One Very Good Reason to Make Sure Your Contractor is Licensed

I know how the thinking goes . . .

Other than providing you with some marginal assurance that the work performed by your contractor (or subcontractor, in the case of general contractors) will be up to snuff, why do you give a hoot whether your contractor is licensed? After all, it’s your contractor who bears the risk of the California Contractors State License Board taking enforcement action against his or her contractor’s license. And it’s your contractor who takes the risk that he or she may be found to have waived the right to be paid for the work he or she performed, or worse still, be required to disgorge all sums that were paid to him or her under dreaded Business and Professions Code section 7031.

Fair enough. Let them be hoist by their own petard.

But let me give you pause to reconsider. And the reason is this: You may be found liable for the actions of your unlicensed contractor. It’s an exception to the Privette doctrine, which we’ve talked about before. The Privette doctrine – named, like most legal doctrines, after a case of the same name, Privette v. Superior Court (1993) 5 Cal.4th 689 – holds that a property owner or general contractor is not liable for injuries to employees of a subcontractor absent an affirmative act or omission by the property owner or general contractor that gives rise to the injury. In short, if you didn’t do anything (or fail to do something) that resulted in the injury, you’re not liable.

But there are exceptions, as one unfortunate property owner found out in the next case.

Blackwell v. Vasilas

In Blackwell v. Vasilas, Case No. D067239, California Court of Appeals for the Fourth District (January 26, 2016), Randall Blackwell was at the top of a ladder while installing rain gutters at an investment property owned by Ray Vasilas. While at the top of the ladder, Blackwell stepped onto scaffolding erected by another contractor, Enrique Gomez Jimenez, a stucco contractor, when the scaffolding suddenly collapsed causing Blackwell to fall onto a pile of bricks approximately 10 feet below.

Blackwell sued Vasilas and Vasilas in turn sued Gomez. Gomez, however, did not participate in the litigation, which I presume was because Gomez never answered Vasilas’ cross-complaint (which reminds me of one of the truisms I’ve found in litigation: You may not be the biggest target, but if you’re the only target, the sights will be on you).

Vasilas filed a motion to dismiss the case arguing that under Privette he had no liability because Blackwell had failed to show: (1) that the scaffolding collapsed as a result of anyone’s negligence; (2) that Vasilas retained and exercised any control over the way Blackwell did his work; or (3) that Vasilas had directed Gomez to use scaffolding. [Note: notice that Vasilas did not argue that he was not liable as a matter of law, but rather, that Blackwell had failed to show that Vasilas was liable as a matter of law. This turns out to be important].

In response, Blackwell argued: (1) that Gomez’s work involved a “special risk of harm” (i.e., the erection of scaffolding) that Vasilas failed to recognize, and in failing to ensure that the scaffolding was properly erected, breached a duty of care to Blackwell; and (2) because Gomez was an unlicensed contractor, Gomez was deemed to be an employee of Vasilas. As an employee, Blackwell argued, Vasilas was responsible for Gomez’s improper erection of the scaffolding.

The trial court agreed with Vasilas and dismissed the case and Blackwell appealed.

The Court of Appeal Decision

On appeal, the Court of Appeals focused on Labor Code section 2750.5 which provides that there is a “rebuttable presumption” that a worker performing services for which a contractor’s license is required is an employee not an independent contractor:

There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required . . ., or who is performing such services for a person who is required to obtain such a license is an employee rather than independent contractor.

Section 2750.5 goes on to list three factors used to rebut the presumption that an individual was an independent contractor rather than an employee:

(a) That the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for.

(b) That the individual is customarily engaged in an independently established business.

(c) That the individual’s independent contractor status is bona fide and not a subterfuge to avoid employee status. . . .

. . . [and that] any person performing any function or activity for which a license is required . . . shall hold a valid contractor’s license as a condition of having independent contractor status.

Finally, Section 2750.5 provides that in addition to factors (a), (b) and (c), if a person was required to hold a contractor’s license, that individual will be deemed an employee unless that person held a valid contractor’s license:

In addition to the factors contained in subdivisions (a), (b), and (c), any person performing any function or activity for which a license is required . . . shall hold a valid contractors’ license as a condition of having independent contractor status.

Because Gomez performed work in which a contractor’s license was required, held the Court of Appeals, Vasilas had not rebutted the presumption that Gomez was an employee rather than an independent contractor, and therefore, Vasilas had failed to meet his burden of showing that he was not responsible for erection of the scaffolding that collapsed and injured Blackwell:

To establish that Gomez was an independent contractor (as opposed to Vasilas’s employee), in addition to presenting evidence of the requisite factors to determine independent contractor status under subdivision (a), (b) and (c) of Section 2750.5, Vasilas also was required to present evidence that Gomez was licensed. . . . Not having presented any evidence as to Gomez’s licensure – either that Gomez had the required license or that no license was needed for the services Gomez performed – Vasilas did not meet his initial burden of establishing that Gomez was an independent contractor. For this reason, the evidentiary burden never shifted to Blackwell to establish the existence of a triable issue of material fact.

Conclusion

So there you have it. One particularly good reason why you should check to ensure your contractor is properly licensed.