CASWELL BELL & HILLISON LLP
FRESNO, CALIFORNIA

BIG RISKS WHEN YOU HIRE AN UNLICENSED CONTRACTOR.

To be blunt, California law is hostile toward unlicensed contractors.  For example, a person who hires an unlicensed contractor has the right to sue the unlicensed contractor for a full refund of all amounts paid, even if there is no defect in the work.  Business & Professions Code section 7031(d).

That result may seem unfair, but it makes plain that California is serious about enforcing the rules relating to contractors.

What work requires a contractor’s license?  As a general rule, a contractor’s license is required whenever the total cost for labor and materials for a construction or home improvement project is $500 or more.  Additional information can be found at the useful Contractor’s State License Board website.

Yet the enforcement requirements can also be shifted to homeowners and other persons who hire unlicensed contractors, as illustrated in Mendoza v. Brodeur (Aug. 18, 2006). 

The facts of the case can be summarized briefly.  “Defendant, a school teacher, lives on 90th Avenue in Oakland.  He and plaintiff are neighbors.  Defendant needed roofing work done on his home.” 

“Defendant hired plaintiff, an unlicensed roofer, to replace his roof.  After a few hours on the job, plaintiff fell from the roof and was injured.”  The unlicensed roofer sued for his damages.

In court, the defendant homeowner found himself in an awkward position.  The homeowner interposed Unemployment Insurance Code section 3352(h) as a complete defense.  This section provides that a person who was “employed less than 52 hours in the 90 calendar days prior to the injury” is not an employee for purposes of the Worker’s Compensation laws.

For the homeowner, this was welcome news.  The Worker’s Compensation laws have sharp teeth, at least for persons who fail to maintain the required coverage.  Had the injured roofer been determined to be an employee for purposes of the Worker’s Compensation laws, then the homeowner would have found himself liable for the injured person’s medical costs and lost wages (past and present), with few, if any, defenses to the claim.

But was the homeowner out of the woods?  Not according to the appellate court.  The appellate court cited to Labor Code section 2750.5, which “creates a rebuttable presumption that a worker performing services for which a license is required is an employee and not an independent contractor.  The statute also makes a valid license a condition of independent contractor status.” 

Thus, while the injured roofer was not an “employee” for Worker’s Compensation purposes, he was still an “employee” for purposes of the Labor Code.  Based on this interpretation of the law, the appellate court held that the injured roofer could sue the homeowner for his damages, although the roofer would still bear the burden of proof on the “evidentiary issue of fraud – including violation of duty, negligence, and causation.”

So was this a victory for the homeowner?  In a real world sense, no.  Most homeowner’s policies do not extend coverage to “employees.”  While the homeowner is not presumed to be liable for the injuries, as would be the case if the Worker’s Compensation laws applied, the homeowner will not have insurance coverage for any of the injuries alleged by the injured roofer.  Further, the homeowner will not have a right to a defense from his insurance carrier, thereby adding to the homeowner’s costs. 

An expensive lesson, indeed.  The word to the wise is simple – don’t hire unlicensed contractors.

© Caswell Bell & Hillison LLP          Attorneys and Lawyers, Fresno, California