CONTRACTORS

Contractor License Required

By law, if a board hires an unlicensed contractor, the association automatically becomes the injured worker's employer. (State Compensation Ins. Fund v. Workers' Comp. Appeals Board (1985) 40 Cal.3d 5) This is true even if the contractor misrepresented that he was licensed and insured. Without workers' compensation insurance, there are no limits on the damages that an injured employee may claim, including those for pain and suffering. The association could be liable, and its members could face large special assessments to cover the damages. With insurance, the employee's claims are limited, and the loss is covered by the policy.

In Heiman v. Workers Comp Appeals Board (2007), the Montana Villas Homeowners Association hired Pegasus Properties as its management company. Pegasus hired Hruby, a contractor, to install rain gutters for the association. Hruby's employee was careless, and a rain gutter touched a high-voltage electrical wire, severely injuring the employee. Since Hruby was unlicensed and uninsured, the court concluded that both the association and its management company were the injured worker's employers and were liable to pay him workers' compensation benefits.

Unpaid Wages. If associations hire unlicensed contractors, they could be liable for wage-and-hour claims filed by the contractors' employees. In a 2009 case involving a general contractor and its subcontractors, associations that hire unlicensed contractors can be deemed a "general contractor" and the unlicensed contractors as "subcontractors." It means that any unpaid workers will be considered employees of the association, and the association will be liable for their pay, even if the association has already paid the contractor. (Sanders Construction v. Cerda (2009) 175 Cal.App.4th 430.)

Licensed but Uninsured Vendors. Typically, as long as the vendor is licensed, the injured worker will remain the vendor's employee rather than the association's. Accordingly, the injured worker could proceed against the vendor either in a civil action or for workers' compensation. If there were a finding of dual employment, then the association would become liable. So long as the association is insured for workers' compensation, the injured worker's remedy would be limited to workers' compensation. If the association is not insured, the injured worker can pursue the association in civil court and under workers' compensation.

Contractor License Numbering

Anyone who contracts to perform work valued at $500 or more for materials and labor must hold a current, valid license in the specialty for which he/she is contracting. Section 7030.5 of the California Business and Professions Code requires that licensed contractors include their license number in “(a) all construction contracts; (b) subcontracts and calls for bid; and (c) all forms advertising, as prescribed by the register of contractors, used by such person.” A contractor's license can be verified through the Contractor License Board.

Contractor Insurance Required

See "Contractor Insurance Requirements"

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