Angie’s List founder Angie Hicks is in the process of calling on state lawmakers around the country to enact uniform and understandable trade licensing laws. The goal is to create laws that give consumers an assurance that anyone holding a license is qualified to do the job it covers. Hicks is also asking lawmakers to set aside a portion of licensing fees for consumer protection funds so that homeowners who are bilked by licensed contractors can recover their lost investments. Hicks will be sending letters to governors across the country outlining the need for better trade licensing laws.

“Most trade licensing is too complicated and offers too little enforcement or protection,” Hicks said in a press release. “Homeowners should be able to trust that if a governmental body has given a license to a contractor, that the contractor is reliable and qualified. They should also have access to some recompense if they rely on a licensed contractor who doesn’t deliver, or worse yet, cheats them.”

Angie's List Companies Required to Comply

Hicks’s call for better laws around the country coincides with a strengthening of Angie’s List policies about trade licensing. The organization, which allows consumers to post ratings of local service companies, has been in business since 1995. Traditionally, the company has relied on service providers to list their trade license status and has asked members to verify that status on their own.

“Licensing laws vary greatly across the country and even among cities within the same state, which makes it hard for contractors to keep track of what’s required and what isn’t,” Hick said. “Consumers don’t have a chance of figuring it out without help. Consumers are still responsible for determining the license status of the contractors they hire, and Angie’s List will be working to make it easier for them. But the key to really accomplishing a better system will fall to lawmakers.”

While lawmakers may debate how to -- or if they should -- address the issue in their state, Angie’s List is now requiring companies on the List to attest that they are in compliance with state and local laws. Like the IRS, Angie’s List will audit contractors to verify that they are following the law. Those found to be out of compliance will have an opportunity to comply or will face actions from Angie’s List that will include alerting members to their true status.

Angie's List communications director Cheryl Reed tells REMODELING that the auditing efforts are a huge undertaking for Angie's List. "Before we made the announcement, we reached out to our companies, explained our efforts, and asked them to contact us," Reed says. "Our first wave will be to let them know what’s going on and gather information, then we’ll post our findings. The accountability process has always included human review, and this is a huge undertaking. That’s an indication as to why it hasn’t happened before -- it’s really complex."

With a process that already includes accountability and company review, and now the infrastructure in place to handle the volume of work, Reed says that Angie’s List is well positioned to get started.

States' Responses Will Take Time

Hicks said that it would be unrealistic to expect all states to adopt the same uniform licensing law that requires minimum training and qualifications, proper enforcement, and consumer protection. A state-by-state approach is likely more realistic. “Even if each state has different trade licensing laws, having one direction per state to follow would be better than the mishmash we have now,” she said.

Most states issue licenses for at least some contractors, including plumbers, electricians, heating and cooling specialists, handymen, builders, and remodelers. However, the complexity of the issue is laid out in the September issue of the Angie’s List Magazine:

  • 15 states have state licensing only
  • 10 states have state licensing and registration
  • 9 states have state licensing, as well as local licensing
  • 4 states have state licensing and local registration
  • 2 states have state licensing, as well as local licensing and local registration
  • 4 states have state licensing and registration, as well as local licensing
  • 1 state has state registration and local licensing
  • 4 states (including Washington, D.C.) have local licensing only

  • Source: Angie’s List research of continental U.S. trade licensing laws

“A current trade license won’t guarantee that your contractor will complete your job perfectly, but it will give you some insight into how your contractor handles his or her business,” Hicks said. “In communities where licensure is required, unlicensed contractors are breaking the law. If he or she breaks this one, what others will they break? If the contractor doesn’t know he or she needs a license to operate, what does that say about how on top of things he or she is?” In most states, a valid license indicates that the holder carries insurance and workers’ compensation, but you still need to be sure the contractor has adequate -- and the right kind of -- insurance. In many cases, only licensed contractors are allowed to pull permits. If your contractor wants you to pull permits for your project, you should consider that a red flag and investigate further, Hicks said.

Contractors cannot acquire a rating on Angie's List until a member of Angie's List reports on his/her interaction with the company. Once a company is added to the List, Angie’s List contacts the company to provide information to be displayed in its profile for member review that includes whether the company is licensed and bonded and insured, as well as contact information and other details that members find helpful. --Lauren Hunter, associate editor, REMODELING.