Hiring licensed, bonded contractor can stave off trouble

By Ingrid Stegemoeller, Herald staff writer

KENNEWICK -- Unlicensed contractors haven't hurt Dan Easton's home remodeling business, but he knows the problems that can befall consumers who hire contractors who don't play by the rules.

"It's a little riskier for them because they don't have any recourse," said Easton, owner of Kennewick-based Easton Construction LLC. "When you're licensed and bonded, you're following the rules. If I don't pay my bills or draw on a job and don't show up again, they have a greater chance of recouping their loss."

He saw that happen once when a contractor on a job asked for money from the homeowner to buy materials, then cashed the check and didn't return. The contractor's bond still was good and the homeowners were able to get their money back, he said.

Easton is one of about 58,000 contractors registered with the state, a number that has dropped from a peak of 63,000 during construction boom times, said Elaine Fischer, spokeswoman for the state Department of Labor & Industries.

That drop, a product of a sagging economy, likely means more contractors are working without licenses, bonds and proper tax payments, she said.

"We think that more people are working without being registered because that's typically what you'd see in tough economic times," Fischer said.

The underground economy in the construction industry is an ongoing problem that drives up costs for registered contractors and leaves consumers without protection, officials said.

"It's a huge detriment because what you have is guys who aren't registered, who aren't bonded, who aren't insured, who aren't paying taxes, competing with members of our association who are," said Amy Brackenbury, lobbyist for the Building Industry Association of Washington. "We get the bad rap for their bad work."

A report by the Washington State Institute for Public Policy indicated participants in the underground construction economy owed the state $109 million in taxes in 2006. That includes business and occupation, unemployment insurance and workers compensation taxes.

"The ones who don't pay, it puts an additional burden on those who are paying, and are operating legitimately," Fischer said. "They look to us to do something about this unfair compensation because those who aren't paying can work cheaper."

Even as the economy puts pressure on contractors, the BIAW and L&I are working together to enforce unregistered contractors.

"It's definitely in the best interest of our members to work closely with contractor registration enforcement people," Brackenbury said. "We'd like to have a level playing field with all our members."

The state's budget woes have cut down on the number of inspectors in the field, Fischer said.

The department is down to 12 compliance inspectors around the state, instead of 18, she said.

"It's going to make it harder," Fischer said. "We're not going to be able to catch as many people."

But the department will continue to patrol construction sites, check advertisements and respond to consumer complaints, she said. Unregistered contractors receive a $1,000 ticket and are entered into a violators' database.

Fischer offered several suggestions for consumers, such as taking the time to do research to find the right contractor.

"It may take a fair amount of time to find a good one," but that's preferable to recovering from a bad one, she said. "The law does provide some protection, but it doesn't guarantee honest transactions or perfect work."

Easton explained that bond and liability insurance help protect homeowners if a contractor doesn't finish a job, doesn't pay bills for materials or does some kind of damage, such as to a neighbor's property.

Easton carries a $2 million liability insurance policy and a $12,000 bond, he said.

Both Brackenbury and Fischer noted the Tri-City construction business has held up relatively well compared to the rest of the state.

More electrical inspectors have been transferred to the local area to complete the work, she said.

In the meantime, officials encourage consumers to do their homework and report unregistered contractors.

"It gives homeowners an insurance policy that you're going to do what you say you're going to do," Easton said.

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Sunday, Jun. 28, 2009

Hiring licensed, bonded contractor can stave off trouble

By Ingrid Stegemoeller, Herald staff writer