NJBIA Opposition to A-2138- Establishes professional board to regulate home improvement and home elevation contractors and requires licensure for each type of contractor
On behalf of our member companies that make NJBIA the largest statewide business association in the nation, I write to you in opposition of A-2138, which would drastically alter the construction industry by creating a licensure process for home improvement and home elevation contractors. There are thousands of home improvement contractors in our state that complete a wide range of projects, from minor improvements such as painting a room to larger projects such as constructing additions on homes. Creating a uniform license process for this broad profession may limit the ability of certain contractors with a particular area of expertise from obtaining licensure. We do appreciate your intent to ensure bad actors are not able to work as contractors and harm homeowners in the state. However, we have concerns that this legislation will create onerous barriers to entry for contractors who may not be necessary for all types of home improvement projects, thus stifling new business development in New Jersey.
Below is our list of concerns and suggestions that can strengthen protection for consumers while providing balance for contractors.
- Carve out time frame- As written, this bill would allow any registered home improvement or elevation contractor with 10 or more years of experience to automatically receive a license. We suggest lowering this threshold to allow any contractor that has been registered for 2 or more years to automatically receive a license. This would make the exemption consistent with the future education requirements in the bill that allows anyone with 2 years of experience working under the direct supervision of a licensed home improvement or elevation contractor to satisfy the training requirements for licensure. Additionally, this would remove some of the initial strain on the system by limiting the number of license applicants during the initial effective period of this law.
- Bonding requirements- The bonding and insurance requirements in this bill may be overly burdensome for entrepreneurs seeking to start new contracting businesses. We suggest removing the bonding requirement of $100,000 to lower the barrier to entry for new businesses. Only 4 states and the District of Columbia require home improvement contractors to secure surety bonds. Three other states have bonding requirements for contractors only in certain municipalities. Of those states that do require bonding, the minimum bonding requirements begin in the $10,000-25,000 range. Some have bonding requirements that vary depending on the value of contracts being completed by a home improvement contractor. By removing the bonding requirements, we will ensure that New Jersey is not an outlier in this space. This will remove a barrier to entry while still ensuring safety and stability through the other insurance requirements in the bill and those already required by law.
- License reciprocity – Right now, home improvement or elevation contractors that move into the state of New Jersey can complete the registration process with the Division and continue their careers here in our state. We suggest adding professional experience as a licensed or registered contractor for at least 2 years in another state or experience working under the direct supervision of a home improvement contractor in another state, as options to satisfy the eligibility requirements for licensure under this bill. This will ensure that professionals with experience in other states can move to New Jersey, take the exam to obtain licensure, and start new businesses without having to take steps backwards in their careers.
- Exam preparation for future licensees- This legislation should be amended to require the New Jersey State Board of Home Improvement and Home Elevation Contractors to post examination prep materials, such as a list of terms and topics covered and FAQs on the exam, to the Division of Consumer Affairs’ website for aspiring contractors to review. This will allow future contractors to better prepare for this new exam and understand the examination process.
- Current challenges with the Division of Consumer Affairs- The Division of Consumer Affairs (DCA) is already facing licensure backlogs and challenges with the dozens of professional licensing boards that it operates. In order to ensure DCA can properly support this new licensing board and the thousands of professionals it will serve, we suggest requiring all licensure fees collected from home improvement and elevation contractors be required to remain in the Division. This will ensure that funding does not get diverted to other parts of state government and the board is fully supported for the betterment of the industry, especially as it gets up and running.
- Volume of licensees- There is a large volume of home improvement and home elevation contractors working in our state. This legislation would be a major undertaking for the state and many current and future industry professionals. Due to the substantial change this legislation would present, we suggest beginning with licensure for home elevation contractors and home improvement contractors that complete other complex or costly types of projects before including all home improvement contractors. This will ensure consumers receive quality service for the most complicated projects and give industry stakeholders and the state an opportunity to assess the strengthens and weaknesses of licensure implementation for a smaller group of professionals before expanding to create a licensure process for all home improvement contractors. Additionally, this will allow home improvement contractors that have a focus on less costly project areas to continue working under the current registration model.
Thank you for taking our concerns with A-2138 into consideration. We appreciate the opportunity to further discuss this legislation with you.