Does someone need a North Carolina general contractor's license if they're an employee of the owner who manages a construction project worth more than $30,000?

Plain-English summary

The Secretary of the North Carolina Licensing Board for General Contractors asked the AG to clarify two situations under Chapter 87, Article 1: the contractor licensing law.

The basic rule under G.S. 87-1: a person who, for a fixed price, commission, fee, or wage, undertakes to construct any building costing $30,000 or more is a general contractor and must be licensed. G.S. 87-13 makes it a misdemeanor for any unlicensed person to contract for or bid upon such a project.

The opinion answered two specific factual variations.

First, the statute applies to anyone contracting for construction of a building for another party for a fixed price, commission, fee, or wage. The licensing requirement does not depend on whether the contractor owns the land where the work is being done. So a builder who is constructing buildings for others without owning the underlying property still needs a license. Vogel v. Supply Company, 277 N.C. 119 (cited by the AG), establishes that the purpose of the licensing statute is to protect the public from incompetent builders, which supports broad application of the licensing requirement.

The AG acknowledged the owner-builder exception: a person constructing a building on his own property does not need a license. Prior AG opinions had said so. But the owner-builder exception cannot be stretched to cover cases where there is a contract for construction of a building for another party. The exception is narrow.

Second, where an owner employs an individual on a salary, wage, commission, or fixed fee to provide overall supervision and construction of a building on the owner's property, that individual needs a license if the project is $30,000 or more. The opinion treats overall supervision and control as the distinguishing characteristic. Helms v. Dawkins, 32 N.C. App. 453, 456, framed the rule: "the principal characteristic distinguishing a general contractor from . . . a mere employee, . . . is a degree of control to be exercised by the contractor over the construction of the entire project." Furniture Mart v. Burns, 31 N.C. App. 626, 632, noted that no absolute rule mandates a contractor's license for everyone employed as a construction supervisor, but an employee with overall authority and control is functioning as a general contractor within the statute.

Putting the two together: someone with overall supervision and control of a $30,000-or-more construction project needs a contractor's license, whether or not the owner directly employs that person.

Currency note

This opinion was issued in 1979. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The general contractor licensing statute (Chapter 87) has been amended several times since 1979. Threshold dollar amounts have changed (the modern threshold is materially higher than $30,000), licensing tiers have been added, and case law has continued to refine the owner-builder exception. The core principles (overall control marks general contracting; owner-builder exception is narrow) have generally survived, but the specific text and dollar amounts should be checked against current law.

Historical context: what the AG concluded

The opinion did three pieces of interpretive work:

The statute targets the contracting transaction, not the land ownership. G.S. 87-1's definition turned on whether someone undertakes to construct for a fixed price, commission, fee, or wage. The AG read that as the operative element, not whether the contractor owned the land. So someone building for another party under contract is a general contractor regardless of land ownership.

The owner-builder exception cannot expand into a contractor-substitute exception. Prior opinions had established that an individual constructing a building on his own property does not need a license. The 1979 opinion preserved that exception but refused to extend it. If the owner is the actual builder, no license. If the owner brings in someone else as the overall supervisor, the someone-else needs a license.

Overall control is the test for who is a general contractor. Citing Helms v. Dawkins and Furniture Mart v. Burns, the AG anchored the analysis on degree of control. Not every employee involved in construction needs a license; many employees are doing pieces of work under someone else's supervision. The person with the overall authority is the one the statute reaches.

Background and statutory framework

The North Carolina general contractor licensing law has been on the books since 1925. Its purpose, as the North Carolina Supreme Court said in Vogel v. Supply Company, is to protect the public from incompetent builders. The licensing structure requires passage of an examination, financial qualification, and continuing compliance with Licensing Board rules.

By 1979, the dollar threshold for general contractor licensing was $30,000. That figure has been adjusted over time. The Licensing Board, established under G.S. 87-2, administers the examination and grants licenses in tiers (limited, intermediate, and unlimited) that authorize different sizes of projects.

The owner-builder exception developed out of the basic structure of the statute. A homeowner building his own house does not pose the consumer-protection problem the statute targets; the homeowner is the protected consumer in the normal case. So North Carolina, like most states, exempted owner-builders from the licensing requirement.

The 1979 opinion's specific contribution is its line on the in-between case: the owner who hires a paid supervisor but not an outside general contractor. The opinion treats that supervisor as functionally a general contractor and requires a license. This prevents a workaround where an owner could effectively contract out the general contracting function under an employee-supervisor label and dodge the licensing requirement.

Helms v. Dawkins (1977) and Furniture Mart v. Burns (1976) are Court of Appeals cases that worked out the control-based test the AG opinion applied. Both involved disputes where the question of contractor-versus-employee status was central. The 1979 opinion brought their reasoning into the licensing context.

