Legal Question in Employment Law in California
My brother Bill, who is not a licensed contractor, has been working for a property owner (PO) Chris who buys and sells (i.e. flips) real estate properties in Southern Cal. He has done roofing, electrical, plumbing, drywall, painting, tile, on several properties over the course of about 3 months. The agreed verbally that compensation would be an older work truck that the PO owned, but there was no agreement as to how many hours or much work needed to be done. The PO Chris agreed to pay for expenses and occasionally would give him $50 to $100 in cash for gas, food, etc, but neither of them kept records. Recently Bill was working on an 11 unit motel that the PO had recently acquired and felt that he had done more than enough work to ask to be paid. (the truck). The PO Chris refused saying that he needed to work more before he would get paid. My brother responded that he was being taken advantage of and needed to be paid or he would not do any more work. Needless to say they got in a heated argument and did not talk over the weekend.
When my brother went to work the next Monday there were other workers there who told him that if he entered the property they were to call the police. It has been a week and the PO has told him that he doesn't owe him anything because he paid him over $4000.00 in cash during the past three months. My brother says the PO gave him ~$500 in cash in small amounts with no documentation with most of the money being used to pay for gas.
Earlier I had told my brother that it was not a good idea to work without having some sort of written contract. He responded that the PO was a "friend" and this was a good opportunity to get in with a real estate developer.
In addition to not paying employees the PO also fails to pull permits. My brother has worked extensively for the past two months on an 11 unit motel in Palm Springs and has not once seen a building inspector or any permits.
PO Chris:
- is not a licensed contractor
- does not hire any licensed contractors
- does all hiring of labor and buys all materials like an owner/builder but motel is a commercial property
In this case the laws that apply to my brother seem to be contradictory as to whether my brother is an employee or an independent (unlicensed) contractor. For the past 20 years he has worked for a guy (John) who owns rental apartments and houses as a maintenance man and in return lives on one of the properties rent free. The tools that he uses are owned by the rental property owner. He also does small home repair handyman jobs and does not take jobs over $500. He gets jobs by word of mouth and has never advertized or represented himself as a licensed contractor. He is an employee for the rental property owner John but does small handyman side jobs.
More recently Bill has been working for Chris in trade for a work truck that Chris owned. No agreement was made as to the amount of work or how many hours would be required. Bill felt that Chris was a "good guy" and they would come to agreement. Bill has worked for several months with little or no compensation thinking that he would recieve the truck in trade for his work. The many tools that Bill used are owned by the rental property owner John.
So what would be the best approach to take to get my brother compensation for the work he did for Chris?
3 Answers from Attorneys
Setting aside the fact that your brother has been very foolish to allow himself to be used by his "friend", there is a good possibility he would be regarded as an employee if he works under the direction and control of Chris. He could file a complaint with the DLSE, which would make that determination. If he is regarded as an employee, he can be awarded minimum wages for the time he worked. Of course, there will be an obvious evidence issue trying to prove the hours he worked, even though the employer is supposed to keep a record of those hours. I cannot predict the outcome, but his options are to either file a complaint with the DLSE or in small claims court.
As an unlicensed contractor [i.e. handyman] he can not sue for 'contract' amounts over the $500 limit that a 'handyman' can charge, and the property owner could theoretically sue for return of money paid to an unlicensed contractor. That doesn't seem likely in this case, since he was apparently working full time for the owner as a sort of employee, not just doing odd jobs occasionally. However, the risk of pursuing an employee 'wage' claim is that he could be reported to authorities as an unlicensed contractor and would risk prosecuted for that violation of the law. I think that is also unlikely, but possible. Tough position, tough choices. Personally, if I were him, I'd probably take the risk and file the wage claim.
I am a little surprised at my fellow attorneys concluding that there is a case to be made that Chris was an employer, rather than a party to an oral contract with your brother Bill. In spite of the lengthy question with lots of information, there is basically nothing in what you said that would allow a conclusive analysis of the employee/contractor issue, and the facts that are there on the issue point to Bill being a contractor to Chris. If Chris was a contractor, it would be much easier, but he is not. So the whole analysis of who controlled hours, means and methods, timing, order and schedule of work, tools, etc. is necessary to evaluate whether we have an employment or contract situation. The facts that you do provide, however, cut against Bill being an employee of Chris. Bill provides his own tools (even though they are borrowed from John). It sounds like Bill buys the materials and supplies and Chris reimburses him. It is not stated, but I get the impression that Chris doesn't do any of the work himself along side Bill. Does he directly supervise Bill, or is Bill just expected to get the job done? My guess, is that Chris just says something like, "those two rooms in the motel need retiled bathrooms," and Bill does it. If that is basically how it works, Bill is 98% sure to be determined to be a contractor, not an employee. In any case, if I were Chris and got a wage claim from Bill, the first thing I would do would be to sue Bill for the truck, and money paid, back. If Bill is found to be a contractor rather than an employee, he is guilty of contracting without a license. Although that is almost never prosecuted unless it's someone preying on little old ladies or something, the courts will and regularly do force unlicensed contractors to give back everything they have been paid for unlicensed work. Chris would have a good chance of winning that case.
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