The Short Answer

What Is the Mandatory Check?

Textbook Definition

The mandatory check is the set of legal requirements a contractor must meet to work, get paid, and protect the business: a valid license, required insurance, bonds where required, and timely lien and notice filings.

In Plain English

Four boxes must be checked on every job: you are licensed, you are insured, any bond is in place, and your paperwork to get paid is on time. Miss one and the work may be free.

Why It Matters

Why Do These Four Checks Matter So Much?

They are not about profit. They decide whether you are allowed to work, whether a worker’s injury becomes your bill, and whether you can collect. In Florida, a contract signed by an unlicensed contractor is unenforceable by that contractor, and the contractor has no lien or bond claim for the work. That is the rule in section 489.128 of the Florida Statutes.

Insurance has teeth too. Under Florida’s workers’ compensation rules, the workers of an uninsured subcontractor can become the general contractor’s employees, and the contractor is expected to confirm coverage before work starts. A stop-work order can bring a penalty of twice the premium that should have been paid, plus $1,000 a day for working in violation of the order.

This is the chapter in the book called the Mandatory Check. These rules differ in every state, so treat Florida here as a worked example, not as the law everywhere.

Signs this part of your business is exposed:

  • Nobody can say the date your license renews.
  • You start subs without seeing proof of coverage.
  • An insurance certificate on file has expired.
  • You cannot name your lien deadlines.
  • You are not sure whether a Notice of Commencement was filed.
  • You work in several counties without checking the local rules.
Three or more? Fix these before you chase more work. They protect everything else in this guide.

What It Looks Like

What It Looks Like: The Helper on the Ladder

From the book · The Mandatory Check · A fictional example

Danny Pruitt is behind on his big renovation, so he hires another sub he has never worked with. The sub does a little of everything, can start Monday with a helper, and comes recommended by a homeowner. His price is good. Danny shakes his hand.

Danny never asks for a license number. He never asks for a certificate of insurance. On the second Thursday, the sub’s helper is hanging drywall from a ladder that should have been a scaffold. The ladder kicks out. He falls and breaks his wrist. Hector, Danny’s helper, drives him to the emergency room in his own truck.

Danny and Hector are fictional characters in the book. The question that follows is a real one: whose employee was that helper, and who pays?

The Checklist

The 4-Part Mandatory Checklist

Florida law is the example. Each item shows the kind of rule to look for in your own state.

Check Your State

The items below come from Florida statutes and agency pages. Your state will have its own license types, insurance thresholds, bond rules, and lien deadlines. Use this list as a map of what to look up, and confirm each deadline with a construction attorney.

1. License

  • Know your license type. In Florida, a certified contractor holds a state license and can work anywhere in the state. A registered contractor can work only in the places where they met local requirements (sections 489.105 and 489.117).
  • Have a qualifier. A business needs a certified or registered qualifying agent with final approval authority over construction work. If the qualifier leaves, the business has 60 days to replace them and may not contract until it does, unless a temporary certificate is granted (section 489.119).
  • Know the cost of working without a license. The contract is unenforceable by the unlicensed contractor and no lien or bond claim exists for the work (section 489.128). A first offense is a first-degree misdemeanor. A repeat offense, or one during a declared state of emergency, is a third-degree felony, and civil penalties can run up to $2,500 a day (section 489.127).
  • Renew on time. Florida licenses renew every two years with 14 hours of continuing education (section 489.115). One of the 14 hours must now cover stucco and cladding, with enforcement starting at license expirations on August 31, 2027 for registered contractors and August 31, 2028 for certified contractors.
  • Check any local license. Florida ended local specialty licensing on July 1, 2025. Local governments may license only types that substantially match state license types.

2. Insurance

  • General liability coverage. One broker’s data covering more than 40,000 small construction customers, most with fewer than five employees, shows a median general liability cost of $89 a month, about $1,069 a year. Roofers averaged $317 a month, general contractors $162, and electricians $61. Your price depends on your trade, payroll or revenue, and employee count.
  • Workers’ compensation. Florida construction employers need coverage with one or more employees. Up to three corporate officers in construction may apply to be exempt, with a $50 application fee. The exemption is for officers, not for subcontractors.
  • Proof from every sub before they start. Get a current certificate of insurance and read what it covers. In Florida, workers of an uninsured sub can become your employees.
  • Know the penalty. A stop-work penalty is two times the premium you would have paid at approved rates for the preceding 12 months, or $1,000, whichever is greater. The look-back is 24 months if payroll was concealed or understated, or if there was a prior order. Operating in violation of an order costs $1,000 a day (section 440.107).
  • Rates. Florida approved a 6.9% average decrease in workers’ compensation rates for 2026, the ninth straight annual decrease. Roofing class 5551 fell 11.04%.

3. Bonding

  • Know when a bond is required. The federal Miller Act requires performance and payment bonds on federal construction contracts above $150,000. Florida requires them on most state work above $100,000, and local governments may exempt contracts of $200,000 or less. Details are in our bonding guide.
  • Confirm the bond before you bid. A bid bond, performance bond, or payment bond may be required by the owner or by law. Ask early.
  • Check your surety’s limits. The surety sets how much work it will guarantee. Compare each bid with that limit, and see the job-size test.

