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DYI and licensing – can central station cover you
October 16, 2019

Webinar notice  - sign up now for tomorrow's webinar
Title:    Subcontractor v Employee and Consequences of Misclassification
When:  October 17, 2019 12-1 PM EST
Who Should Attend: Alarm owners, managers and CFOs
Presenter: Michael Foster, Esq. and Ken Kirschenbaum, Esq.
More information: Proper classification and consequences of misclassification of independent contractors and employee s; 1099 v W2; California's new law and how it impacts other states.
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DIY and licensing – can central station cover you
            As the well-known authority in the legalities of the alarm industry I have a question about DYI online licensing across state lines. I know we as an alarm company are required to have a license in any state that requires a license to monitor the customer’s alarm even if the customer installs it themselves.
            But what if the monitoring central station is billing the customer for us in their own name i.e. CS and the customer is paying CS and then CS takes what they are owed and sends us the balance since it’s our customer?  I’m not saying CS has agreed to do so but would it be legal if they did?
 Paul W
            I think there are a number of issues that need to be considered that work against this business model.  First and foremost, whose subscriber is it, the CS or the dealer?  The CS will be billing the subscriber directly; payment goes to the CS.  Then the CS takes its monitoring charges and remits the balance to the dealer.  The missing fact is who has the signed contract with the subscriber?  That contract will identify who owns the contract.  
            The entire point of operating using the RMR model is to build your RMR.  You can’t build RMR if you don’t own the RMR Contract.  If the CS owns the contract with the subscriber then it’s paying a commission to the dealer.  Maybe the CS agrees to assign the contract to the dealer on demand.  This plan begins to look like it’s probably illegal and fraudulent.  No legitimate CS is going to entertain this plan.  Several states have criminal laws dealing with aiding and abetting circumventing licensing laws.  This plan could only be conceived by a dealer who isn’t big enough to get its own license.  Why would a CS risk it’s license and reputation for that arrangement?  
            Some CSs won’t monitor for a dealer who isn’t licensed as required; others will provide the monitoring, but dealer and CS can’t share a license, whether it’s the dealer’s license or the CS’s license.  
            If you provide installation of security or fire equipment you need a license.  If you contract for monitoring service you need a license in at least 20 states and either a license or registration in many municipalities.  If you are going to be conducting business in these jurisdictions then you should get licensed, your own license.  
            K&K can help you to determine if you need a license, which license you need and where you can find a qualified license holder to work with.  It’s your business and you’re spending a great deal of time and energy building it.  Start with a strong foundation, get licensed. Contact our Licensing Coordinator Eileen Wagda at 516 747 6700 x 312 or

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301