RISK TO YOU
Hiring unlicensed contractors will usually also mean that the contractor is uninsured. This presents a huge risk to you and your Homeowner’s insurance. If the contractor’s employees are injured on your property, you can end up being sued for injuries. The amount awarded may exceed the maximum payout provided by insurance as well as increase your premiums.
• Case Law: Mendoza v. Brodeur. Court of Appeals stated: “A person who hires an unlicensed individual to perform duties that require a license is in fact an “employer.” Once an employment relationship is created, the hiring individual may be sued for any injuries sustained on the job.”
• Clients who use licensed contractors have up to four years after the work is completed to file a complaint for substandard work. There is no recourse for the property owner who hires an unlicensed contractor.
Hiring unlicensed contractors also present the risk of having an unfinished project for which you may pay.
• Mariana Bridges of Las Vegas, learned that hiring someone with a reputable-sounding business name, a website, an 800 telephone number and a city business license does not ensure that a contractor is licensed. That was the case when she hired Star Home Service to put in a patio floor and roof at her Las Vegas home and paid Scott Hileman most of the $1,500 in advance. For his part, Hileman, who was not licensed, removed some dirt, and she never saw him again.
• Last year investigators arrested 19,000 unlicensed contractors in California. A small fraction.
• What happens to unfinished projects when a contractor is arrested? They stay unfinished until the Homeowner pays another contractor again.
RISK TO THE ECONOMY
• Unlicensed contracting is part of California’s estimated annual $60 to $140 billion dollar underground economy. These individuals do not pay taxes, have insurance or bonds. It is not unusual for them to be involved in other illegal activities as well.
• These contractors may force legitimate employers out of business contributing to an economic decline.