OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
S.B. 142 Bill Analysis
134th General Assembly
Version: As Introduced
Primary Sponsor: Sen. Schaffer
Effective Date:
Prince Senayah, LSC Fellow
SUMMARY
 Prohibits, beginning six months after the bill’s effective date, a person from recklessly
performing residential construction with respect to heating, ventilating, and air
conditioning; refrigeration; electrical; plumbing; or hydronics without a license from the
Ohio Construction Industry Licensing Board (OCILB).
 Exempts an individual from the bill’s license requirement if the person is employed by a
licensee, performing work on the person’s primary residence, or is a direct labor
subcontractor.
 Makes acting as a residential contractor without a license a minor misdemeanor on the
first offense and a fourth degree misdemeanor for each subsequent offense.
 Requires each OCILB specialty section, in accordance with rules the specialty section
adopts, to issue, renew, or refuse to issue or renew licenses for the types of residential
contractors that the section regulates.
 Allows the appropriate specialty section to authorize the OCILB Administrative Section
to grant a license to an applicant without requiring the applicant to pass an examination
if certain conditions are met.
 Prohibits an Ohio political subdivision, district, or agency from requiring a residential
contractor licensed by OCILB to meet any additional eligibility requirements for
registration by the political subdivision, district, or agency.
 Allows a political subdivision, district, or agency to charge a registration fee or require
permits, approvals, or code compliance bonds, provided the political subdivision,
district, or agency requires proof that the contractor holds a valid state license.
 Reduces the number of years an applicant must have been a tradesperson to be eligible
to take an examination for a contractor’s license from five years to three years
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(continuing law allows an applicant with other acceptable experience to be eligible to
take the examination).
 Requires the OCILB Administrative Section to adopt a rule requiring a contractor to earn
a number of continuing education hours each year equal to the total number of hours of
continuing education required for each valid, unexpired license the contractor holds.
 Reduces, from five to four, the number of hours per year in specific course requirements
that a specialty section can adopt in a continuing education curriculum.
 Eliminates several provisions from the OCILB Law that relate to OCILB’s ability to refuse
to issue or renew a license based on a person’s criminal history or moral character.
 Creates the Construction Industry Licensing Enforcement Fund in the state treasury.
 Requires a person who wishes to make a complaint against an unlicensed contractor to
file a written complaint with the OCILB within one year after the date of the action or
event on which the complaint is based.
 Increases, from $5,000 to $500,000, the amount of the bond that the OCILB Secretary
must file with the Treasurer of State.
TABLE OF CONTENTS
Residential contractor licensing...................................................................................................... 2
Universal and residential only licenses ....................................................................................... 4
Licensing without examination ................................................................................................... 4
Enforcement ................................................................................................................................ 6
Regulation by other entities ........................................................................................................ 7
Eligibility .......................................................................................................................................... 7
Criminal activity and moral character ......................................................................................... 8
License assignment ......................................................................................................................... 9
Continuing education .................................................................................................................... 10
Licensee discipline ........................................................................................................................ 10
Administration .............................................................................................................................. 11
Construction Industry Licensing Enforcement Fund ................................................................. 11
Secretary bond .......................................................................................................................... 11
Administrative Section votes required to take action .............................................................. 12
DETAILED ANALYSIS
Residential contractor licensing
The bill prohibits, beginning six months after its effective date, a person from recklessly
performing the duties, responsibilities, or functions associated with a licensed trade on a
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residential building (a one-, two-, or three-family dwelling house or any structure incidental to
that dwelling house), unless one of the following apply:
 The person is licensed by the Ohio Construction Industry Licensing Board (OCILB) to
perform the trade;
 The person is employed by a person licensed by the OCILB;
 The person is performing the trade on the person’s primary residence;
 The person is a direct labor subcontractor.
Currently, a person is only required to be licensed by the OCILB if the person is
performing a licensed trade on a commercial construction project or is employing
tradespersons who are performing the licensed trade on the commercial project.1
The bill exempts direct labor subcontractors from the bill’s requirement to be licensed
by the OCILB to perform a licensed trade on a residential building. However, the bill requires a
contractor who uses direct labor subcontractors on a residential construction project to be
licensed by the OCILB. A “direct labor subcontractor” means an individual who engages in
construction, improvement, renovation, repair, or maintenance of residential construction
projects under terms specified in an agreement with a contractor if both of the following apply:
 The contractor has the right to control or direct only the result of the construction,
improvement, renovation, repair, or maintenance performed by the individual;
 The income the individual earns from the construction, improvement, renovation,
repair, or maintenance is subject to the federal Self-Employment Contributions Act.2
Under continuing law, a “licensed trade” is a trade performed by a heating, ventilating,
and air conditioning (HVAC) contractor, a refrigeration contractor, an electrical contractor, a
plumbing contractor, or a hydronics contractor.3 Licensed trades are regulated by the OCILB,
which consists of an Administrative Section and three specialty sections: a plumbing and
hydronics section, an electrical section, and an HVAC and refrigeration section.4 Each specialty
section is responsible for regulating licensees that practice the licensed trade for which the
section is responsible. The specialty sections’ duties include: adopting rules for issuing licenses
and disciplining licensees; investigating violations of the OCILB Law;5 and establishing or
approving continuing education curriculum for licensees.6 The Administrative Section is
responsible for administering the OCILB Law and must perform duties including overseeing
