Workplace Fraud Act
CHAPTER 36. Delaware Contractor Registration Act [Effective upon fulfillment of 82 Del. Laws, c. 168, § 6, as amended by 82 Del. Laws, c. 291, § 2]
This chapter may be known and cited as the “Delaware Contractor Registration Act.”82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
For purposes of this chapter:
(1) “Contractor” means a person, partnership, association, joint stock company, trust, corporation, limited liability company, or other legal business entity or successor or subsidiary thereof that engages in construction services or maintenance under an express or implied contract on behalf of another entity or individual for profit within the State, and includes any subcontractor or lower tier subcontractor of a contractor.
(2) “Construction services” includes all building or work on a building, structure, or improvement of any type, including bridges, dams, plants, highways, parkways, streets, tunnels, sewers, mains, power lines, pumping stations, heaving generators, railways, airports, terminals, docks, piers, wharves, buoys, jetties, breakwaters, levees, canals, dredging, shoring, rehabilitation and reactivation of plants, scaffolding, drilling, blasting, excavating, clearing and landscaping, including tree cutting.
(3) “Custom fabrication” means the fabrication of plumbing, heating, cooling, ventilation, or exhaust duct systems and mechanical insulation.
(4) “Department” means the Department of Labor.
(5) “Knowing” means having actual knowledge of or acting with deliberate ignorance or reckless disregard for the prohibition involved.
(6) “Maintenance” means the repair of existing facilities when the size, type, or extent of such facilities is not changed or increased.
(7) “Public works contract” means a construction contract under Chapter 69 of Title 29.
(8) “Secretary” means the Secretary of Labor, or the Secretary’s authorized designee.
(9) “Subcontractor” means a lower tier contractor of a contractor, including owner operators or independent contractors.
(10) “Violation” means a project or contract where work is done by a contractor who is not registered under this chapter.
(11) “Worker” means a laborer, mechanic, skilled, or semi-skilled laborer and apprentices or helpers employed by any contractor or subcontractor and engaged in the performance of construction services or maintenance in the State, regardless of whether the work becomes a component part of the construction or maintenance. “Worker” does not mean a material supplier or employees of a material supplier. A contractor or subcontractor engaged in custom fabrication is not a material supplier for purposes of this section.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
The Office of Contractor Registration in the Department shall administer and enforce this chapter, using the rules and procedures of the Administrative Procedures Act, Chapter 101 of Title 29.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
A contractor must register under this chapter before performing construction services or maintenance.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) To register under this chapter, a contractor shall submit all required forms, information, and fees to the Department.
(b) A contractor must apply for a registration certificate by submitting a complete application on the form provided by the Department, which must include all of the following information regarding the contractor, if applicable:
(1) Name, principal business address, telephone number, fax number, and e-mail address.
(2) Type of business entity, including corporation, partnership, or sole proprietorship.
(3) If the principal business address is not within the State, the name and address of the custodian of records and agent for service of process in the State.
(4) The name of the person, the date and nature of the violation, conviction, or judgment, and all additional information requested by the Department if the contractor or a person holding a financial interest in the contractor’s business has ever done any of the following:
a. Held a financial interest in a licensed entity that was cited by the Department for a violation of a labor law.
b. Been convicted of home improvement fraud under § 916 of Title 11 or new home construction fraud under § 917 of Title 11.
c. Been found to have engaged in an unlawful practice under § 2513 of Title 6.
(5) The federal employer identification number, the state taxpayer identification number, individual tax identification number, or other tax identification number.
(6) Proof of Delaware worker’s compensation insurance.
(7) Proof of a state business license.
(8) A safety plan that is compliant with the requirements established by the Occupational Safety and Health Administration.
(c) (1) a. A contractor who has a state contract under subchapter IV of Chapter 69 of Title 29 must pay an initial annual nonrefundable registration fee of $300 to the Department with the application under this section.
b. The nonrefundable registration fee for the second annual registration is $300.
c. Upon successful completion of 2 consecutive years of registration, a contractor may register for a 2-year period and pay a nonrefundable registration fee of $500. The Department may only grant a 2-year registration if the contractor has not violated this chapter or any other labor laws during the registration period that is expiring.
d. A contractor who is performing public work on July 1, 2021, shall submit the registration application form and fee to the Department no later than August 1, 2021.
(2) a. A contractor who does not have a state contract under subchapter IV of Chapter 69 of Title 29 must pay an initial annual nonrefundable registration fee of $200 to the Department with the application under this section.
b. The nonrefundable registration fee for the second annual registration is $200.
c. Upon successful completion of 2 consecutive years of registration, a contractor may register for a 2-year period and pay a nonrefundable registration fee of $300. The Department may only grant a 2-year registration if the contractor has not violated this chapter or any other labor laws during the registration period that is expiring.
(d) The Department may enter into cooperative agreements with other state agencies, including the Department of Finance and the Department of State, to share information required under this chapter and to streamline the process of contractor registration.
(e) Information under subsection (a), (b), or (d) of this section is not public information under Chapter 100 of Title 29.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 1; 82 Del. Laws, c. 291, § 2;
(a) Except as provided under § 3607 of this title, upon receipt of a completed, accurate, application and fee under § 3605 of this title, the Department shall issue a certificate of registration to the contractor. A certificate of registration is valid as follows:
(1) For 1 year from the date of registration.
(2) For a period that ends 2 years from the date of registration, if the contractor successfully completes 2 years of registration.
(3) A certificate of registration must be renewed no less than 30 days before the expiration date of a certificate of registration. The Department may deny the certificate of registration if the contractor has violated this chapter or any law under § 3605(b)(4) of this title during the registration period that is expiring.
(b) A certificate of registration is not transferable.
