The Four Questions Every Homeowner Should Ask Before Hiring a Contractor

As every homeowner knows, there’s no shortage of projects to be done around the house. These projects can range from the easy, DIY chores (weeding or washing windows) to those requiring more skill (building a deck or adding a new room to your house). Regardless, it’s likely that you’ve considered hiring a contractor to help.

What people may not know, is that in the state of California, hiring an unlicensed person to conduct maintenance or repair work on your home or property makes them your employee– potentially, exposing you and your family to huge financial risk.

Read on for more information about the law and what you can do to protect yourself, your family, and your financial assets.

What it takes to be considered a “contractor”?
In California, every person who builds, improves, or repairs residential structures (e.g., builders, electricians, plumbers, painters, landscapers, tree trimmers) is a “contractor” who must obtain a license from the State of California. If you hire a licensed contractor, they have “independent contractor” status, which insulates the homeowner from liability. The reason for this is the higher probability that the licensed contractor will be competent, responsible, and insured. The law rewards the homeowner who hires a licensed contractor, rather than his unlicensed counterpart.

What happens if a contractor is unlicensed?
Under California law, the unlicensed contractor cannot be considered an “independent contractor.” Instead, he is an “employee” of the homeowner (Cal. Labor Code §2750.5). Conversely, the law penalizes the homeowner who hires an unlicensed contractor. As an employer, the homeowner becomes liable (legally responsible) for the unlicensed contractor’s negligence occurring in the course of his work. For instance, if the unlicensed contractor causes damage to the home of a neighbor, or causes physical injury to another person, the homeowner, as the employer, is responsible for payment of damages. California courts refer to this derivative responsibility of the homeowner/employer as “vicarious liability.”

In addition, the homeowner may be legally liable for injuries suffered by the unlicensed contractor, himself, or any of his workers. When the injured party has worked more than 52 hours before the injury, he is entitled to workers’ compensation benefits from the homeowner as set forth in the Labor Code, even if it was the unlicensed contractor or his worker who negligently caused the injury.

Will my homeowners insurance cover the cost of liabilities associated with an unlicensed contractor?
In some limited instances, homeowners insurance will cover the cost of these benefits. In many instances, however, the homeowner will be personally liable for the payment of workers’ compensation benefits, including medical treatment, temporary disability payments, and a permanent disability award.

On the other hand, if the injured party has worked less than 52 hours, he is not eligible under the law to receive worker’s compensation benefits. However, the homeowner is not off the hook. They’re even more exposed! In this instance, the injured worker may sue the homeowner in tort (lawsuit brought in a court of law) if he can prove that the homeowner’s negligence was a factor in causing the injury (e.g. homeowner fails to provide fall protection to workers on roof). In such cases, the damages sought by the injured worker are not limited in scope, like the benefits provided by the workers’ compensation system. The homeowner is exposed to all economic losses as well as the “pain and suffering” incurred by the injured worker, regardless of amount.

What steps can I take to protect myself from liability when hiring a contractor?
The best course of action is to make sure you are informed, and that you hire a reputable, licensed contractor. Ask to see proof of your contractor’s general liability insurance and worker’s compensation insurance. Note, this applies to subcontractors as well.

If you have any additional questions relating to your liability as a homeowner, or if you have questions related to personal injuries suffered on the job, or elsewhere, contact the Law Offices of Edward Casey Jr. at 510-251-2300.