Talented contractor, but not licensed/insured

[Vipergrün]

I think I know ya'lls response, but will toss it out there anyway.

Getting ready to do a small bathroom remodel. Holy cow it's expensive, but I work from home and don't have the luxury of time to do it myself, which I normally would. This a 5x8 bath, basically a rip and replace. Re-bath wants 17-20K WTF? For middle of the road materials, including 2 new doors, I'm in for ~3K. Other estimates for labor have been between 8-13K. Staggering.

I've been referred a super nice, trustworthy and hardworking guy who does really good work, and have seen a couple examples of his work. He just got his green card, is not licensed or insured, but has been doing this for a while.

For labor, he comes in at 1/2 to 1/3 the cost of others, but am I looking at too much risk in the event of an injury or code issue?

Next call is to AAA, which carries my condo insurance, to see what they have to say.

Thoughts?

Thanks!
-Brad

[sammyg2]

no

[Vipergrün]

Originally Posted by sammyg2

no

That's terse..LOL

NO as in "don't do it" or NO, not too risky?

[Sooner or later]

No, don't do it.
No, it is too risky.

[sammyg2]

run forest run

So he's a good guy, and due to no fault of his own or yours, he falls while working on your property and and gets hurt badly.
He can't work for a while, he can't support his Familia.
He is scared.
Then a non-scrupulous lawyer-type catches up to the ambulance and says "hey, I know how to solve all your problems".
Next thing ya know he get awarded a couple mil, well above what you are insured for, so you looose everything including your condo. But ya still gotta pay back the loan!

He must have his own insurance or he does not pick up a tool on your property.

[id10t]

Here in Fl. a home owner can act as the supervisor/contractor and hire labor. Pull appropriate permits, make sure the guy does it to code, and you are good. This works well with you working from home....

[Dantilla]

Originally Posted by Vipergrün

I've been referred a super nice, trustworthy and hardworking guy ....

For a normal construction site, I use nobody who isn't either an employee, or a licensed & bonded subcontractor.
For a small remodel in the home, I may use an unlicensed guy if it was a friend I'd known for a long time.

For someone you've never met? Just a referral? I wouldn't take that chance.

[freeform911]

Originally Posted by id10t

Here in Fl. a home owner can act as the supervisor/contractor and hire labor. Pull appropriate permits, make sure the guy does it to code, and you are good. This works well with you working from home....

Same as South Carolina....biggest think are codes...make sure you know what the cuty expects...

[frosty2]

If you’ve seen his work and no he’s trustworthy as well as know the person that referred him I would not have a problem with him.

[LWJ]

No - if he is running the job.

Yes - if you can have him help you on YOUR job.

[Vipergrün]

Originally Posted by LWJ

No - if he is running the job.

Yes - if you can have him help you on YOUR job.

Can you clarify?

Any thoughts on a 'hold harmless' contract?

[nota]

self insure as the biz guy with lic and ins costs way tooo much

I just did my roof
roofers wanted way too much
and would NOT do the job the way I wanted WITH multi layers of ply screwed and glued
doubled and lapped steel ect
as I hate betting I am going to lose [ins] I did the job with known uninsured help
and built a cat 5 proof roof for less then the bids that did not want to go stronger then ''CODE''

as always ymlmv

[Zeke]

Being a now retired contractor for nearly 40 years with some odd 50 years in the trades (the difference being licensed vs. unlicensed) I can tell you that not once in all that time have I been asked about a license. Did I offer the information? Yes, but never on the phone making the appointment to see the proposed work. Was my lic info in my advertising? Yes. Do people read the advertising? Not much. They see the hook or the deal and make their decision to call based on that. (I used to advertise discounts.)

Note: over 50% of my work was by referral up to the Great Recession when I pulled all advertising as it no longer pulled in any leads. From then on it was 100% referral until a month before my shoulder surgery in January when I stopped taking calls.]

The point is, a lot of contractors are plain lousy. There was a segment on the local news last night about these 'home improvement' booklets that come in the mail. The complaints against the mass advertisers that are so called contractors ran well against hiring anyone in that category.

If you find someone who is recommended and do a modicum of due diligence, you could very well be safe in working with an unlicensed. The main thing to always thing about is the fact that many in the trades who are good at what they do did not take accounting in college. They aren't always very good business persons.

Don't pay up front. Period. A 10% or $1000 deposit (whichever is less) is the CA Contractors State License Board law. That means if you sign up for a $100,000 job, you put down a grand and no more. The draw for payment must remain at 95% of completed work at any given time (more law).

Guys that come in and ask for material money up front meed to be scrutinized. Sure, the small fry doesn't want to use his rent money for your materials and that's understandable. Go to the supply house, lumber yard, home box store, whatever, with your "contractor" and buy the stuff yourself if necessary.

Me, I used my money from beginning to end on every job. Never, ever took a deposit more than allowed and most of the time I was out of pocket thousands before I saw a check. That right there builds a hell of a lot of confidence.

[Zeke]

Originally Posted by Vipergrün

Can you clarify?

Any thoughts on a 'hold harmless' contract?

Doesn't exist in the world of contracting.

