The 1099 Subcontractor With a Badge
Cody owns a licensed private investigation firm in Billings. He wins a contract to document a workers' compensation claimant's activities for an insurer. Because the file is large, Cody brings in Dale, a retired sheriff's deputy with 20 years of experience, as a 1099 subcontractor. Dale is scheduled for 30 hours of surveillance per week, will interview two neighbors, and will draft the final report. Dale moved from Wyoming last year and allowed his Wyoming PI license to lapse; he has never held a Montana license. Cody's business card lists Dale as 'Senior Investigator,' and Cody tells the insurer that Dale is 'fully licensed.' A neighbor complains to the Board after Dale questions her while wearing a badge on his belt. Dale has already logged 18 surveillance hours and has not been paid yet.
1. Does Dale need a Montana private investigator license before performing the surveillance and interviews? Explain the statutory test and any exemption that might apply.
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Yes. Montana regulates private investigation by activity, not by job title. A person who for compensation investigates the identity, habits, conduct, whereabouts, affiliations, or character of another, or obtains evidence for a client, is engaged in the business of a private investigator. Dale is doing exactly that: 30 hours per week of surveillance, witness interviews, and a report. The independent-contractor label does not remove him from the definition; if anything, it makes him a separate provider rather than an employee acting under Cody's license. Retired law-enforcement status and out-of-state experience are not exemptions. A Wyoming license, even if current, would not authorize Montana work. He must apply, meet the Board's requirements, and be licensed before he performs investigative services for a fee. The badge is a separate concern because it can suggest law-enforcement authority.
2. What disciplinary exposure does Cody face, and what should he do immediately?
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Cody faces exposure on several theories: aiding or abetting unlicensed investigative activity, permitting an unlicensed person to hold himself out as an investigator, and misrepresenting Dale's credentials to the insurer. The Board of Private Security Examiners can investigate the firm and the individual licensee, and discipline can include reprimand, suspension, revocation, or civil penalties under the applicable statutes and rules. Cody should stop Dale's work immediately, remove him from the case, preserve all surveillance logs and drafts, correct the 'fully licensed' statement to the insurer in writing, and tell Dale not to use the title or badge until licensed. Cody should also review how subcontractors are screened and document the corrective action. He should respond truthfully to any Board inquiry rather than trying to paper over the 18 hours already worked.
3. May Cody bill the insurer for Dale's 18 hours? Discuss.
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Billing is not the central licensing question, but it is a conduct issue. Cody may not bill for services that were unlawfully performed by an unlicensed person if doing so misrepresents that a licensed investigator did the work. The safest course is to segregate the 18 hours, disclose the staffing problem to the insurer, and not certify the work as licensed investigative services. If Cody himself reviewed and adopted the observations, that does not retroactively license Dale's activity. Billing the time as 'Senior Investigator' would compound the misrepresentation. Cody should consult counsel and the Board's rules on fees and records, and he should be prepared to refund or credit the affected time.