Bills to Boost Responsible Business Practices Signed into Law

DOVER – Governor Jack Markell on Monday signed a package of bills designed to “level the playing field” and promote responsible business practices across the business and construction communities.

The measures, which range from cracking down on contractors who do not have Delaware business licenses to allowing for anonymous reporting of license violations, are designed to root out “bad actors” in business and construction industries and ensure that all entities are playing by the rules, said House Majority Leader Rep. Valerie Longhurst, who sponsored one of the four bills.

“The vast majority of companies that operate in Delaware follow the rules and do what’s required of them. However, we often hear of a few businesses that don’t,” said Rep. Longhurst, D-Bear. “What we passed and Governor Markell has signed is a series of bills that will close some of the loopholes and shortcuts that some companies take and ensure that everyone follows the rules we have on the books. In some cases, this could lead to added revenue for the state.”

Rep. Longhurst’s bill, House Bill 270, requires that contractors, subcontractors and independent contractors performing work under a public works contract obtain an occupational and/or business license within 30 days of being awarded the contract. The measure also requires all contractors to verify that their subcontractors and independent contractors have an occupational and/or business license. A violation of this new section could result in a civil penalty.

According to the Division of Revenue, nearly 650 businesses were assessed a $200 penalty during the past two fiscal years (2012-13) for failing to obtain a Delaware business license. This is for all businesses, not just those engaged in public works contracts.

House Bill 269, sponsored by Rep. Charles Potter Jr., requires the Department of Finance to provide an anonymous system to allow the reporting of individuals who fail to obtain an occupational or business license. Currently, citizens who want to tip off the state about possible violations must give their names, which discourages people from being whistleblowers.

House Bill 271, sponsored by Rep. Dennis E. Williams, requires the Division of Professional Regulation (DPR) to notify the Department of Finance of any person who practices a profession without a license and who DPR believes should have a business or occupational license.

Professionals in dozens of fields – such as barbering, funeral services, nursing and plumbing – are required to obtain professional licenses that show compliance with minimum standards to practice in their fields. They also must hold valid business licenses from the Department of Finance for tax and accounting purposes.

A person operating without a professional license likely does not have a business or occupational license – and might not be paying taxes, either – but there was no mechanism requiring the Division of Professional Regulation to report a person engaging in an unlicensed practice to the Department of Finance. According to the Division of Professional Regulation, there have been nearly 500 substantiated claims of operating without a professional license during fiscal years 2011-13.

House Bill 268, sponsored by Rep. Trey Paradee, ensures that the Division of Motor Vehicles must have proof of a valid business license before registering a company vehicle. A business could register a business vehicle, which can carry tax write-offs, with DMV without actually having a valid business license in Delaware.