Request clearance letters through connect...it's a convenient
way to manage sub-contractor lists too!
Clearance letters will protect you from potential liability and are required:
1. When the employer is performing contract work
Employers who hire contractors, or who work as contractors, will often need a clearance letter from the Commission as part of their contract requirements. A clearance letter confirms that an employer is in good standing with the Commission. A clearance letter releases the principal from liability under Section 120 of the Act for unpaid assessments for the contracts performed by this sub-contractor in the period for which the clearance letter is valid – normally 45 days from date of issue.
If the contractor is not in good standing, Section 120 of the Act allows a principal to withhold the amount of the assessment on this contract that the Commission can hold the principal liable for. You can contact us at 709-778-1125 and provide us with the contract information to obtain this amount.
Either the principal or the contractor can contact the Commission to request the clearance letter. We recommend all clearance requests be made online through connect. If you are unable to use connect, you can also request a clearance letter by calling 709-778-1198.
2. When the employer is involved in a legal transaction
Lawyers will request clearance letters from the Commission for all legal transactions.
Sale of business, shares or any assets
Failure to obtain a clearance letter may leave the purchaser liable for any assessments owed by the previous owner. In addition, the Commission could seize the asset as it has an automatic lien on all assets of an employer for any unpaid assessments.
The financial institution wants to ensure that there are no potential liens on the security used in the financing transaction as the Commission has an automatic lien on all assets of an employer for any unpaid assessments.
For most legal transactions, an audit is required as this is a self-reporting system. To ensure there are no delays finalizing your legal transaction, it is recommended that you call 709-778-1137 as soon as you are aware that a legal transaction will be happening. This should be done when gathering information to apply for financing or you decide to sell your asset/ business. This will ensure that when we receive the clearance request from the lawyer, it will have already been determined if an audit is required and it will be in progress.
Note: Clearance letters cannot be issued for the sale of a business or other assets if you have a deferred payment arrangement. We require full payment to ensure there is no lien on the employer’s assets that are being transferred.