Contractors vs handypeople: What's the difference?

The Situation

Last week, I had two separate calls from "contractors" pitching themselves to do my projects.

Although they both claimed to have been doing renovations in the city for years, they were unfamiliar with the most basic requirements for working in a Manhattan co-op, such as insurance and other documentation.

In short, they were not really contractors at all: They were unlicensed handymen.

What's the difference, anyway?

Here’s the Deal

• There are licensed contractors, unlicensed contractors, and handymen (or women). As far the City is concerned, anyone doing work valued at more than $200 is required to be licensed. But that's not the reality on the ground. The person you hire may be determined by your particular budget and scope, or by your building's regulations.

• You might expect that, akin to a driver's license, a Home Improvement license provides evidence of basic skills. It does not. It's more like a fishing license, a way to monitor and reprimand those who behave unethically. There are many highly skilled unlicensed contractors, just as there are inept licensed ones.

• Back in the day (like, 2003), things were a lot more relaxed, and an unlicensed handyman might have built a bookcase or fixed up your kitchen. Not so anymore. Boards and managing agents have lawyered up, so be prepared to play by the rules when you renovate. These days, unless your building is super lax, or you're paying someone off under the table, you can't get away with less than a licensed general contractor (GC).

• An unlicensed contractor may be cheaper than a licensed guy, and with good reason. He is skipping some of the very hefty overhead (insurance, workman’s comp, payroll and sales tax, etc.) that the legitimate contractor must pay. However, for small jobs, it may make more sense to use a reputable handyman. After all, no licensed GC wants to put time aside to hang a closet rod for you.

• All else being equal, there are advantages to working with licensed guys: It indicates a level of seriousness often lacking in a person who tapes up lamppost ads. To obtain a license, a contractor must undergo a background check, pass an exam about ethical business practices, and pay a $250 annual fee, which goes towards a consumer trust fund. He/she is also more likely to have taken care of basic business practices such as registering with the state and obtaining insurance and workman's comp.  

• If you run into trouble with a contractor, you may have more recourse if they are licensed. Licenses are issued and revoked by the NYC Department of Consumer Affairs. They will investigate complaints and mediate a resolution. If restitution is due, and the contractor fails to pay, the consumer trust fund may cover costs up to $15,000.

• You can check whether any complaints have been registered against a contractor by calling 311 with their license number. (If only 311 had a dating hotline!)