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Who May Submit Proposals

Who May Submit Proposals On Behalf Of Contractor

It is not uncommon for some businesses to utilize the services of a third-party marketing and sales office to submit bids or proposals to customers on behalf of their business.  However, in the case of building construction and repair this practice is considered a violation of the Nevada Administrative Code (“NAC”) by the Nevada State Contractors Board anyone other than an employee of the contractor to do so.

According to the Contractors Board, signing up or providing proposals to customers must be done by a W-4 employee of the contractor.  Utilizing the services of independent contractors is not permissible.  It has been the recent position of the Contractors Board that unless one is a W-4 employee of the contractor, it is unlawful for a third-party to prepare or negotiate a contract or submit a proposal on behalf of a contractor.  At first glance, this appears to be in direct conflict with the common law principle that an agent with apparent or actual authority can bind the principal and there has historically been no employer-employee requirement.

In support of its present position the Contractors Board points to Chapter 624 of the NAC, which defines an “employee” as follows:

“Employee” means a natural person in the service of an employer under any appointment or contract of hire or apprenticeship, express or implied, oral or written, at-will or other, whether lawfully or unlawfully employed.

This definition is quite broad and includes anyone who works at the direction of another, including under any contract of hire, whether lawfully or unlawfully employed.  Under this definition, even a non-W4 worker can be an employee and could enter into a contract on behalf of a contractor.  However, in 2021, the Nevada State Legislature amended Nevada Revised Statute (“NRS”) 624.020’s definition of “contractor”.  Within that definition the legislature also uses the term “employee” and defined an employee:

As used in subsection 2, “employee” means a natural person who:

  •     (a) Works under the direction and control of a contractor; and
  •     (b) (b) For federal income tax purposes:

(1) Is required by the contractor to complete a Form W-4 for the withholding of federal income taxes from wages paid to the person by the contractor

The new language to the statute became effective upon adoption for purposes of the Contractors Board being empowered to promulgate new language to conform to its then-existing regulations.  However, the Contractors Board has not done so as of this date. Nonetheless, the Contractors Board is operating under the NRS definition and bringing claims against contractors who have allegedly contracted with non-licensed persons.   

The obvious result is that until the NAC definition of “employee’ is updated to conform to the NRS definition of “employee” there will continue to be a conflict between the two definitions and determining who may submit a bid or proposal to a customer on behalf of the contractor remains a gray area.  This gray area has, in fact, caused significant confusion.  It is extremely common, albeit improper, for contractors, and in fact persons of all trades, to misunderstand the differences and circumstances of subcontracting versus employment, which can change based on context (labor law versus tax law versus contract law).

It is unclear why the Legislature made this change in 2021, as previously there was no explicit W-4 requirement.  Either the Legislature found that there was no requirement and wanted one or it felt the previous statute required clarification.  In either case, it is now the position of the Contractors Board and the Legislature that one must be an employee of the contractor to submit a bid or proposal on behalf of the contractor.

Fortunately, there are limits to the authority and enforcement of the provisions of Chapter 624 by the Contractors Board.  When such enforcement is undertaken against a licensee it is imperative that the licensee obtain the services of an experienced attorney.  The Wright Law Group, P.C. has decades of experience defending claims before the Contractors Board and is well equipped to assist you in handling your case.  Please call us at 702-405-0001 to schedule a consultation or email us.

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  • John Henry Wright
  • The Wright Law Group, P.C.
  • 2340 Paseo Del Prado Building D Suite 305 Las Vegas NV 89102
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