Legal Question in Construction Law in California

Re: Non-licensed laborers

This question is far more complex than you might realize. The following is a great simplification. If you are not going to use a licensed contractor, you really need to seek a lawyer who specializes in employment law.

Nevertheless, here is the basic rule: workers must either be employees of the owner or they must be licensed contractors in the field in which they work. There are some minor exceptions, the key one being that for projects under $500, the worker needn't be an employee or licensed. You can't, however, split up a project to avoid the $500 limit. There is also a silent risk lurking when you hire an unlicensed person for a minor job. If that person is injured, depending upon the number of hours worked and how much he/she has been paid, you can be sued in tort for that injury. For the most part, you avoid this risk with licensed contractors or if you make sure that the person is an employee covered by worker's compensation. I stress that I am greatly simplifying all the permutations.

If an unlicensed person is working for the owner of the property, for all practical purposes, he is an employee, must be paid an hourly wage, and the employer/owner must pay employment taxes, usually worker's compensation, etc. There are some cases that say that temporary labor agencies needn't be licensed, but whoever hires them would either have to be an owner/builder or licensed for the work being performed. Again, this is a rather drastic simplification of the entire situation.

Remember, also, that the HOA has special duties to the homeowners and using a temporary labor agency without assuring adequate supervision could come back to haunt you. The FAR better choice is to hire a licensed contractor against whom you will have recourse should the repairs be done improperly. And, believe me, unlicensed workers do things wrong far more often than licensed contractors. This isn't to say that there aren't bad contractors, merely that you increase the risk substantially by going with unlicensed people. By hiring a licensed contractor, you also avoid a host of other liability issues.