General contractors and subcontractors in Virginia are required to hold a Virginia Class A contractor’s license if they perform or manage construction where either (1) the total value of a single one of their projects or contracts is $120,000 or more, or (2) the total value of the construction undertaken by them in any single 12-month period is $750,000 or more. The consequences of not holding a valid Class A license can be devastating –contractors who are not properly licensed may not be able to enforce their contract rights, including the all-important right to recover money due for work performed under a contract even if the work was completed properly and the contract balance would otherwise be due and owing.
So, how do Virginia contractors obtain and maintain a valid Class A?
Class A licenses are issued by the Virginia Department of Professional and Occupational Regulation (also known as DPOR) and, specifically, by the Virginia Board for Contractors, which is part of DPOR. Anyone desiring a Class A license must file a written application with DPOR on an application form that can be obtained from the Board for Contractors.
Importantly, in order to obtain a Class A, Virginia contractors must name a “designated employee” (DE) who is either a full-time employee of the firm (defined as an employee working at least 30 hours a week) or who is a member of “responsible management” of the firm (defined generally as the officers of a corporation, the managers of an LLC, or the partners of a partnership). In addition, the DE must also pass a Board-administered written examination and either the DE or another member of responsible management must successfully complete a Board-approved course in basic business.
Virginia contractors may also seek to be licensed in one of seven (7) specifically designated “classifications,” as follows: (1) commercial building contractor (CBC); (2) residential building contractor (RBC); (3) electrical contractor (ELE); (4) highway/heavy contractors (H/H); (5) HVAC contractor (HVA); (6) plumbing contractor (PLB); and (7) “specialty” contractor. The Virginia Administrative Code, in regulations generated by DPOR and the Board, defines literally dozens of “specialty” services, everything from asbestos contracting to water well and pump contracting. Google “18 VAC 50-22-30” for a complete list of all Virginia “specialty” contractor services.
For every “classification” or “specialty” service in which a contractor wishes to be licensed, the contractor must name a “qualified individual” (QI) who is a full-time (30 hours a week) employee of the firm and who has a minimum of five (5) years of experience in the classification or specialty for which she or he is to be the QI. In addition, in order to become licensed in some of the “specialty” services there are additional certification requirements – for instance, in order to be licensed in fire sprinkler contracting, a Class A contractor’s QI must have obtained her or his NICET Sprinkler III certification. All such additional certification requirements can be found by googling 18 VAC 50-22-60.
Conveniently, the same person is able to serve as both DE and QI for a single firm.
Importantly, Class A licenses are issued to business entities and not to individuals and are not transferrable. So, if the legal business entity holding the Class A changes its form of organization, the Class A becomes void and the firm will have to apply for a new Class A within 30 days of the change in business entity. For instance, if a contractor which had been a sole proprietorship or partnership incorporates and becomes a Virginia corporation or an LLC, a new Class A must be applied for and obtained.
Finally, any change in a contractor’s DE must be reported to the State Board within 90 days of the change. Any change in a contractor’s QI must be reported to the Board within 45 days of the change.
Maintaining the validity of your Class A is one of the most important business and legal obligations that Virginia contractors have. If you have any question about how to deal with the retirement or termination of either your DE or your QI, or how to react to a change in the corporate organization of your business, please call a member of Hirschler Construction Industry Team.
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