Homeowners frequently hire outside contractors to complete work in and around their homes. Many contractors who are hired are required to be licensed to perform the functions of their job. Examples of activities where a contractor’s license is required include trimming trees over 15 feet in height, removing tree stumps or operating a nursey.
See California Business & Professions Code § 7026.1. Many homeowners may not realize that hiring a contractor may inadvertently create an employment relationship between the homeowner and the contractor and their employees.
The California Supreme Court in April 2018 set out a three-part test to determine when a worker should be considered an employee or an independent contractor. See Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903. California also has a statute under the Labor Code that addresses individuals who are required to have a license under certain portions of the California Business & Professions Code. See California Labor Code § 2750.5. This statute provides that a worker, or their employees, performing services for which a license is required is presumed to be an employee of the person who hired the worker (here, the homeowner) unless certain factors are met showing the individual is an independent contractor (similar in kind to those listed in the Dynamex action) and they hold a valid contractor’s license. Without the valid contractor’s license, the worker and their employees are considered to be statutory employees of the homeowner. This is true even in common situations where the homeowner may not know about the worker’s license status.
If such a situation arises, the homeowner is not exempt from the same legal requirements as other employers including furnishing a safe and healthful workplace (California Labor Code § 6400) and even requiring them to provide workers compensation insurance (California Insurance Code § 11590). If the homeowner does not carry workers’ compensation insurance, the employee can proceed against the homeowner in tort under California Labor Code § 3706. If the employee is exempt from workers’ compensation coverage because they worked less than 52 hours in the 90 days prior to the injury under California Labor Code § 3352, they can still file a tort claim against the homeowner. So if a contractor must have a license, fails to carry one and is later hurt on the job, the homeowner can be held liable for the injuries entitling the injured contractor to file a claim against the homeowner’s insurance, make a workers’ compensation claim against the homeowner or even assert a tort claim against the homeowner.
Homeowners should take precautions to protect themselves against such situations by asking any prospective contractor whether they are required to carry a contractor’s license. If so, the homeowner should then ask whether they have a valid contractor’s license. The homeowner can (and should) check the license status on their own on the California Contractors State License Board website: https://www2.cslb.ca.gov/OnlineServices/CheckLicenseII/checklicense.aspx.
If a contractor is asked about their license status and they lie or otherwise hold themselves out as licensed contractors, the homeowner now has a defense against claims brought by that contractor under Labor Code § 2750.5 for injuries sustained on the job. See Chin v. Namvar (2008) 166 Cal.App.4th 994. The homeowner should also carry comprehensive insurance coverage over their home and themselves to insulate themselves and their property from liability if a contractor is hurt at their home and they seek to hold the homeowner responsible.
Please note that this publication is for general information and education purposes only and does not constitute legal advice nor does it form an attorney-client relationship between the author and the reader. Laws concerning the subject matter(s) of this publication are subject to change and thus this publication may not contain complete or accurate information depending upon when the reader reviews it. Before taking any action based upon information or laws discussed in this publication, the reader should consult with an experienced attorney.