(c) A registered contractor who allows the contractor’s certificate of registration to expire before applying to renew the certificate must subsequently apply for a registration certificate as if for the first time.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) The Department may deny, suspend, or revoke a certificate of registration if the contractor or an officer, partner, director, stockholder, or agent of the contractor does any of the following under this chapter:
(1) Fails to comply with any requirement of this chapter.
(2) Wilfully makes a misstatement or omits a material fact in an application for or renewal of a certificate of registration.
(3) Fails to provide all information, including records, forms, or documents, requested by the Department under this chapter.
(4) Performs work without full compliance with this chapter.
(5) Contracts with or uses a subcontractor who is not registered under this chapter in the completion of a public works contract.
(6) Fails to cooperate or interferes with an investigation by the Department.
(7) Violates a criminal or civil law or regulation related to the ability of the contractor to comply with the labor laws of this State.
(b) (1) The Department shall reject an application that is incomplete or contains inaccurate information.
(2) If a contractor knowingly supplies incomplete or inaccurate information to the Department under this section, all of the following apply:
a. The application for registration must be rejected.
b. The contractor may not apply for registration until 1 year from the date of the notice of disqualification.
c. The contractor is subject to other applicable penalties, including under Chapter 12 of Title 6.
(c) (1) The Secretary shall exercise reasonable discretion in deciding whether to deny, suspend, or revoke a certificate of registration under subsection (a) or (b) of this section.
(2) The Secretary may not revoke or suspend a certificate of registration for longer than 5 years. The Secretary shall consider the following criteria to determine the length of time that a certificate of registration is denied, revoked, or suspended:
a. The contractor’s record of previous violations of any civil or criminal law related to the fitness of the contractor to bid on or engage in construction services or maintenance including this chapter and the prevailing wage law, § 6960 of Title 29.
b. If the contractor should reasonably have known that a subcontractor to a contract did not have a certificate of registration, had a lapsed certificate of registration, or had a certificate of registration revoked or suspended.
c. The total number of unregistered subcontractors at a work site and the size and scope of the project on which the unregistered subcontractor worked.
d. If the contractor in contract with a subcontractor who is not registered under this chapter obeyed the Department’s directive to remove the unregistered subcontractor from the work site to cure the violation of this chapter.
(d) (1) The Department may require as a condition of initial or continued registration that a contractor who has violated either this chapter or the prevailing wage law, § 6960 of Title 29, must provide a surety bond payable to the Department.
(2) The Department shall require a surety bond if there is a pending investigation or litigation of a violation of a state or federal labor law alleged against the contractor which the Secretary finds would constitute a knowing violation of this chapter.
(3) The surety bond must be in the amount and form that the Secretary deems necessary for the protection of the contractor’s workers, but must not exceed $10,000 per worker.
(4) The surety bond must be released upon a final adjudication of the investigation or litigation under paragraph (d)(2) of this section if the final adjudication is in favor of the contractor.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) Following an investigation in which the Department makes an initial determination that a contractor has violated 1 or more provisions of this chapter, the Department may make a decision to do 1 or more of the following:
(1) Deny, suspend, or revoke a certificate of registration.
(2) Require the posting of a surety bond.
(3) Impose an administrative penalty.
(b) The Department shall notify the contractor, in writing, of a decision to take an action taken under subsection (a) of this section which must comply with § 10122 of Title 29 and include all of the following:
(1) The action to be taken.
(2) The grounds upon which the determination was made to take the action.
(3) Instructions to request a hearing under § 102 of this title.
(c) (1) A request for a hearing must be made in writing, addressed to the Secretary, and made within 10 business days from the date of receipt of the notice under subsection (b) of this section.
(2) If a hearing is not requested under paragraph (c)(1) of this section, the determination made by the Department under subsection (a) of this section is final.
(d) The Office of Contractor Registration shall review a request for hearing under paragraph (c)(1) of this section to determine if the dispute can be resolved at an informal settlement conference. If the Office of Contractor Registration holds an informal settlement conference and a settlement is not reached, the Office of Contractor Registration shall forward the hearing request to the Secretary to schedule a hearing.
(e) The Secretary shall issue a final case decision at the conclusion of a hearing held under this section as required under Chapter 101 of Title 29.
(f) A contractor may seek judicial review of the Secretary’s final case decision by commencing an action in Superior Court, within 30 days of the date of the final decision under subsection (e) of this section.
(g) When a determination to suspend or revoke a certificate of registration is final, the holder of a certificate of registration shall surrender the certificate of registration within 20 days of the later of the date of the notice under subsection (b) of this section or the final decision under subsection (d) of this section by sending the certificate of registration to the Secretary by certified mail.
(h) If a contractor’s application for a certificate of registration is denied or a contractor’s certificate of registration is suspended or revoked, the contractor cannot perform work for which a bid has been submitted and which is under review.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) A knowing violation of this chapter is subject to a civil penalty of not less than $5,000 and not more than $85,000 per violation.
(b) A violation that is not a knowing violation may be subject to a civil penalty of not more than $1,000 per violation.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) The Department may bring a civil action to enforce this chapter, including an action for injunctive relief in the Court of Chancery to enjoin work by an unregistered contractor.
(b) The Department is not required to post a bond or filing fee in connection with an action under this section.
(c) Any finding of fact or conclusion of law in any court in this State or any administrative agency in this State finding that construction services or maintenance occurred must be conclusive on all parties to an action under this section. For purposes of the preceding sentence, a finding or conclusion is final if it has been fully determined on appeal to the appropriate court, if all time for filing such appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;
(a) The Department shall retain all application fees collected under § 3605 of this title for enforcement purposes.
(b) All civil penalties collected under this chapter must be paid to the General Fund of this State.82 Del. Laws, c. 168, § 4; 82 Del. Laws, c. 291, § 2;