The 2025 Louisiana legislative session led to some important changes for the construction industry in Louisiana. Most notably, Act 422, which went into effect on August 1, 2025, provides for stricter oversight in the industry increased penalties for noncompliance. Here is a summary of the key changes.
The Introduction of the “Mold Remediation” and “Home Improvement” Licensure
Previously, the State Licensing Board for Contractors recognized nine major classifications for licensure of contractors: (1) building construction, (2) highway, street, and bridge construction, (3) heavy construction, (4) municipal and public works construction, (5) electrical, (6) mechanical, (7) plumbing, (8) hazardous materials, and (9) residential construction. The new law adds “mold remediation” and “home improvement” as two additional classifications for licensure. In other words, contractors who perform either type of work will be subjected to the applicable licensing standards.
Increased Financial Requirements
Previously, contractors seeking commercial, residential, or mold remediation licenses were required to submit financial statements evidencing a net worth of at least $10,000. An applicant who did not meet the requisite $10,000 threshold was able to furnish a bond, letter of credit, or other security in the amount of the required $10,000 plus any negative net worth. Act 422 increased this threshold to $50,000 for residential and commercial licenses, their subclassifications, and all specialty classifications (except for labor only specialty) and to $25,000 for mold remediation, home improvement, and labor-only specialties. Further, contractors will no longer be able to satisfy this requirement by bond or security; the only acceptable alternative to the net worth requirement is an irrevocable letter of credit in the amount of the applicable net worth requirement plus the applicant’s negative net worth, if any.
New Business Name Requirements
Contractors must now operate in Louisiana under the licensed business name as registered with the State Licensing Board for Contractors. This change requires that all bids, contracts, business transactions, etc. must be performed in the name as it appears on the contractor’s current license or registration. Thus, a contractor may now use a “DBA” only if its license provides for the alternative name.
Increased Licensing Requirements for Residential Roofers
Effective January 1, 2026, contractors performing residential roofing work over $7,500 must hold either a residential roofing license or a residential construction license with roofing subclassification. Work performed without the proper licensing may result in fines, and jobs in progress are subject to cease-and-desist orders.
Stricter Penalties for Deceptive Practices When Taking the Board Exam
The former law provided that individuals found to engage in “deceptive practices” when taking any board exam were ineligible to serve as a qualifying person for licensure for a period of one year. The new law lengthens this ineligibility period for taking any board exam from one year to three years.
Summary
In an attempt to weed out bad actors and “fly-by-night” contractors and better protect Louisiana citizens, Act 422 provides for stricter licensing and financing requirements and also gives the licensing board more power to issue fines and stop unlicensed work. Time will tell whether these greater protections will lead to more confidence over and stability in the construction industry in Louisiana and ultimately more productive construction in Louisiana.
For more information, reach out to Collyn DuBose at cdubose@gordonarata.com