When is a Property Owner also an Employer?

By Laurie Murphy

If a tree falls in the forest, and no one is around to hear it, does it still make a sound? What if an unlicensed tree trimmer falls out of the tree, and the forest is your property? Are you liable?

If you’re not careful, a $200 tree-trimming job can turn into a five-figure plus lawsuit. When landscapers, plumbers, handymen, etc., are injured while working in your home or on your commercial property, your liability depends on whether the law recognizes them as an employee or an independent contractor. Section 2750.5 of the California Labor Code states that any unlicensed worker performing a job for which a contractor’s license would be required is viewed by the law as an employee of the hirer, rather than an independent contractor.

In short, any unlicensed and uninsured worker you pay to work on your home can be legally viewed as your employee, thus obligating you to provide worker’s compensation benefits.  And most homeowners' insurance policies will cover such claims.

Luckily, the Labor Code carries a few exemptions that may protect the average homeowner in these cases. Section 3352 (subsection h), includes an exclusion for “casual residential employees.” This is defined as any employee that has worked for the employer for less than 52 hours, or earned less than $100, in the 90 days preceding the accident.

Though many rulings have found this exemption to trump Section 2750.5, the best way to avoid a potential legal battle is to hire licensed and bonded contractors in the first place.  Paying a handyman or landscaper “under the table” might save money, but the liability implications really aren’t worth it.  It certainly is not for owners of commercial property and apartment buildings whose insurance policies generally exclude claims by unlicensed workers because they simply don't provide workers' compensation insurance.  The property owner in such a case can be hit with a double whammy – getting penalized for not carrying workers' compensation insurance and having to defend himself and pay the injured worker.