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HomeOwner22

Risk of worker's comp claim as a homeowner?

7 posts in this topic

Hi!

 

I am in the finishes stages of a major remodel and am directly hiring contractors to do things like painting, flooring, kitchen cabinet installation, and other work. I frequently receive bids on thumbtack from unlicensed contractors and would like to better understand the risks I would be taking by hiring them. Beyond the obvious risks like the worker disappearing with the deposit, performing subpar work, not meeting code etc. the risk of a worker's comp suit is one I have not been able to fully understand. 

 

Question 1: How likely is it that a lone worker could be classified as a an employee?

 

I do not have worker's comp insurance, and, after a week-long discussion with my State Farm insurance agent, I have determined that I am NOT able to purchase worker's comp insurance from them because I am homeowner, not a business. I believe this means that if a worker were to be classified as an employee I would be at major risk of a worker's comp claim. Is this right?

Assuming it is, I have also read that a worker's status as an independent contractor an employee would be determined based on 11 criteria, described in this CA govt site: https://www.dir.ca.gov/dlse/faq_independentcontractor.htm

 

  • 1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
  • 2. Whether or not the work is a part of the regular business of the principal or alleged employer;
  • 3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
  • 4. The alleged employee's investment in the equipment or materials required by his or her task or his or her employment of helpers;
  • 5. Whether the service rendered requires a special skill;
  • 6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
  • 7. The alleged employee's opportunity for profit or loss depending on his or her managerial skill;
  • 8. The length of time for which the services are to be performed;
  • 9. The degree of permanence of the working relationship;
  • 10. The method of payment, whether by time or by the job; and
  • 11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

 

Bullets 1, 2, 4, 5, 6, 7, 9, 11 all point toward IC. However, bullets 3, 8, and 10 could potentially point toward employee. What is the likelihood of the worker being found to be an employee in the following example? 

a - I hire an unlicensed worker for a job that will take 120 hours and we sign a contract which states the worker is an independent contractor, as well as some basic terms around price, completion date, and a scope of work.

b - I pay him hourly

c - I supervise his work daily and ask for daily status reports. 

d - I provide some materials and tools (but not all)

e - I require him to finish by an agreed up on deadline (which will functionally require him to work full time at my house)

f - I may hire him for other jobs in the house.

 

Question 2: If a foreman I hire does not have workers' comp and one of the foreman's employees is injured, I believe I am at risk because the employee would sue his boss and me with a worker's comp claim. Can I avoid this risk by having a direct contract with each individual in my house that prevents them from bringing in their own workers?

 

Thanks in advance for your help!

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In the circumstances you are describing, it is about 99.8% certain that you will have IC's and not employees, and the only reason I'm not saying 100% is that I don't like superlatives.  It's the totality of evidence that determines IC vs. employee, not any one point.

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Thanks cbg - that makes sense. I am thinking the real risk is question 2, where the employees of the foreman clearly are employees and if the foreman doesn't have workers comp the employees can come after me. 

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1 hour ago, HomeOwner22 said:

Thanks cbg - that makes sense. I am thinking the real risk is question 2, where the employees of the foreman clearly are employees and if the foreman doesn't have workers comp the employees can come after me. 

 

They have to be YOUR employees to come after you for workman's comp.

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Hire a bunch of unlicensed contractors for a major remodel and the question of employee vs. IC is the very least of your problems. It's like standing on the deck of the Titanic and asking if you should wear the green shirt or the blue.

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On 6/9/2018 at 3:42 PM, HomeOwner22 said:

I frequently receive bids on thumbtack from unlicensed contractors and would like to better understand the risks I would be taking by hiring them.

 

I don't know what "bids on thumbtack" means, but using unlicensed contractors for what I assume is a home remodel is beyond stupid for lots of reasons.

 

 

On 6/9/2018 at 3:42 PM, HomeOwner22 said:

the risk of a worker's comp suit is one I have not been able to fully understand. 

 

Question 1: How likely is it that a lone worker could be classified as a an employee?

 

I don't really understand what the question means or what "lone worker" means.  I'm also not sure why you would think you might have risk of a "worker's comp suit" (whatever exactly that means).

 

 

On 6/9/2018 at 3:42 PM, HomeOwner22 said:

I do not have worker's comp insurance, and, after a week-long discussion with my State Farm insurance agent, I have determined that I am NOT able to purchase worker's comp insurance from them because I am homeowner, not a business. I believe this means that if a worker were to be classified as an employee I would be at major risk of a worker's comp claim. Is this right?

 

Frankly, I think it's unlikely, but define "major risk."  In the abstract, virtually anything is possible.

 

As for the rest of it, once your house falls down because you hired incompetent and unqualified workers, will any of this really matter?

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Thumbtack is basically like Craigslist or any other online bulletin board or classified ad site for finding vendors for various services. There are companies and Joe Schmoes who just hang out their electronic shingle so to speak. Logically, if hiring a company the odds are greater that they are licensed, bonded, insured, and there are assets in the event of a major snafu. With Joe Schmoe, your "lone worker" who does this on the side, or under the table, you have virtually no recourse if anything goes wrong.

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