[sammyg2]

Unlicensed contractors are a hidden risk for California homeowners
by Julian Pardo de Zela
Mar 11

Real estate agents are often advised to create a network of contractors that they can share with clients. In California, however, that referral network could cause problems for new homeowners.

When a California homeowner hires a contractor to work on a home, the contractor is ordinarily considered an independent contractor. This legal status means the homeowner generally will not be liable for accidents or injury to the contractor or any workers, unless the homeowner directly contributed to the incident.

However, a homeowner may be tempted to hire an unlicensed contractor to save money on a home construction project. This is risky. The interplay between several sections of the California Labor Code may result in the inadvertent transformation of the contractor or its worker into an employee of the homeowner. This change to the employment relationship opens up the homeowner to a potential lawsuit for personal injuries. Here’s how this can happen, and how your clients can avoid it.

An appropriate contractor’s license

The California Contractors’ State License Law (“License Law”) was enacted to protect the general public from incompetence and dishonesty by those who provide construction services in this state. The law provides a comprehensive licensing scheme that requires all contractors doing business in California to possess a valid contractor’s license unless they meet a few narrow statutory exceptions. There are more than 40 types of licenses, primarily dealing with electrical, roofing or plumbing issues. A contractor must have the license appropriate to the work to be done. A contractor with one license cannot use that license for an activity that requires a different license. A “contractor” is broadly defined and determined by the conduct, activity or work that a person undertakes or offers to undertake. An inquiry to the Contractors State License Board may confirm whether a contractor is appropriately licensed.

The License Law applies to the provision of “home improvement goods.” These are goods that are to be so affixed to real property as to become a part of real property. Examples include carpeting, fencing, air conditioning and heating equipment, and termite extermination. The law applies to gardeners, including tree trimmers and those who perform tree removal. The law also applies to interior decorators, painters and an installer of sprinkler systems. The License Law is not limited to the structure of the home itself. It extends to work on driveways, swimming pools, hot tubs, porches, garages or land that is adjacent to the home.

The License Law does not apply to any construction, alteration, improvement or repair of personal property. Therefore, the repair of televisions and computers does not require a license. The law also does not apply to the sale or installation of items that are finished products, materials or merchandise and that will not become a fixed part of the home. For example, a supplier who sells a patented prefabricated kitchen will not be required to have a contractor’s license. Similarly, a supplier who delivers finished cabinets to a home and performs no installation work is not required to have a license. The law also does not apply to those who engage in cleaning work, such as residential cleaning and chimney sweeping.

The homeowner’s liability

Generally, all businesses in California that have employees must purchase a workers’ compensation insurance policy or be self-insured. The policy provides covered employees with medical and wage replacement benefits for injuries that arise from workplace accidents.

Ordinarily, a worker who sustains an on-the-job injury may only seek damages within the workers’ compensation framework. It is a no-fault system, meaning that injured employees need not prove the injury was someone else’s fault in order to receive workers’ compensation benefits for an on-the-job injury. In exchange for these benefits, the worker relinquishes his right to sue his employer for the tort of negligence.

For example, a homeowner hires a cleaning company to clean a home. A worker hired by the contractor injures his back while lifting a heavy object on the job. That worker will be covered for medical expenses and lost wages through the contractor’s workers’ compensation. The worker will be unlikely to prevail in any claim against the homeowner. This is because the cleaning company is an independent contractor of the homeowner, and the injured worker is an employee of the cleaning company. Generally, when an employee of an independent contractor is injured on the job, that employee cannot sue the entity that hired the contractor for work (Privette v. Superior Court). The rationale for this is that workplace injuries are covered by workers’ compensation insurance, the cost of which is included in the contract price paid by the hiring entity. The cleaning company compensates its employee for his injury by way of the workers’ compensation system, and that worker has no recourse against the landowner.

But what if the homeowner hires an unlicensed contractor to perform work that requires a license, and the contractor or its worker is injured? There is a rebuttable presumption that an unlicensed person who performs work for which a license is required is an employee and not an independent contractor. The unlicensed person may claim benefits as an employee under the workers’ compensation statute. But an employee may not be covered for workers’ compensation because they have not worked a certain minimum number of hours, or because the employer has not secured appropriate insurance coverage.

In that case, the worker is no longer limited to workers’ compensation for his damages. He may sue the employer (homeowner) directly for significant medical costs and a lifetime of inability to work. (Rosas v. Dishong (1998) 67 Cal. App. 4th 815.)

The employer (homeowner) carries the burden of determining whether a worker is licensed. The homeowner may be liable even if he or she was unaware the contractor was unlicensed. Homeowners often are uninformed about the consequences of hiring unlicensed contractors and assume their homeowners insurance policy covers injury to unlicensed contractors. A homeowner should confirm he has sufficient homeowners insurance to protect against an unlicensed contractor.

Better yet, the homeowner should hire only a contractor who holds a license appropriate to the work to be performed. That way, the homeowner avoids unwittingly becoming an employer, and a target of a personal injury lawsuit.

