Design and construction professionals practice in a heavily regulated industry. This is especially true with respect to state licensure, permitting and approvals. Professionals must be constantly aware of federal, state and local requirements (and any recent changes to those requirements) before construction on any job. Why? Because the penalties for noncompliance are broad and severe.
The most common penalty for noncompliance is that a party may be prohibited from using the court system to obtain payment for the construction services it provided. A party may also be administratively sanctioned and fined for its noncompliance. Perhaps most surprising, though, is that, as explained in Bruner & O’Connor On Construction Law, “many states make the act of practicing without a license a criminal offense subject to financial penalties and imprisonment.”
Although criminal penalties are a powerful deterrent to noncompliance with licensing requirements, “[n]o jurisdiction relies heavily upon its criminal code to police professional practice.” There are perhaps several reasons for this. First, “prosecution of license violations is not a high priority in most jurisdictions” because “our criminal justice system is currently overburdened and likely to remain so for some time[.]” Second, it may not make sense to prosecute a construction professional unless the professional also commits another crime in conjunction with noncompliance with licensure laws — such as theft, fraud or embezzlement. Civil and administrative sanctions would seem to be sufficient deterrents and punishments in the absence of another crime. Third, it can be much more challenging to prove that a party committed a crime, as opposed to proving civil or administrative liability, because criminal liability necessitates an elevated burden of proof. For instance, some state statutes may require a showing that a contractor “knowingly” violated the statute, something administrative regulations likely would not.
For these reasons, construction professionals performing work without a license may be less likely to suffer criminal penalties than administrative or civil. Regardless, the threat of criminal penalties alone should prompt practitioners to carefully examine all applicable licensure and permitting requirements prior to starting any new job.
This article summarizes content from Bruner & O'Connor on Construction Law. For more information on this topic, or for additional citations, see Section 16:27.