Posted by Mark Paskell on Sat, Jul 24, 2010 @ 08:11 PM
In a recent RRP training in Southampton, New York a contractor yelled out "how am I going to survive when I have to compete against illegal immigrants and the local fireman contractor working illegally". In another training in Mass a painting contractor told us that he is getting killed in his town going up against local teachers and college kids with under the radar side businesses. In another training in Mass, a contractor says he competes against the whole town fire department on half of his window and siding jobs.
All too often we hear numerous reports of illegal contracting activity all over the region. The contractors in our RRP trainings tell us they are there to be certified because it is the right thing to do even though they are tight on funds from the economic slow down.
Since January, we have trained 3000 contractors in Mass and New York and we consistently hear the pleas for a level playing field and equal enforcement. The majority of the contractors fear lost projects from a homeowner who is all to willing to accept the lower price from the illegal contractor. Many doubt the local building inspector or state officials have the will or resources to enforce the rules and regulations on the books. They further doubt that the RRP lead rule will be enforced. The contractors cite overworked and under staffed building departments as well as the age old tradition of protecting the old boy network.
In our trainings we are constantly reminded that there are four groups that make up the underground contracting community.
Group 1; The contractor who elects to work with no insurance, under the table labor, no permit, cash payment so they don't have to pay taxes, no license, no certifications.
Group 2; the undocumented illegal immigrant contractor
Group 3; the local fireman with an illegal side contracting business
Group 4; the local teacher and college kids with an illegal side contracting business.
Legal contractors are paying thousands of dollars to comply with the rules and regulations to be a professional contracting company. These include but are not limited to; liability and workmen's comp insurance, building license, state registration, W-2 employees with matching taxes, OSHA training, proper classification of employees, pulling permits, paying taxes, and most recently becoming EPA RRP certified.
Legal contractors deserve a level playing field
There is no better time than now for our state and local officials to begin the crack down on all illegal contractor activity. It should not matter if it is an illegal immigrant contractor or the local fireman who chooses to own a side business without the required practices. Those who play by the rules deserve a level playing field. Maybe the RRP Lead Rule will give officials the tool they need to shut down illegal activity by imposing fines and work stoppages.
Comments from contractors in our RRP Trainings
We asked many of the contractors in our RRP trainings which group they think is the greatest threat to their livelihood and this is what we were told.
Group 2; The undocumented illegal alien contractor is one of the biggest threats. They are good at hiding and many homeowners are attracted to the rock bottom price. In addition group one contractors often pick them up at the local big box store or on the side of the road on an as needed basis and pay them under the table with no insurance or taxes.
Group 2 an 3; the local fireman or teacher who works on the side without the proper credentials. These groups cause the greatest angst among the legal contractors because;
1. The local fireman and teacher often use their profession and community reputation as a gage of trust to convince homeowners to hire them. Then they ask the homeowner to pay cash with nothing in writing. One contractor told us it goes something like this; "you can trust me, I am your local fireman or in the case of the teacher " I am the teacher who has your kid in class."
2. The local fireman and teacher are part of the old boy network and often buddies with the town inspectors and selectman.
One contractor was careful to point out that he also knows many fireman and teachers who have legal side business and they play by the rules. He went on further to say that a couple of legal contractor firemen he knows well, actually take issue with other firemen in their department who choose to work illegally.
I wonder how that dynamic works when they are all in the firehouse late at night with no fires to fight!
Which group do you think poses the greatest threat to your contracting prospects for business in your marketplace?
mark the coach
Posted by Mark Paskell on Sat, Sep 05, 2009 @ 08:07 PM
Over the past 3 months I have been reading the Angie's list monthly magazine and was amazed at all the contractor advertisements that were in violation of the Mass Home Improvement Law. The Mass Home Improvement Law explicitly states that contractors must publish their registration number in all advertising. One would expect that Angie's list would not allow contractors who violate the law to advertise in their publication. I was thinking that it was time to expose this matter due to the dangers posed to homeowners who hire what they think is a good company based on the Angie's List.
Well I suppose their ears were ringing because this months magazine is devoted to the massive problems associated with contractor licensing throughout the country. The articles are eye opening and all contractors should take notice that the tide is turning in USA. The public is learning that hiring a contractor without the proper credentials, is not a risk worth taking. If you are not sure of the rules go to the state web site and learn what is needed to be in complete compliance. The only logical choice is to be a completely legal business. In our contractor coaching seminars we teach clients to obtain the proper licensing. The List has a huge following and should be applauded for bringing this long overdue issue to the forefront. Angie states in her article that all contractors will have 60 days to comply with the law or they will lose their eligibility to advertise with the List.
The articles cover a gamut of topics regarding the inconsistency of licensing and enforcement. In California they have strong enforcement, where in Massachusetts and Ohio enforcement is sparse, due to lack of funding. One article covers a contractor who says licensing is a joke and a ruse to take his money! Do you think an educated homeowner will hire him?
In Florida, Jay Carlson, President of the Florida Home Builders Association, is quoted as saying "unlicensed contractors put homeowners at personal and financial risk. Consumers often become victims and the livelihood of the law abiding, licensed contractors is threatened."
The tide is turning in favor of prosecuting contractors who chose to be illegal. With the recession culling out the fly by night contractors and increased consumer awareness of contractor credentials, the good guys will prevail to serve the marketplace. Educated legal contractors and remodelers are using this down to focus on learning how to make their businesses better. Many are taking courses, working with a contractor business coach and implementing systems.
Next licensing issue coming in 2010; the new EPA RRP lead paint law requiring all contractors who work on pre-1978 homes to be certified by the EPA. Historically no one likes increased regulation. However these new focuses may be just what our industry needs to reach a level of professionalism so lacking in the current remodeling and home improvement industry.
mark the coach