What Are the Requirements for a Construction License?

A contractor must be licensed in order to begin construction on any project. The process and requirements for acquiring a construction license vary from state to state. Read on for a general guide to earning a construction license. Schools offering Construction Management degrees can also be found in these popular choices.

Requirements for Earning a Construction License

The requirements to receive a construction license are determined by each state's contractor licensing board. The board issues many kinds of license classifications, such as electrical, plumbing, flooring or concrete construction. There are also separate licenses for commercial and residential contractors.

The licensing board also outlines the rules for what work requires a contractor's license, because there are usually some exemptions. Someone performing work personally on property he or she owns, for instance, typically does not need a construction license.

Important Facts About Construction Licensure

Licensure Costs Original Application: $330; Initial License Fee: $200 (California)
Exemptions to Licensure Projects under $500 (California), Owners building on personal property, federal projects.
Penalties Contracting without licensure is a misdemeanour charge with a 6-month sentence in jail or $500 fine.
Duration of License Two years.

Source: California Department of Consumer Affairs' Contractors State License Board

Pre-Examination Qualifications

In order to apply for a license in California, applicants need to be age 18 or older and have personal ID. They must have a certain amount of documented construction experience, or be represented by a qualified person who would have knowledge of the experience, such as an inspector, architect or homeowner.

Businesses applying for a license need to be in good standing with the state and be registered with the Secretary of State. Applicants may also be asked to take a training course before taking the licensing exam.

State Licensing Exam

After submitting an application and paying the application fee, prospective contractors can take the state board's construction license examination. Each board's website contains information about how to schedule a test and where testing centers are located.

In some states, like California, the contractor's exam consists of material covering construction law, OSHA guidelines, and business management. The firm administering the test supplies study guides upon request. Some states only require a business law exam for licensure, while others require additional trade exams related to specific fields where licensure is needed, such as insulation, or elevator construction.

The Contractor's Bond

Many states require licensed contractors to post a surety bond that acts as a promise that they will operate their construction business legally and responsibly. The amount of the bond varies by state and by license classification. Federally, any construction job costing $150,000 or more requires a surety bond.

Final Paperwork

After passing the exam, there is a final set of requirements for construction licensure. There is an initial licensing fee that is separate from the application fee. Contractors must submit proof of general liability insurance and worker's compensation coverage. Additionally, many states require that applicants be fingerprinted in order to receive a license.

Salary and Job Outlook

According to the Bureau of Labor Statistics, the median annual wage for construction managers was $93,370 in May 2018. Employment of construction managers is projected to grow 11 per cent from 2016 to 2026, faster than the average for all occupations.

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