Common questions

Does the dollar threshold include materials or just labor?

The statute speaks of "construct any building . . . where the cost of the undertaking is $30,000 or more." The cost of the undertaking includes the cost of the whole project, materials and labor together. The 1979 opinion does not parse the threshold question in detail, but the statutory text addresses total cost.

What if the project breaks into smaller subcontract pieces?

Subcontracting structures do not necessarily get around the licensing requirement for the general contractor. The general contractor with overall control still needs a license. Specific subcontractor licensing under other statutes (electrical, plumbing) operates separately. The 1979 opinion addresses general contractor licensing.

Can the owner avoid the supervisor licensing problem by limiting the supervisor's authority?

The control-based test the AG applied looks at actual control, not titles. An owner who keeps overall control and just delegates specific tasks to an employee may keep that employee outside the general contractor definition. But if the employee in practice has overall authority and the owner is functionally absent from the project decisions, the license requirement applies regardless of titles on paper.

Are there exceptions for ranch buildings or barns?

The Chapter 87 framework reaches all buildings above the threshold. Specific exceptions for certain agricultural structures or specialized work exist in some neighboring states but were not the subject of the 1979 opinion. North Carolina practitioners should check the current statute for any specific exemption that applies.

What is the penalty for working unlicensed?

G.S. 87-13 makes contracting for or bidding upon construction without a license a misdemeanor. Civil consequences are also significant: unlicensed contractors cannot enforce their construction contracts (a long-standing rule that has produced substantial case law in North Carolina). The cumulative effect makes the licensing requirement real, not just a paper formality.

Source

• Landing page: https://ncdoj.gov/opinions/licenses-and-licensing-licenses-and-permits-general-contractors/

Citations

• N.C.G.S. § 87-1
• N.C.G.S. § 87-13
• Article 1 of Chapter 87 of the General Statutes
• Vogel v. Supply Company, 277 N.C. 119
• Helms v. Dawkins, 32 N.C. App. 453
• Furniture Mart v. Burns, 31 N.C. App. 626

Original opinion text

Subject:

Requested By:

Conclusion:

Article 1 of Chapter 87 of the General Statutes prohibits any contractor who has not passed the examination and secured a license as therein provided from undertaking to construct a building costing $30,000 or more. G.S. 87-1 provides that ". . . one who for a fixed price, commission, fee or wage, undertakes . . . to construct any building . . . where the cost of the undertaking is $30,000 or more" is a general contractor and required to be licensed. G.S. 87-13 provides that any person, firm or corporation not being duly licensed who shall contract for or bid upon the construction of any of the projects or works enumerated in G.S. 87-1 shall be guilty of a misdemeanor.

The statute prohibits the contracting for, or the bidding upon, the construction for a fixed price, commission, fee or wage without a license. The purpose of the licensing requirement is to protect the public from incompetent builders. Vogel v. Supply Company, 277 N.C. 119, 120. The statute does not qualify the definition of a general contractor by ownership of the land on which the improvement is undertaken. Therefore, it is the opinion of this Office that in each of these cases it is a violation of the provisions of G.S. 87-1 et seq. for the builder to enter into a contract for construction without having the applicable general contractor's license under Article I of Chapter 87. This Office has on several occasions advised that the licensing statute is not applicable to an individual constructing a building on his own property and he is not required to be licensed. However, we do not believe the cases of inapplicability of the statute to an owner can be extended to cases where there is a contract for the construction of a building for another party for a fixed price, commission, fee or wage.

The secretary of the licensing board further requests a clarification of the licensing requirement in the case where an owner employs an individual for the overall supervision and construction of a building on the owner's property where the improvements are in excess of $30,000. The prior opinions of this Office have advised that such a person, where employed by the owner on a salary, wage, commission or fixed fee, having overall supervision is required to be licensed. In the case of Helms v. Dawkins, 32 N.C. App. 453, 456, the court said that within the meaning of the contractor's licensing statute, "the principal characteristic distinguishing a general contractor from . . . a mere employee, . . . is a degree of control to be exercised by the contractor over the construction of the entire project." In the case of Furniture Mart v. Burns, 31 N.C. App. 626, 632, the court indicated that there is no absolute rule requiring a contractor's license in case of persons employed to act as a construction supervisor. It was indicated by the court in that case that an employee of the owner who undertakes the construction of such a building and has overall authority and control over the construction is a general contractor within the meaning of the licensing statute. Therefore this Office is of the opinion that an employee of an owner who has overall supervision and control of a construction project where the cost is $30,000 or more, is required to have a general contractor's license.

Rufus L. Edmisten
Attorney General

Eugene A. Smith
Special Deputy Attorney General