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Licensed general contractors that do not have worker's comp?

T

Tommy2000GT

Golden Member
My plans were approved by the city and I'm in the process of hiring a general contractor to remodel my house. Two of them who are bidding have a valid CA contractor license which I verified through the CSLB website. But it also shows their company doesn't have any worker's comp insurance because they have no employees so they're exempt from worker's comp. But one told me he would have 3 people working on my house and the other one said he would have 4.

It sounds like they're lying to CSLB to cheap out on carrying worker's comp. But Buildzoom shows they pulled a lot of permits and done many projects over the years.

Their prices are good but my instinct tell me not to use them.

Do a lot of small construction companies do this?
 
Uppsala9496 said:
The are probably hiring subcontractors.
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The ones without workers' comp said they would be doing the demolition, structure work, plumbing, electrical, and finish work with their people. The way it sounds like they do have a crew of people working for them.
 
If the contractor doesn't have worker's compensation to cover his employees...don't hire him. YOU ((and your homeowner's insurance) will get stuck paying if any of his employees get hurt.
Contact the CSLB and talk to them. (if you can get through...otherwise, send them an email.)
 
BoomerD said:
If the contractor doesn't have worker's compensation to cover his employees...don't hire him. YOU ((and your homeowner's insurance) will get stuck paying if any of his employees get hurt.
Contact the CSLB and talk to them. (if you can get through...otherwise, send them an email.)
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I'd definitely inform the CSLB. That's why the guy gets so much work - he's violating the law so that he can cut corners; and cutting those corners screws over the customer when something goes wrong, not the employer.
 
The owner probably doesn't have any employees working for him. They're probably all contract workers hired on a per project basis.
 
BoomerD said:
If the contractor doesn't have worker's compensation to cover his employees...don't hire him. YOU ((and your homeowner's insurance) will get stuck paying if any of his employees get hurt.
Contact the CSLB and talk to them. (if you can get through...otherwise, send them an email.)
Click to expand...

DrPizza said:
I'd definitely inform the CSLB. That's why the guy gets so much work - he's violating the law so that he can cut corners; and cutting those corners screws over the customer when something goes wrong, not the employer.
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I don't want to snitch on him. I just won't use him if he is like that.
 
pete6032 said:
The owner probably doesn't have any employees working for him. They're probably all contract workers hired on a per project basis.
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That condition doesn't exist in California. A contractor can have an employee or a subcontractor. If he's using a sub, that contractor has to be licensed. The one other option is that he uses people from a temp agency and they pay the comp, but that's expensive as hell.

Lot's of small contractors don't carry workmens comp because it's expensive, for a GC in California he'll be paying 24% to 36% of his employees gross pay. Chances are that if he's not carrying comp, he's probably paying cash as well.

What you need to do is require a workmens comp and general liability certificate as part of the contract. You're contractor should carry a million dollars of general liability. If they can't provide those certs, you're on the hook for everything. If one of his people gets hurt, you pay, if he burns your house down he'll walk away like you stink.

I'm a licensed general building contractor in California, I provide proof of comp and insurance on every project I do.

Tommy, I'm happy to help you out if you have any other questions, shoot me a pm or ask here.
 
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Even though he they may have a crew or crew's, they are probably 1090'd and used/payed as subcontractors. Nothing illegal at all...
 
Price out the difference between that guy & one who caries coverage. See if buying the extra insurance is cheaper.
 
Greenman said:
That condition doesn't exist in California. A contractor can have an employee or a subcontractor. If he's using a sub, that contractor has to be licensed. The one other option is that he uses people from a temp agency and they pay the comp, but that's expensive as hell.

Lot's of small contractors don't carry workmens comp because it's expensive, for a GC in California he'll be paying 24% to 36% of his employees gross pay. Chances are that if he's not carrying comp, he's probably paying cash as well.

What you need to do is require a workmens comp and general liability certificate as part of the contract. You're contractor should carry a million dollars of general liability. If they can't provide those certs, you're on the hook for everything. If one of his people gets hurt, you pay, if he burns your house down he'll walk away like you stink.

I'm a licensed general building contractor in California, I provide proof of comp and insurance on every project I do.

Tommy, I'm happy to help you out if you have any other questions, shoot me a pm or ask here.
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Thanks for all of the info. I'm going to question them about that and see what their deal is about workers' comp.

If any general contractor is referring to their employees as subs to avoid worker's comp I think I better not use them. Is it often that small time GCs do this?
 
Finding a contractor that doesn't hire illegals is probably tough......so worker's comp is not even remotely on the radar....
 
It's tough finding them that don't sub out the work. Quality Control with those jobs is a tough thing to achieve because no one is willing to fix problems when they arise.

Good luck finding the right contractor.
 
My dad was a contractor who ran his own business for nearly two decades. Heavy construction though, but the same rules apply.

Whenever you hire someone, ALWAYS make sure they are fully licensed and insured, and ALWAYS get a written contract.

If they don't have worker's comp, you might be held liable if one of their workers gets injured on your property. It's not worth the risk. Remember too, never sign anything you don't feel 100% comfortable signing.
 
I also remember one GC was saying he had a partnership with someone who would also do some of the work. Does this sound like the main GC with the license is saying he has a partner as opposed to employee so he doesn't have to buy worker's comp? Also this partner of his may not be licensed but I don't really know for sure.
 
Tommy2000GT said:
The GCs with legit employees and workers' comp are roughly 35% higher.
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For a reason. Sometimes paying the extra cash is worth it. We should reward the people treating their employees like humans, it all comes around in the end.

Remember, you have the cash. They are bidding for a job. Don't agree to/ sign a damn thing unless you are 100% comfortable with it.
 
Tommy2000GT said:
I also remember one GC was saying he had a partnership with someone who would also do some of the work. Does this sound like the main GC with the license is saying he has a partner as opposed to employee so he doesn't have to buy worker's comp? Also this partner of his may not be licensed but I don't really know for sure.
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He might very well have a partner, but the contract you sign has to be with the guy who's name is on the license. There are three possible methods of being a contractor in California. The first, and what you will probably end up dealing with, is a sole proprietor. That's one guy who owns the company and his name is on the license. The second is two or more people that have formed a corporation, one of those people will be an RMO or Responsible Managing Officer. He's the guy providing the licence for the partnership. The third is a company that has an RME or Responsible Managing Employee, it's much like an RMO, but he's a hired hand. The reason for this is that no matter who you do business with, there is one guy who's responsible and is qualified to oversee the work.
They also are supposed to have very specific language in their contract about your rights and how payments are made, about your three right of rescission, and a bunch of other stuff. I can send you a sample contract if you'd like to see one.
Some contractors use an AIA contract, which doesn't meet the requirements imposed by the state, I don't know how that works out if everything goes to hell.
 
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