Under the Michigan Occupational Code, residential building, maintenance, and alteration contractors must hold licenses to perform certain types of work. In Stokes v. Millen Roofing, 649 N.W.2d 371 (2002), the Michigan Supreme Court ruled that under MCL 339.2412(1), unlicensed contractors cannot sue customers for unpaid compensation, even if the customer was aware of the contractor’s unlicensed status. The court acknowledged the harshness of this penalty but emphasized its adherence to the statute as written. Without legislative amendments, this one-sided rule continues to leave unlicensed contractors vulnerable.

However, Michigan law does provide some protections for unlicensed contractors in payment disputes. In Epps v. 4 Quarters Restoration LLC, 872 N.W.2d 412 (2015), the Michigan Supreme Court affirmed that unlicensed contractors can still defend themselves against lawsuits brought by customers. The court clarified that the law serves as a public “shield” and not a “sword” for customers to exploit.

Additionally, contractors may sue for payment if their work does not fall under activities requiring licensure. For instance, in San Marino Iron, Inc. v. Haji, 991 N.W.2d 828 (2022), the court determined that installing an iron railing did not constitute “carpentry” or a “craft or trade” as defined under MCL 339.2404(3), enabling the unlicensed contractor to pursue compensation.

Finally, the doctrine of “substantial compliance” offers relief in specific scenarios. If a contractor obtains a license before performing unlicensed work, they may still seek payment for their services.

These cases underscore the critical importance of understanding Michigan’s contractor licensure requirements. To avoid severe consequences, contractors should seek guidance from legal professionals, such as Warner’s team, specializing in licensure, construction litigation, and corporate governance.