Why Licensed Contractors Should Never Allow or Recommend Employees for Side Work

In the construction and home-improvement industry, reputation, trust, and legality are everything. As licensed contractors, we are held to a higher standard for a reason: our work directly affects the safety, value, and function of the structures people live and work in every day. But there is an issue quietly eroding our industry from the inside—licensed contractors recommending, allowing, or turning a blind eye to employees performing unlicensed side work.

It may feel harmless. A friend needs a small repair. A neighbor needs help with a project you don’t personally offer. One of your employees is capable of doing the work cheaply. But when a licensed contractor endorses or allows this kind of “side job,” it creates real harm—both legally and economically—to the entire industry.

Below is why this practice must stop, and why we all have a responsibility to report it.

1. Side Work by Employees Is Unlicensed Contracting—Period

There is no gray area.
If an employee of a licensed contractor performs work outside of the company structure—without the contractor's license, insurance, bonding, permitting, or oversight—they are acting as an unlicensed contractor. It does not matter whether:

• The job is small

• The customer is a friend

• The employee is “skilled enough”

• The contractor does not charge anything

If the worker is paid, or even promises to perform work requiring a license, it is illegal.

As licensed contractors, we are responsible for upholding state laws, not helping people circumvent them.

2. This Behavior Supports Unfair Competition and Hurts the Entire Industry

While a contractor might say, “I’m just helping someone out,” the reality is that recommending or permitting unlicensed work directly harms every contractor who follows the rules.

How?

• It undercuts legitimate contractors.
Licensed companies invest heavily in insurance, workers compensation, bonding, vehicles, tools, state fees, taxes, training, and safety compliance. Unlicensed workers pay none of this, allowing them to charge prices that no ethical contractor could match. That is not “helping a friend”—it is undercutting the businesses who play by the rules.

• It dilutes licensed contractors’ value.
When homeowners get used to paying unlicensed rates, it lowers the perceived value of licensed, professional work. Customers begin believing they are being “overcharged” by legitimate businesses simply because they do not understand the vast difference in overhead, responsibility, and liability.

• It artificially lowers wages.
When unlicensed workers flood the market with lower prices, licensed contractors are forced to compete with illegal labor, reducing the wages they can offer their skilled employees. This ultimately hurts our own crews, our families, and our ability to grow our businesses.

3. Allowing It Makes You Part of the Problem

Even if you are licensed, if you send “your guy” to help someone on his own time, you are:

• Supporting unlicensed contracting

• Contributing to wage suppression

• Undermining the legitimacy of licensed, insured tradespeople

• Taking work away from contractors who do provide that service

• Opening yourself to potential liability if something goes wrong

Many contractors justify it by saying, “I don’t do that type of work.”
But that doesn’t matter.

If you refer an employee to do it illegally instead of referring a legitimate contractor who is licensed for that work, you are taking business away from the people who keep this industry alive.

If we want customers to respect licensed contractors, we must respect each other first.

4. It Is Our Duty to Report Unlicensed Contracting to the ROC

State licensing agencies, including the Registrar of Contractors, rely heavily on industry reporting. Unlicensed individuals rarely self-police, and homeowners often don’t know enough to file complaints.

Licensed contractors, on the other hand, know exactly what unlicensed activity looks like—and the damage it causes.

We have a professional and ethical obligation to report:

• Employees doing side work

• Unlicensed individuals advertising or performing work requiring a license

• Contractors knowingly enabling these practices

This is not about “snitching.”
It is about protecting our trade, our income, our employees, and our customers.

5. We Cannot Elevate Our Industry While Undermining It

For years, licensed contractors have battled:

• Underbidding

• Illegal labor

• Race-to-the-bottom pricing

• Customers choosing cheaper, unlicensed options

• Lowering wages due to unfair competition

We cannot complain about this while simultaneously contributing to it.

If we want to raise standards, wages, and respect for our craft, then we must stop feeding the very system that devalues us.

Conclusion: Do the Right Thing—Always

Being a licensed contractor means more than just having a card in your wallet. It means upholding the law, protecting the public, supporting legitimate tradespeople, and honoring the profession we’ve worked so hard to master.

Allowing or recommending employees for unlicensed side jobs is harmful, illegal, and destructive to our industry.

We should:

✅ Never recommend unlicensed individuals
✅ Never allow employees to perform side work illegally
✅ Always refer customers to licensed contractors
✅ Report unlicensed activity to the ROC
✅ Lead by example

When licensed contractors stand united against unlicensed work, we all win: higher standards, higher wages, better protection for homeowners, and a stronger industry that we can all be proud of.