If Your Household Worker or Contractor is Injured, Will You Be Liable? (Part II of Two Parts).
Last month (See Related Links), we reviewed a case in which a worker for an unlicensed and uninsured contractor sued the contractor’s customer after he was injured on the job. The case stirred anew the question of liability on the part of the property owner. Here, attorney Peter N. Brewer examines the legal background against which the case was cast.
THE HISTORY: Until the aberrant decision in Fernandez v. Lawson that we discussed last month, this area of the law was fairly settled. To understand it we briefly explore two statutes:
Labor Code § 2750.5
Labor Code § 2750.5 says that anyone performing work for which a contractor’s license is required, or working for someone who is required to be licensed, is presumed to be an employee of the hirer unless certain criteria for independent contractor status are met. The first criteria for being deemed a independent contractor instead of an employee is that the contractor must hold a valid contractor’s license. Thus a worker without a contractor’s license, or working for someone without a contractor’s license, cannot by law be an independent contractor, and must be presumed to be an employee. Thus Labor Code § 2750.5 creates a rebut table presumption that an unlicensed contractor and his or her employees are employees of the homeowner, and the presumption cannot be rebutted if the contractor doesn’t have a valid license because he doesn’t meet the first criteria for being an independent contractor.
Labor Code § 3352
Labor Code § 3352 lists some exceptions to the definition of an employee, thus exempting the hirer from liability to provide worker’s compensation benefits if the worker or contractor fits one of the exceptions. Subsection (h) excludes “casual residential employees” from the requirements. A casual residential employee is anyone who worked or contracted to work less than fifty-two (52) hours in the ninety (90) days preceding the injury, or anyone who earned less than $100 from the hirer in the preceding ninety days.
A brief look at four cases will illustrate these two statutes, the interaction between them, and how the courts have reconciled them with one another in the past.
Furtado vs. Schriefer
In 1991 a case called Furtado vs. Schriefer, was brought by a house painter, Furtado, who was injured while painting Schriefer’s house. Furtado was not licensed, and so he contended that under Labor Code § 2750.5 he could not qualify as an independent contractor and was therefore necessarily Schriefer’s employee. Schriefer contended that the Lab.C. § 3352(h) exclusion from employee status applied to unlicensed contractors. The trial court held that Lab.C. § 2750.5 preempted Lab.C. § 3352(h), and therefore Furtado was Schriefer’s employee and not an independent contractor. The Court of Appeal stated that no previous court had considered the interaction between Lab.C. § 2750.5 and Lab.C. § 3352(h), but stated that the California Supreme Court had indirectly suggested that the § 3352(h) exclusion applied to the § 2750.5 presumption of employee status, and so sent the case back to the trial court for a determination on the issue of whether Furtado is excluded from status as an employee by § 3352(h). Since there was no further appeal it is unknown what the result of the further trial proceedings were. [Only appellate decisions are published, not trial court decisions].
Mischler v. WCAB, Gary Chagnon
In 1994 there was a decision of the Court of Appeal in a case called Mischler v. WCAB, Gary Chagnon. Chagnon had been working on a remodeling project at homeowner Mischler’s house for more than a month at the time of his injury. He had first worked under James Miller d.b.a. Miller Contracting, a licensed contractor. Homeowner Mischler grew impatient with Miller’s job progress, terminated him, and contracted with Robert Kissel d.b.a. Rob’s Carpentry, an unlicensed and uninsured contractor, to complete the job. Kissel retained Chagnon to continue working on the job and Chagnon was immediately injured. The Worker’s Compensation Judge found that Chagnon was an employee of both Kissel and Mischler (which leaves Mischler on the hook because Kissel was uninsured).
