What the state Labor & Industries contractor checklist for homeowners leaves out

Most Washington homeowners have never hired a contractor for a big job until they’re staring at demolition dust and a five-figure estimate. It’s stressful, and the state’s Department of Labor & Industries (L&I) knows it, which is why they put out a “Hiring a Contractor” checklist and worksheet.

That L&I form is helpful. It reminds you to verify the contractor’s registration, check references, and get a written contract. But from what we’ve seen inside Crooked Contractors of Washington (CCW), it leaves out many of the traps that actually wreck projects and drain savings.

Below are a few more important considerations that go beyond the L&I worksheet, addressing pieces that are missing, weak, or too vague, and what you should do, ask, or add to better protect yourself before you sign anything or hand over any money.

1. What L&I registration really means (and doesn’t)

The L&I form says to verify that a contractor is properly registered, bonded, and insured. That’s essential, but it can give a false sense of security.

Registration does not mean the contractor is skilled, financially stable, or well-run. It means they filed paperwork, bought a relatively small bond, and carry minimum liability insurance. On a large job, that bond can be completely wiped out by one bad project. Taxes and unpaid workers can eat the bond first, before the homeowner ever sees a dime.

Under Washington law, it’s actually a crime to advertise or do contracting work without being registered, and any real ad is supposed to show the contractor’s current L&I registration number. If you don’t see that number on their website, truck, or flyer, that’s a bright-red flag.
And homeowners should be aware that under state law, an unregistered contractor cannot sue you to collect compensation for work that required registration.

What you should ask:
“When I look up your L&I registration, what bond amount and insurance limits should I see, and are those enough for a project of this size? “What’s your L&I registration number?” and perhaps – because it should — “Why doesn’t it appear on your ad/website?”

2. Deposits and payment schedule: “Large” is too vague
The L&I form warns against a “large deposit” and paying in cash. That’s good, but “large” is undefined and the form doesn’t explain how to structure payments. The way money flows is where homeowners lose control: oversized deposits, front-loaded payment schedules, and money paid before inspections or visible progress.

What you should do:
Limit any upfront money to what’s truly needed to schedule the job or order special materials, and tie later payments to specific, visible milestones (for example: rough framing approved, inspections passed, windows delivered). Try to pay with a bank-issued check. Treat money transfer apps the same way you’d treat cash: High-risk with low leverage if something goes wrong.

3. Retainage: Some leverage at the end
The L&I notice mentions a “right to retainage,” but never spells out how powerful this is or how to use it. Retainage is the portion you hold back until the work is fully complete and the punch list is done. On a big job, that can be the only thing keeping a contractor motivated to finish details and repairs.

Washington’s retainage statute specifically allows up to 5% of the contract price to be withheld on private construction projects. You’re not “being difficult” by asking for it, you’re using a tool the law expects owners to use.

What you should add:
A clear retainage clause in your contract—often up to 5% held back from each progress payment and released only after final completion and any agreed corrections are done in writing.

4. Liens and deadlines: What happens if they walk off
The L&I form briefly warns about liens and suggests getting lien releases, but doesn’t explain the real-world consequences.

If your contractor doesn’t pay subs or suppliers, your house can be liened, even if you already paid the contractor. There are also hard deadlines for when lien notices and claims can be filed, which matter a lot if the contractor walks off the job.

On many residential projects over $1,000, Washington law also requires the contractor to give you a written “Notice to Customer” (Model Disclosure Statement) before starting work. That statutory notice must warn you that your property may be liened, that the bond might not be enough to cover everyone, and that you can protect yourself with retainage and lien releases. A contractor generally can’t enforce a lien later if they never gave you that notice and can’t prove it.

You may also get a separate “Notice to Owner” in the mail from a subcontractor or supplier. It’s a statutory warning that the sub or supplier also has lien rights on your property unless it gets paid.

What you should do:
Before the project starts, ask for a copy of the signed “Notice to Customer” you’re entitled to and keep it with your contract. Ask how they handle lien releases and insist on signed releases from subs and suppliers with each payment. If work stops unexpectedly, freeze payments, document everything, and get legal advice quickly so you don’t miss deadlines or pay twice for the same work.

Keep every “Notice to Owner,” ask your contractor about any names you don’t recognize, and when you pay big draws, demand lien releases from anyone who sent you one of these notices.

5. Subcontractors, specialties, and “helpers”
The form tells you to ask whether subcontractors will be used and to expect only “licensed companies.” Good start, but it doesn’t explain: the difference between a general and specialty contractor, or the risk of “helpers” who are really unregistered subs doing major work under someone else’s license.