4. Lien rights

  • Notice to Owner. If you are a subcontractor or supplier without a direct contract with the owner, Florida generally requires a Notice to Owner before you start or within 45 days after you start, and before the owner’s final payment. Laborers are exempt (section 713.06).
  • Claim of Lien. The lien must be recorded no later than 90 days after your final furnishing of labor, services, or materials (section 713.08). The lien generally stays valid for one year from recording unless a foreclosure action is filed.
  • Notice of Commencement. The owner records it before work starts and posts a copy on site. It expires one year after recording unless another date is stated, and it is void if work does not begin within 90 days of recording (section 713.13). The permit threshold for requiring one rose from $2,500 to $5,000 on October 1, 2023.
  • Keep a lien calendar. Put every notice and deadline on a single calendar by job, the day work starts. The Siteline 2026 survey found that 56% of subcontractors missed a critical mechanic’s lien deadline in the past two years.
  • Change orders count. Florida’s lien law defines the contract to include extras and change orders that the owner authorizes. See change orders.

What Changed

Florida Changes for 2025 and 2026

These changes affect licensed contractors and their subs. Several come from law firm and agency summaries. Confirm details before you rely on them.

ChangeWhat it doesEffective
SB 290 (new section 489.1295)Licensed contractors must pay subcontractors and suppliers within 45 days of being paid, or as the contract provides, unless there is a bona fide dispute. Knowing or willful violations can bring license discipline.July 1, 2026
Local specialty licensing endsLocal governments may license only types that substantially correspond to state license types.July 1, 2025
Stucco and cladding continuing educationOne of the 14 continuing education hours must cover stucco and cladding.Enforced from Aug. 31, 2027 (registered) and Aug. 31, 2028 (certified)

Source for all three: the Florida Department of Business and Professional Regulation. Law firm summaries of SB 290 also report fines of up to $10,000 per violation, which we could not confirm in the statute.

Paying subs on time is also good business. Our subcontractor guide shows how to write payment terms you can keep, and our cash flow guide shows how to plan for them.

Dr. Paul’s Insight

Run the four checks on a calendar, not from memory. Put your license renewal, your insurance renewal, each sub’s certificate expiry, and every lien deadline in one place, with a reminder two weeks ahead. It takes an hour to set up and can save a job, a license, or a company.

Work With Dr. Paul

Three Ways Dr. Paul Helps Construction Owners

Read the page and fix it yourself, or get help. Here is where each option fits.

Business Consulting

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FAQ

Mandatory Check Questions

What does a contractor need to work legally?
Requirements vary by state, but most contractors need a valid license or registration, general liability insurance, workers’ compensation coverage when they have employees, any bonds the work requires, and local permits. Check your state licensing board and a construction attorney for your exact list.
What is the difference between a certified and a registered contractor in Florida?
A certified contractor holds a state license and can work anywhere in Florida. A registered contractor can work only in the places where they met local licensing requirements. Both need a qualifying agent for a business.
Do I need workers’ compensation as a contractor?
In Florida, construction employers need workers’ compensation coverage when they have one or more employees, including the owner. Up to three corporate officers may apply to be exempt. Other states have different thresholds.
What is a Notice to Owner and when is it due?
A Notice to Owner is a written notice that a subcontractor or supplier sends so it keeps its right to file a lien. In Florida it generally must be served before starting work or within 45 days after starting, and before the owner’s final payment. Ask a construction attorney how it applies to you.
What happens if I hire an uninsured subcontractor?
In Florida, workers of an uninsured subcontractor can be treated as the general contractor’s employees, and the contractor can face stop-work orders and penalties if coverage is missing. Get a current certificate of insurance before any sub starts.

Start with the book. Call when you want a second look at your paperwork.

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Keep Going

Related Construction Guides

The Mandatory Check touches bonding, subs, change orders, retainage, and moving up to general contractor.

How to Get Bonded

The three bond types, the three Cs, costs, and what to have ready.

Managing Subcontractors

License and insurance checks, the agreement, and Florida pay rules.

How to Write a Change Order

Six steps, a one-page sample, a script, and the Florida lien clock.

What Is Retainage in Construction?

How the holdback works, who can hold how much, and how to collect it faster.

Sub to General Contractor

The license path, the cash, and a safe first prime job.

Business Plan Writer for Contractors

A plan that shows lenders and sureties your systems are in place.
← PreviousHow to Build Crew Leads

Sources

Where These Numbers and Rules Come From

Every figure on this page comes from a source below. Dollar examples labeled as examples are illustrations, not projections for your business.

Dr. Paul Borosky, DBA, MBA

Business Consultant, Author & Educator | 14+ Years | 1,000+ Clients Served

Dr. Paul Borosky, DBA, MBA is a business consultant, author, and educator, and the founder of Quality Business Plan. He helps small business owners across the United States and Canada, including contractors and specialty trades, with business planning, financial modeling, fractional CFO services, and the everyday problems of businesses that depend too much on their owners. He is the creator of Dr. Paul’s Organize-Plan-Grow™ Strategy, author of numerous published books on Amazon including Top 5 Reasons Construction Companies Fail, and publisher of over 1,000 business-focused videos on YouTube.

About Dr. Paul The Construction Book YouTube Channel

This page is for general educational purposes only. It is not legal, financial, tax, accounting, insurance, or other professional advice. Construction laws, licensing rules, and tax rules vary by state and change over time. Dollar examples are illustrations, not projections for your business. Shiny Nail Remodeling, Square-Up Contractors, and the people in them are fictional. For decisions about your own business, consult a qualified professional.