Portland painter falls hard for licensing
Fifteen years ago, one of Eric Hernanz’ employees fell off a ladder. The fall resulted in a broken elbow and a sky-high medical bill — about $18,000. Hernanz, a Portland painter, was young and “borderline destitute,” but he had his Oregon contractor’s license, which requires workers’ compensation insurance. And his insurance paid the bill.

Photo by James Holk | State-licensed painter Eric Hernanz learned the value of having a license and proper insurance when one of his employees fell off a ladder.But what if he wasn’t licensed and didn’t have insurance? “My employee very well could have sued the homeowner for medical bills and lost wages since it happened on his property,” Hernanz says. “Unlicensed contractors put their own clients at risk if someone’s injured on the job.”

The incident illustrates why Hernanz still cares — really cares — about contractors being licensed. “Choosing to go with an unlicensed contractor is like a drug user choosing to perpetuate the drug dealing system,” he says. “I feel very strongly that there are moral and ethical implications, as well as tangible reasons, for being licensed.”

According to research compiled by Angie’s List Magazine, contractors must demonstrate proof of insurance as part of obtaining a trade license or registering in 39 states. Claire Wilkinson, vice president of global issues for the Insurance Information Institute, says the first thing a homeowner should do before hiring is ask for proof of a license and insurance.

Liability insurance covers property damage and bodily injury caused by that contractor’s work. Homeowners should also make certain the contractor’s insurance policy includes workers’ compensation, which covers injuries the contractor’s employees may suffer while on the job, says Dean Herriges, vice president of the National Association of the Remodeling Industry. If a contractor doesn’t have these types of insurance, consumers could end up paying out of their own pocket if their homeowner’s policy is insufficient to cover the bills, Herriges says.

Bonding is also important, which is why many licensing and some registration boards require it as well. Bonds protect homeowners if the company performs shoddy work, doesn’t finish the project, or fails to pay subcontractors and suppliers.

The economy makes these assurances all the more important. There’s been a surge in unlicensed painters in the Portland area, Hernanz says, as contractors take financial shortcuts by not paying licensing and insurance fees. And he says the penalty if caught working without a license deters no one. “The fines are a slap on the wrist,” he says.

Oregon Construction Contractors Board Enforcement Manager Rich Blank responds that unlicensed contractors face increased fines for repeat offenses, and that the board will ultimately seek criminal charges if the first few sanctions don’t work.

In June alone, Hernanz bid four jobs against competitors he believes to be unlicensed. “A telltale sign is a too-good-to-be-true price,” he says. In those cases, Hernanz e-mails the customers, explaining the increased costs of being licensed. He encourages them to check with the state board to make sure the companies are properly licensed, bonded and insured. “I think it’s important they know the risks,” he says.

And he believes homeowners should be held criminally liable for knowingly hiring unlicensed contractors. “They’re contributing to fraud and cutting into the business of legitimate companies,” he says.

He knows it’s unlikely that punishing homeowners will fly politically. But it doesn’t dampen his resolve. “This isn’t how I want it to be,” he says.
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