What you should ask:
“Please list every subcontractor you plan to use by legal business name and trade (electrical, plumbing, roofing, etc.), and I will look each one up on L&I just as I did you.”

6. Sales tactics and pressure: What the form barely touches
L&I warns about “too good to be true” prices and “cash only,” but many real-world scams are about pressure, not just price. These are the contractors who push “today-only” deals, claim your neighbors already signed, or knock on doors after storms and offer quick fixes with “leftover” materials. They may also ask you to pull the permit as an “owner-builder” so they avoid scrutiny.

If you signed on the spot in your living room or at a home show, federal and state law often give you three business days to cancel in writing. High-pressure “today only” deals are exactly why those cooling-off rules exist.

What you should do:
Walk away from any deal that depends on you signing today. Never let someone talk you into pulling the permit in your name so they can “save you money.” If they can’t give you 48–72 hours to review a written contract, that’s your red flag.

If you wake up the next morning with doubts about a deal you signed at home or at a show, don’t wait. Check the contract for cancellation language and send a written cancellation right away if the three-day window still applies.

7. Scope, change orders, and vague language
The form correctly says that change orders should be in writing and suggests making a punch list. But it doesn’t warn you about vague scopes or fuzzy change-order math. Terms like “as needed,” “builder’s grade,” or “per plan” when there is no actual plan leave huge room for dispute. So do change orders that don’t show how they affect the total price and schedule.

What you should add:
Require a written scope that spells out materials, brands, model numbers, finishes, and any drawings or plans attached and initialed. Insist that every single change order lists: (1) what is changing, (2) added (or reduced) cost, (3) extra days, and (4) the new contract total in dollars. You should require a separate document for each change order.

8. Checking them out online: Beyond Google and Yelp
The L&I form encourages you to read reviews and call references. That’s good, but it doesn’t mention that online reviews can be filtered, purchased, or fake, and that references are hand-picked.
You need to look for patterns of lawsuits, complaints, and unfinished jobs, not just five-star ratings.

What you should do:
Search the contractor’s exact business name and owner name in state/county court records (an earlier post here explains how to select a firm to do that search for you); L&I’s site, and local news. Ask for recent jobs that match your project and visit in person if possible. When you talk to past customers, ask what went wrong and how the contractor handled it, not just whether they’re “happy.”

9. If things go wrong: You need a roadmap, not just phone numbers
The L&I worksheet gives you contact information to report a contractor, but not a practical sequence of steps for when things start to go sideways. Homeowners often keep paying out of fear or hope, which makes the damage worse before they ever complain.

Washington has created a Homeowner Recovery Program and account (RCW 18.27.410, 18.27.420). Starting July 1, 2026, qualifying owners with unpaid judgments against registered contractors (after going against the bond) can seek up to $25,000 in additional recovery, subject to conditions and available funds.

The Homeowner Recovery Program that will let some owners with unpaid judgments against registered contractors apply for limited state-funded reimbursement (up to a capped amount, and only after you’ve gone after the bond). It won’t make you whole, but it’s one more reason to insist on a fully registered, bonded contractor and keep good documentation from day one.

What you should do:
If serious problems appear such as a contractor abandoning your project, leaving big defects, or breaking promises—stop paying, document everything (photos, emails, texts), and send a written notice asking the contractor to fix specific issues by a specific date. Then look at L&I complaints, bond claims, and legal options sooner rather than later, because bond funds are limited and timelines matter. And check whether you might qualify for the state’s Homeowner Recovery Program once it’s fully live.”

10. Big jobs vs. small jobs: Different level of protection
The L&I form treats all projects alike. But there’s a big difference between repainting a bedroom and a $200,000 addition. Larger projects may need more sophisticated tools: independent inspections, builder’s risk coverage, more detailed payment schedules, and, sometimes, a lawyer to review the contract before you sign.

What you should ask yourself:
“If this goes badly, could it threaten my savings or my home?” If the answer is yes, treat this like the major financial transaction it is and get professional advice before you commit.

Used as a checklist, the L&I worksheet is a solid start. But it was designed for the average case. Crooked Contractors of Washington exists because too many homeowners are walking into above-average risk: complex projects, smooth sales pitches, and contracts written to protect the contractor, not the customer. Your best protection isn’t just filling out a form. It’s slowing down, asking harder questions, and adding safeguards where the standard worksheet stays vague.