Licensed Contractor vs. Unlicensed Worker: What Homeowners Need to Know

By Angela Wethered, Wethered Timberworks LLC WETHETL760CL – Colville, WA

When planning home projects — from remodels to repairs — one of the most important decisions you’ll make is who you hire to do the work. Many homeowners find themselves weighing the choice between a licensed contractor and an unlicensed worker.

Both exist for a reason, but the differences in protection, risk, and accountability are critical to understand before you sign a contract or hand over a deposit.

Why Hire a Licensed Contractor?

A licensed contractor is approved by the state to perform construction or remodeling work professionally. In Washington State, licensing is handled by the Department of Labor & Industries (L&I).

Benefits of Hiring Licensed Contractors

• Accountability Licensed contractors must meet education, testing, and experience requirements. They operate under strict building codes and safety standards, and can lose their license for violations or negligence.

• Insurance and Bonding Licensed contractors are required to carry general liability insurance and a surety bond, protecting homeowners if damages occur, a project goes unfinished, or subcontractors aren’t paid.

• Permits and Inspections Licensed professionals can legally pull building permits, ensuring your project meets code and passes inspection — key for long-term safety and resale value.

• Worker Protection If a worker is injured on your property, a licensed contractor’s workers’ compensation coverage protects you from liability.

• Consumer Protection Licensed contractors are monitored by the state. Homeowners have a clear path to file complaints or seek resolution if disputes arise.

When Hiring an Unlicensed Worker Might Make Sense

There’s a legitimate market for unlicensed workers, especially for small-scale, low-risk projects like painting, landscaping, or minor repairs. Many unlicensed individuals are skilled and hardworking — but homeowners should understand what they’re agreeing to as a “domestic employer.”

When you hire someone directly who is not licensed, bonded, or insured, you are legally acting as their employer. That means you may be responsible for things like tax withholding, workplace safety, and even injury liability. Understanding this distinction is crucial before hiring anyone to perform work on your property.

What It Means to Be a “Domestic Employer” in Washington State

When you hire someone directly to work in or around your home — and you control their schedule, tasks, or tools — you may legally become a “household (or domestic) employer.” In the state of Washington, this classification carries specific responsibilities and liabilities for the homeowner.

Key Legal Responsibilities

• Payroll and Tax Registration If you hire someone as an employee (not as a true independent contractor), you may need to register with the state for unemployment insurance and workers’ compensation coverage.

• Workers’ Compensation Insurance If you employ two or more household workers who each work 40+ hours per week, Washington law requires you to carry workers’ compensation insurance through the Department of Labor & Industries.

• Wage, Hour & Sick Leave Laws Apply Household employees are covered by Washington’s minimum wage, paid sick leave, and paid family & medical leave laws.

• Record-Keeping You’ll need to maintain payroll records, provide pay statements, and file tax forms such as W-2s if applicable.

• Classification Risk Misclassifying an employee as an “independent contractor” can result in tax penalties, fines, and legal liability if the worker is injured or files a complaint.

Why This Matters in the Context of Unlicensed Work

When hiring an unlicensed worker for home improvement or maintenance tasks — and supervising them directly — you may inadvertently trigger the domestic employer rules.

That means:

• If the worker is injured on your property and you haven’t secured proper insurance, you could be personally liable.

• Misclassifying the worker to avoid taxes or paperwork can expose you to penalties.

• If the work involves electrical, structural, or permitted construction, you may face violations for unlicensed or unpermitted work.

A Practical Tip for Homeowners

If you’re hiring someone for small, one-time tasks — and they provide their own tools, set their own hours, and control how the job gets done — they may qualify as an independent contractor.

But if you:

• dictate their hours,

• supervise their work,

• or supply their tools and materials,

then you should assume you are their employer under Washington law. In that case, you’re responsible for taxes, insurance, and compliance — or you can eliminate that risk entirely by hiring a licensed contractor.

The Risks and Realities of Unlicensed Work

No Bond or Insurance If something goes wrong — from damaged property to injuries — you, the homeowner, are financially responsible. Your homeowner’s insurance may not cover claims from unlicensed work.

No Legal Oversight Without a license, there’s no state agency ensuring accountability. Any dispute over payment, quality, or damages must go through civil court, which can be expensive and slow.

Unpermitted Work Unlicensed workers cannot legally pull building permits, meaning the work may not meet local building codes. Unpermitted improvements can result in fines, failed inspections, or problems during resale.

Limited Resale Value Home inspectors and potential buyers often recognize unpermitted or substandard work — which can lower your home’s value or even jeopardize a sale.

Where Each Option Fits

There’s nothing wrong with using an unlicensed worker — as long as you understand the risks and choose wisely.

Project Type	Licensed Contractor Recommended	Unlicensed Worker Acceptable
Structural framing, roofing, remodels	✅ Yes	❌ No
Electrical or plumbing work	✅ Yes	❌ No
Decks, additions, or foundations	✅ Yes	❌ No
Painting, staining, yard work	Optional	✅ Yes
Furniture assembly, décor, small repairs	Optional	✅ Yes

For any job that affects your home’s structure, safety, or systems, always hire a licensed, bonded, and insured contractor.

How Homeowners Can Protect Themselves

1. Ask for their license number and verify it at LNI.wa.gov.

2. Request proof of insurance and bond before work begins.

3. Get a written contract outlining the scope, cost, and schedule.

4. Avoid paying in full upfront. Schedule payments tied to milestones.

These steps safeguard your investment and help prevent costly disputes later.

Final Thoughts from Wethered Timberworks LLC

At Wethered Timberworks LLC, we take great pride in being a licensed, bonded, and insured contractor serving Northeast Washington. We believe in transparency, craftsmanship, and protecting homeowners through professional integrity. We believe in mentoring the next generation of quality contractors. Hiring a licensed contractor isn’t just about following the rules — it’s about ensuring quality, accountability, and peace of mind for you and your family.

Your home is one of your biggest investments. Protect it by choosing professionals who hold themselves to the highest standards.