Workers’ compensation 
lead to complications for Mecklenburg County code officials

In June, a new state law went into effect to stop unlicensed contractors from skirting the system.

The goal is to crack down on contractors who solicit a property owner to apply for a permit for work they will do for the owner.

“The purpose of the legislation is to close the loophole,” said Mike Carpenter, executive vice president and general counsel for the North Carolina Home Builders Association, one of the groups that pushed for the change.

Essentially, the law allows a property owner to apply for a permit with the understanding that, if they do so, they are considered the general contractor.

“The result of this is to make sure the owner understands that responsibility,” Carpenter said.

But the law, 2011-376, is raising concerns among code inspectors in Mecklenburg County, even though Carpenter said the abuse the law aims to address isn’t likely as prevalent in urban places like Mecklenburg.

The law says it is illegal for a building inspector or authority to issue a building permit unless the applicant has workers’ compensation insurance or is exempt. A building inspector or authority who violates it can face a $50 fine and a Class 3 misdemeanor charge.

James Bartl, Mecklenburg County Code Enforcement Office director, said the law requires that the insurance must be verified for every permit, not just once a year or every few months for every contractor.

In Mecklenburg County, where there were approximately 70,000 building permits issued last year, verifying the insurance for every permit would be a huge burden, Bartl said.

To be sure, all the 70,000 building permits would not fall under the law’s purview. But Bartl estimates that as many as 20,000 permits would. And in a department that has nearly reached its goal of providing a fully electronic, Internet-based building permit process, the idea of having as many as 20,000 in-person trips by general contractors to the code enforcement office is not appealing to Bartl.

“They’re envisioning a piece of paper being handed over a desk,” he said. “The law doesn’t anticipate the way business is being done. It almost demands a paper process, and that’s the problem we are wrestling with here.”

The Mecklenburg County Building Development Commission has asked county attorney Marvin Bethune to seek an interpretation of the law from the state attorney general’s office. It’s unclear how long it will take for the AG to issue one.

“It may be that receiving an electronic affidavit from a contractor will satisfy the requirement of the law,” Bartl said. “If that works, it’s a slam dunk inside our electronic process. If the AG’s office says ‘no,’ that creates complications.”

In short, the language of the law is unclear, Bethune said, and his interpretation does not envision a slam dunk.

Bethune said the law refers to an affidavit in one section that deals with property owners serving as general contractors for projects on their property. Proof of workers’ compensation insurance is in another section of the law, he said, adding that it does not specify that the proof of insurance should be included in the affidavit.

“The question is whether proof of workers’ comp can be provided in the affidavit, and I have an opinion but nobody likes it,” he said. “The opinion I gave they thought was going to make things too complicated.”

If the code enforcement office must require separate proof of workers’ compensation insurance, Mecklenburg County might want a notary to review the insurance documents and include his or her information in the online building permit process.

But that’s an idea that’s only under development.

“We haven’t found a good way to do the notary solution yet,” Bartl said.

The workers’ compensation law dates to 1992, but the new law has rewritten the requirements. Carpenter said he didn’t see the law creating a burden for code enforcement departments or general contractors.

“They have their obligation to ensure a contractor is complying with workers’ comp law if the contractor is required to comply with it,” Carpenter said. “I don’t see any reason they couldn’t do it online. I don’t think the notary is required to prove workers’ comp. The law does not require a notarized affidavit.”

But Bethune is not convinced.

“They talked proof as if it is something separate and apart,” he said.

For contractors who take advantage of Mecklenburg County’s Internet-based permitting process, an AG opinion could determine if they might be making a special trip to the code enforcement office at 700 N. Tryon St. every time they apply for a permit in the future.

Bartl hopes that won’t be the case.

“Take 20,000 permits and divide that by 250 customer service days and you get an idea the number of people running into our office,” he said. “Everybody who works with us electronically, they don’t come in here anymore.”

It works out to be 80 general contractors in the code enforcement office every day it’s open.

“With any luck, the AG will come back and say you can accept an affidavit,” Bartl said. “We can do an electronic affidavit pretty easily.”

Ramsey can be reached at [email protected].