If you sell real estate in California and refer contractors to your clients, make sure that any contractors you recommend are fully licensed.

https://www.inman.com/2015/03/11/unlicensed-contractors-are-a-hidden-risk-for-california-homeowners/

[peppy]

Originally Posted by id10t

Here in Fl. a home owner can act as the supervisor/contractor and hire labor. Pull appropriate permits, make sure the guy does it to code, and you are good. This works well with you working from home....

That's what we did on our addition we are doing. I hired a carpenter not a contractor.

[Zeke]

Sam, that article is wrong in only one minor fact, otherwise a very good article. That is unless the law has changed since I took the test to become a general contractor. The article states, " A contractor with one license cannot use that license for an activity that requires a different license."

Not true. A contractor with a C or D specialty license cannot advertise or pursue any activity directly outside of the license issued. However, if additional work outside of the particular license becomes "incidental and/or supplemental" to complete the job, the licensee may do so.

For instance, a plumber has a re-pipe job and has to open up walls, some interior and some exterior. He may do the patching and painting if he wants. Otherwise, 3 additional contractors would be required.

But, a swimming pool contractor can't build a required fence because that is considered not part of swimming pool construction. Swimming pool contractors normally use specialty contractors making them a sort of limited general contractor, e.g., licensed electricians and concrete contractors to name a couple.

It's damn confusing and I'm afraid a few specialty ("C") contractors tread on thin ice.

Now let's look at the bathroom the OP is considering. If a general takes the job, he can do almost the whole thing in-house. Or he could hire all the subs required from framing to flooring. That would make that job either very high in cost or not profitable. Something has to give somewhere.

Since a plumber could ostensibly do the drywall, he couldn't do the tile. So, he cheats and does more that the strict law would allow. This is why unlicensed multi talented persons are in demand. Or licensed folks who will work outside the box. It's not always because so called 'handymen' are to be considered jack leg incompetents.

Jobs like this fall into a blackhole in the world of contracting.

[Zeke]

There is also the statement, "But an employee may not be covered for workers’ compensation because they have not worked a certain minimum number of hours..."

I question that. AFAIK, there is no minimum amount of hours worked, covered or not, that are required for WC benefits. Not my area of expertise.

There is so much to the CA contractor's license that most only are aware of the tip of the iceberg and that includes licensee's. I mean there is a statute that says licensed contractors may not "associate" with unlicensed workers not in employ. WTF? I can't go to lunch and talk shop with unlicensed Joe the Handyman? Or does it mean I can't do any kind of transaction with Joe involving work requiring a license? (Likely the intent of the law.)

I can tell you I have had "Joe" come out and haul away siht a lot. The law says "Joe" needs a D-63.

Yeah, right. I'll get right on that.

[Vipergrün]

Thank you all for your feedback. Honesty, I am less concerned about license, but much more so insurance and liability, but seems they go hand in hand

[Zeke]

Originally Posted by Vipergrün

Thank you all for your feedback. Honesty, I am less concerned about license, but much more so insurance and liability, but seems they go hand in hand

Insurance is overrated if you ask me. If a claim is filed the response will likely make your head swim. And stop your job for months. What are your concerns? If your worker, or whatever you want to classify him starts a fire, what insurance will cover that? His, yours? If you are really concerned, pay the 20K that you were quoted. That was the price because that's the reality of the situation. As I said, this is not a profitable job for a contractor with ALL his ducks in a row. He has too much overhead to be bothered.

This is where the problem lies: each sub has his own liability and WC to pay for. For a small time contractor in CA, this is probably about $1000 to 1500 a month. You have, well let's see, demo, rough plumbing, some electrical, carpentry (new doors, vanity, ect.), drywall and/or plastering, tile or tub surround, floor, painting, maybe a mirror involving a glass company. Pick and choose amongst that list and add or subtract.

You don't have everything right down to the fan upgrade on site so each contractor might have to shop and supply. Times all that by a rate that will cover expenses and overhead and you'e looking at anywhere from 80 bucks an hour to double that for an employee in a company truck. Add in the cost of materials and the picture starts to develop.

AFA materials are concerned, I don't like anything that the HD sells unless it's a box of nails and even they aren't all that good, and your typical lumber yard has the same crappy nails these days. Let's take plumbing fixtures for instance, Kohler sells a fine line of fixtures, but their spec stuff for the big box store is not the same as you will find at the plumbing supply. Plus, I can buy at a better price at the PS for a better product for less. But it takes time. So I sell it to you at retail, which is more than the BB price. Then you think I'm boning you.

And on and on. Truth be known, I'm sick of the remodeling business that I've loved for nearly all my adult life. As Chuck Berry said, "Too much monkey business."

I ran a $300,000 renovation job at the end of 2017 and into '18. It's documented here on Pelican. I had trouble with half of all the subs that showed up. Part of that was because the owner stepped in with someone he found at a 'better' price now and then and he ended up paying for that, I can assure you. My people were much better and more reliable. They weren't always the best deal on the table.

Pay the money to the best fully insured and equipped general contractor and walk away if you have any doubts. If he doesn't perform, hold back payment and make him do it right. He will if he's credible (if he needs to in the first place).

Or save money and put your skin in the game.