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LIABILITY FOR UNLICENSED
AND UNINSURED CONTRACTORS
Even if an Association has no employees, it can
still have workers compensation liability exposure. In a recent decision, the
Court of Appeals held that an Association and its managing agent were both
liable to pay workers compensation benefits to an injured worker employed by an
uninsured and unlicensed contractor.
Background. The Montana Villas
Homeowners Association retained Pegasus Properties as its management company.
Pegasus hired Hruby, an unlicensed and uninsured contractor, to install rain
gutters on the Association's common areas. Hruby's employee, Freddy Aguilera,
was sent out to perform the installation work. Unfortunately, on the first day
of the job, a rain gutter touched a high voltage electrical wire, severely
injuring Aguilera. Aguilera filed a claim for workers compensation benefits
against the Association and its management company.
Decision. Since Hruby was an unlicensed
and uninsured contractor performing work for the Association, in
Heiman v.
Workers Compensation Appeals Board the court concluded that both the
Association and its management company were the employers of the injured worker,
and both were liable to pay him workers compensation benefits.
RECOMMENDATIONS:
As this case demonstrates, hiring an unlicensed and uninsured contractor is
never a good idea – even if the job is relatively small, and even if the
initially low cost of hiring an uninsured/unlicensed contractor is somewhat
tempting. If an employee of the unlicensed/uninsured contractor is injured, an
otherwise "small job" can end up being very costly. Therefore, associations and
their managers should verify that all of their contractors are properly licensed
and insured.
However, merely obtaining proof of the
contractor's license status from the
California Contractor's Licensing Board website, and obtaining insurance
policies/certificates at the time of signing the contract, do not guarantee that
those licenses and insurance policies will remain in effect , or that the
association will actually be notified of a cancellation. In light of the Heiman
case, all Associations (even those without any current employees) should contact
their insurance agents to make sure they have appropriate workers compensation
insurance coverage.
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Very truly yours,
Gary Kessler, Esq.
Adams Kessler PLC |
CLOTHESLINE UPDATE: Despite
negative recommendations from three County bar associations (Los Angeles, Orange
and San Diego as reported in last week's
newsletter), the San Francisco Bar supported Tina Rasnow's clothesline proposal,
and the California State Bar Conference voted 108 to 105 in
favor of the clothesline resolution. It appears it will now be headed for the legislature. |
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