Mischler appealed on the basis that Chagnon had worked less than fifty-two (52) hours under the new contract with Kissel. The appeal was denied. Labor Code § 2750.5 provides that a worker performing work for which a license is required is presumably an employee. Chagnon met that criteria. Labor Code § 3352(h) excludes from “employees” those workers who have not worked fifty-two (52) hours in the last 90 days. Chagnon was injured on his first day under the new contract with Kissel, but the contract was for the same work that Chagnon had been doing under the contract with Miller for more than a month. Because it was a continuation of the same work, he was deemed to have worked more than 52 hours within the preceding 90 days. Therefore he was an employee, and not within the § 3352(h) exemption.
Sepanshirabad vs. WCAB, Bet’Poulos
Then in 1995 injured worker Sepanshirabad brought suit against homeowner Bet’Poulos for injuries Sepanshirabad received while trimming trees at Bet’Poulos’s residence. Sepanshirabad did not have a contractor’s license. So by the statutory presumption he was an employee of Bet’Poulos and was entitled to worker’s compensation benefits. However, he had neither worked, nor contracted to work, for fifty-two (52) hours at the time of his injury or within the 90 days before the injury.
Injured worker Sepanshirabad urged that under Lab.C. § 2750.5 he could not be found to be an independent contractor (and thus liable for his own insurance benefits) because he was unlicensed and thus necessarily an employee of Bet’Poulos. The Court found that Lab.C. § 3352(h) is the threshold that must be met before the rebuttable presumption of Lab.C. § 2750.5 comes into play. Therefore Sepanshirabad was excluded from the definition of employee and Bet’Poulos was not his employer and not responsible for his compensation insurance.
Duncan vs. WCAB, Sheehan
Then in 1998 the case of Duncan vs. WCAB, Sheehan was decided. Decedent Pastor Fariar fell out of a tree and died while working as a tree trimmer for William Sheehan, d.b.a. Reliance Tree Service, an unlicensed and illegally uninsured tree trimming business. The decedent’s widow sought worker’s compensation benefits, and included the insured homeowner and the Uninsured Employer’s Fund as defendants. The Worker’s Compensation Judge found the defendant homeowner and Sheehan were employers of decedent Fariar, but the homeowner was excluded from liability because the decedent’s employment was casual residential employment under Lab.C. § 3352(h).
The Uninsured Employer’s Fund filed a writ urging the Court of Appeal to overturn the Worker’s Compensation Judge. The writ was denied, and so the Lab.C. § 3352(h) exemption from the definition of employee overrode the Lab.C. § 2750.5 presumption of employee status. This remained essentially the settled state of the law until the 2002 decision in Fernandez v. Lawson, the first case discussed above.
THE IMPLICATIONS: When you hire a worker at your house for a one-time job of casual domestic work lasting less than fifty two (52) hours they are excluded from the Labor Code definition of employee. However, if they are unlicensed and performing work for which a license is required, the status becomes less clear, although several cases suggest that the Labor Code § 3352(h) exception prevails over the Labor Code § 2750.5 presumption.
As to longer term workers, such as a cook, housekeeper, child care worker, or gardener, the Labor Code definition of “Employee” includes any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the care and supervision of children, or whose duties are personal and not in the course of the trade, business, profession, or occupation of the owner or occupant, unless that person is excluded under the “52 hours in 90 days” exclusion of Lab.C. § 3352(h).
Insurance Code § 11590 provides that every homeowner’s comprehensive personal liability insurance policy issued or renewed in California after 1977 is required to have, or will be imputed to have, coverage for worker’s compensation benefits for “Employees” as defined in the Labor Code, if they are not covered by other compensation insurance.
However, when you hire someone for a longer-term project, such as a home remodel, pool construction, or any job not “incidental to the ownership, maintenance, or use of the dwelling” you must ensure that such persons are properly licensed and insured. If they are not, you could become their employer and be responsible for the equivalent of worker’s compensation benefits in the event anyone is injured.
OUR SUGGESTION: You absolutely must check on the license status of any contractor you hire before they commence work, and insist on proof of current and valid worker’s compensation insurance. Keep a photocopy of the insurance certificate and a printout of the contractor’s license status. The license status of a contractor can be checked on the website of the State Contractor’s Licensing Board
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