permits on a job-by-job basis. Required documents for pre- and post-construction contract can be found on Houston’s Office of Business Opportunities website. In Austin, contractors don’t have to be licensed, but they must register with the city before obtaining their first permit. (The same is true in Dallas.) In most Texas cities, registration is the requirement rather than licensing—but it’s still best to check with the city in question before you start your first contracting job.
Reciprocity Agreements Between States
Reciprocity is when one state honors the licensing and registration of an already-licensed contractor from another state.
The National Center for Construction Education and Research offers a super-handy Reciprocity Map for a quick way to find out what kind of reciprocity agreements each state offers. API Processing, a provider of contractor licensing preparation tools, also has a helpful list of reciprocity statuses.
The summaries on each site are brief, though, so if you are seriously considering doing business in another state, you’ll probably want to dig a little deeper.
Does New York offer licensing reciprocity?
New York State does not offer reciprocity, which makes some sense, as it doesn’t issue contractor licenses to most types of contractors on a state level.
The NCCER recommends seeking more information from your local New York licensing board about any kind of reciprocity agreements that might be honored.
Does California offer licensing reciprocity?
California does honor licensing reciprocity with a handful of states: Arizona, Nevada, Utah and (for some reason) Louisiana.
This table provides details on exactly which licenses are honored by those other states, and vice versa, and what the equivalents are. For example, Structural Steel is equivalent to Arizona’s Steel and Aluminum Building, and General Building is equivalent to Louisiana’s Commercial Building.
Does Texas offer licensing reciprocity?
Of the handful of contracting licenses Texas issues on a state level, it does offer a reciprocity program for electrical contractors—both master electricians and journeymen—with several other states. (The master electrician reciprocity is only available with Louisiana and North Carolina.)
Ready, licensed, go!
Licensing is one of those tedious boxes you have to check to get to work in construction—but you’ll feel better when you’re licensed, as you won’t have to worry about getting cited for breaking the law. Plus (and it’s a big plus), you’ll be in better standing to win contracts or get hired by general contractors. So get online or get to your local government office, and then get those boots on the ground—either in the state where you live or in the one where you’d like to do business.