The Qualifier Walked Out
Delta Ridge Contracting, LLC holds a Tennessee contractor's license with a $900,000 monetary limit. Its designated qualifier, the only person in the company who ever passed the trade exam, resigned six weeks ago and now works for a competitor. Delta Ridge has kept advertising, kept bidding, and ten days ago signed a $180,000 remodeling contract; work starts in ten days. Separately, Delta Ridge is the apparent low bidder at $1,640,000 on a county school addition, and plans to subcontract $38,000 of electrical work to a local electrician whose only credential is a city business license. Its bid forms and truck signage show the company name but no license number.
1. What is the company's legal position the moment the qualifier resigned, and what should it have done that week?
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In Tennessee the license is issued to the entity, but it exists only because a qualifying agent - an owner, officer, or full-time employee who meets the experience requirement and has passed the required examination - is designated on the Board's records. When that individual leaves, the entity is no longer qualified to hold the license, and the loss must be reported to the Board so a replacement qualifier can be designated. Operating in the gap is not a paperwork lapse; it is unlicensed contracting.
Consequences of continuing to advertise, bid, and contract without a qualifier:
- The Board may suspend or revoke the license and impose civil penalties.
- Bids submitted during the gap can be rejected, and a contract awarded on an unqualified bid can be terminated for cause.
- The most expensive exposure is commercial: Tennessee law bars an unlicensed contractor from recovering in court for work requiring a license. The $180,000 remodeling contract is work already performed and unpaid the moment a payment dispute arises - the company could finish the job perfectly and still have no cause of action for the balance.
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2. Evaluate the $1,640,000 bid and the electrical subcontract. Can Delta Ridge proceed with either?
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The bid: no. Two independent bars.
- Monetary limit. The license carries a $900,000 limit. Bidding or contracting a $1,640,000 project exceeds it by 82%. Monetary limits are set by the Board largely from the licensee's financial statement; exceeding them is a licensing violation in itself, and a public owner will check the limit against the bid before award. The bid should be withdrawn in writing immediately, before the county opens the envelope or acts on it, and the reason should be documented internally.
- No qualifier. Even a bid inside the limit cannot be submitted by an entity with no designated qualifier.
The electrical subcontract: no. Electrical contracting in Tennessee requires a state-issued electrical contractor license (limited or full, depending on scope); a municipal business license is not a substitute for any of it. The $38,000 scope is well above the $25,000 threshold at which licensure is required, and it is electrical work, which the general contractor's own license does not cover. Putting an unlicensed electrical sub on the job exposes Delta Ridge to loss of its own license, to stop-work orders and failed inspections, to the sub's uninsured payroll, and to joint liability for wages and taxes.
What to do instead: rebid the electrical scope to a state-licensed electrical contractor, verify the license number and limit on the state's database (not the sub's letterhead), and get a certificate of insurance naming Delta Ridge as additional insured before that sub sets foot on site.
3. Set out a 30-day remediation plan for the owner, in sequence.
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Week 1
- Stop all advertising, bidding, and contract execution until a qualifier is designated. Pull the school bid in writing.
- Written notice to the Board reporting the loss of the qualifier and requesting the procedure and deadline for designating a replacement.
- Review the $180,000 contract: notify the owner in writing, confirm scope and schedule, and get it under a licensed entity as fast as legally possible (the cleanest fix is often to assign it to an entity that currently holds a qualified license).
Weeks 1–2
- Identify a replacement qualifier: a current owner, officer, or full-time employee who can satisfy the experience requirement and sit for the exam, or hire an individual who already qualifies. Do not rent a qualifier from another company - that is a distinct and separately disciplined violation.
- Rebid electrical to a state-licensed electrical contractor.
Weeks 2–4
- Add the license number to bid forms, contracts, proposals, signage, vehicles, and the website. Using a license number in advertising and bids is required, and its absence is the easiest thing for a Board investigator to prove.
- Written compliance procedure: license and limit verified before every bid; sub licenses verified before every subcontract; expiration dates calendared.
- Financial statement review - if the company wants a higher monetary limit, the path is a stronger financial statement and a Board request, not a bigger bid.