Quote of the Day - Homeowners insurance excludes losses to automobiles.
Homeowners beware: if you hire an unlicensed worker to perform work that requires a license (take for example, roofing or virtually any other type of construction trade), then you better be prepared for the consequences.
Those consequences require you to purchase worker's compensation insurance and that worker is automatically transmuted into your employee. Without even considering the tax consequences (payroll withholding and taxes), those are some pretty steep consequences. Here's how today's case gets set up:
A homeowner hires his next-door neighbor to reroof his house. The neighbor apparently had done some roofing before, but was not licensed to do so by the State of California. The homeowner had a handyman who ensured the neighbor was doing the right work on the job, while the neighbor went out and hired other workers to assist in the reroofing efforts. After working four or five hours, the neighbor fell from the roof and was injured.
You guessed it. The neighbor sued the homeowner because perhaps not surprisingly, the homeowner didn't have worker's compensation insurance. The neighbor claimed he was an employee of the homeowner.
He's right. The California Supreme Court has made it clear if you hire someone who should hold a license to do the work you hired that someone to do, then you become that someone's employer.
The appellate court in Mendoza v. Brodeur had no trouble dispatching the homeowner's claims that he wasn't the neighbor's employer. The consequences of not having work comp for the homeowner are now that he has to face a lawsuit for personal liability.
The lesson here? Check out your neighbor's Contractor's license status on the Contractor State License Board's website, or buy work comp insurance if you want to be fully protected. Otherwise, you become the insurance company.