1 R.C. 4740.13(A), 4740.131, and 4740.01(H) and Section 3.
2 R.C. 4740.131 and 4740.01(D)(2)(c),(G), and (J), by reference to 26 United States Code 1401 et seq.
3 R.C. 4740.01(F).
4 R.C. 4740.02, not in the bill.
5 R.C. Chapter 4740.
6 R.C. 4740.05.
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examinations, issuing and renewing licenses, making annual reports to the Director of
Commerce, and keeping records on every contractor who holds a license.7
To receive a license from the OCILB, a person must pass an examination after satisfying
the requirements described under “Eligibility,” below. Licenses also may be issued pursuant
to reciprocity agreements. Licenses are valid for one year and may be renewed. To renew a
license, an applicant must complete the requirements described under “Continuing
education,” below. All licenses must be assigned to a contracting company as described
under “License assignment,” below.8
Universal and residential only licenses
The bill distinguishes between a universal license and a residential only license. Under
the bill, a “universal license” is a license issued by the OCILB allowing a person to perform a
licensed trade on any construction project. A “residential only” license allows a person to
perform a licensed trade on a residential construction project only. Each type of license must
indicate whether it is universal or residential only.9
The bill does not establish different qualifications or examinations for the different
types of licenses. Instead, it requires each specialty section, in accordance with rules the
specialty section adopts, to issue, renew, or refuse to issue or renew licenses for the classes of
contractors for which the section has primary responsibility.10
Licensing without examination
Under the bill, the appropriate specialty section may authorize the Administrative
Section to grant a license to an applicant without requiring the applicant to pass an
examination if the applicant applies within six months after the bill’s effective date, pays a $50
fee, and does all of the following:
1. Identifies a contracting company with which the applicant is associated as a full-time
officer, proprietor, or partner and to which the applicant will assign the applicant’s
license as described under “License assignment,” below;
2. Undergoes a criminal records check the results of which the OCILB determines do not
disqualify the applicant from receiving a license;
3. Submits evidence that the applicant is the primary insured under a contractor’s liability
insurance policy in the name of a single company for an amount of at least $500,000,
including complete operation coverage;
7 R.C. 4740.04.
8 R.C. 4740.06 and 4740.07 and R.C. 4740.08, not in the bill.
9 R.C. 4740.01(A), (B), and (C) and 4740.04(C).
10 R.C. 4740.05(H) and 4740.06.
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4. Submits evidence that the applicant is in compliance with the Workers’ Compensation
Law11 and the Unemployment Compensation Law;12
5. Submits evidence that the applicant is in compliance with any other requirements the
OCILB determines to be necessary;
6. Demonstrates that the applicant has not been convicted of or pleaded guilty to a crime
of moral turpitude as defined in continuing law, a disqualifying offense (a felony that has
a direct nexus to the applicant’s proposed work as a contractor), or a violation of the
OCILB Law or rules adopted under it;
7. Demonstrates that the applicant has not obtained or renewed a contractor’s license, or
obtained any OCILB order, ruling, or authorization through fraud, misrepresentation, or
deception;
8. Demonstrates that the applicant has not engaged in fraud, misrepresentation, or
deception in the conduct of business;
9. Meets either of the following criteria:
a. Holds a valid, unexpired registration or license issued in the licensed trade by a
municipal corporation, county, or health department before the bill’s effective date;
b. Has been actively engaged in a licensed trade on residential construction projects for
at least three consecutive years immediately before the bill’s effective date.
If an applicant seeks a license without examination by demonstrating experience under
(9)(b), above, the applicant must submit to the OCILB any evidence necessary for the OCILB to
verify that the applicant has the experience required to receive a license and must satisfy any
other experience acceptable to the appropriate specialty section. At least three members of the
specialty section must review an application filed by an applicant seeking a license without an
examination by demonstrating experience under (9)(b).
The appropriate specialty section must act on a complete application within 90 days
after the application is submitted. The bill allows a specialty section to withdraw its
authorization to the Administrative Section for issuance of a license for good cause shown at
any time before the Administrative Section issues the license.
The OCILB must issue a universal license to any person who holds a license to perform a
licensed trade that is in good standing and was issued by the OCILB before the bill’s effective
date. The license is effective for the term of the license that it replaced.13
11 R.C. Chapters 4121, 4123, 4127, and 4131.
12 R.C. Chapter 4141.
13 Section 4.
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Enforcement
The bill applies the same criminal penalty to an unlicensed residential contractor that
continuing law applies to an unlicensed commercial contractor. A person who acts as a
residential contractor without a license is guilty of a minor misdemeanor for the first violation
and a fourth degree misdemeanor for each subsequent violation. The bill specifies that the
culpable mental state, meaning the state of mind with which a person must act in order to be
legally responsible for the offense, is recklessly for the criminal prohibitions against unlicensed
residential and commercial contractors. Current law does not specify a culpable mental state
for the criminal prohibition against unlicensed commercial contractors; however, recklessly is
the default mental state for any existing offense that does not specify a culpable mental state.14
Additionally, the bill allows the Attorney General, on the appropriate specialty section’s
request, to sue a person who is operating as a residential contractor without a license for
appropriate relief, including a temporary restraining order or permanent injunction. This is the
same authority the Attorney General has under continuing law with respect to commercial
contractors.15
A person who acts as a residential contractor without a license also may be subject to an
administrative penalty assessed by the appropriate specialty section. The penalty and
assessment process are the same as the penalty and process used by the OCILB with respect to
commercial contractors as revised by the bill. Under that process, an investigator appointed by
the Director, on behalf of the appropriate specialty section, may investigate any person
allegedly operating as an unlicensed contractor. Under the bill the Director may limit an
investigation to areas or activities related to licenses, permits, or approvals.
If after the investigation, the section or the section’s designee, as added by the bill
determines that reasonable evidence exists that a violation occurred, the section or the
investigator must send a written notice to the person who allegedly violated the license
requirement and hold a hearing. If a majority of the section’s members determine that a
violation has occurred, the section may issue a fine of up to $1,000 per violation per day and
may file a complaint against the person with the appropriate local prosecutor for criminal