OK to Bring a Pal to Help on a Job? Make Sure He/She Is Covered

The scenario: You are a licensee who works on your own, and have a workers' compensation (WC) insurance exemption from CSLB, but there's a job coming up that will require a little help. Your brother-in-law is available to provide some needed muscle for a few hours.

Is it OK to bring him along?

Hopefully, you answered no – unless you purchased WC insurance policy to cover him.

There are no circumstances under which a licensee can casually bring along a relative, a friend, or a helper, even if for a short time, to help him or her on a job without a WC policy in place.

Any person who accompanies you to a job site to do work is considered your "employee" under state law.

The definition of an employee is a broad one. According to the state Employment Development Department (EDD), the common law rule provides that an employer-employee relationship exists when an employer has the right to exercise control over the manner and means by which an individual performs services. Consequently, EDD may consider an individual whose employment is subject to this condition to be an employee of any contractor who retains this right of control relative to the performance of the employee's services.

It's just not worth the chance to try and save a few dollars by forgoing a WC policy in any circumstance. According to the state Department of Insurance, willful failure to secure WC coverage for employees is a violation of Labor Code section 3700.5, a misdemeanor punishable by up to one year in county jail and a $10,000 fine for the first offense. Failure to comply with the laws relating to WC insurance, payroll deductions, and employment taxes could subject your business to scrutiny and/or audit by the EDD, Division of Labor Standards Enforcement and/or other agencies. Consequences for noncompliance could include penalties assessed against your business, criminal charges, and/or the suspension or revocation of your contractor's license.

Then there's the risk you're taking if someone uncovered gets hurt on the job. In addition to prosecution, you may be liable for their medical treatments, and the person who hired you can be on the hook as well.

CSLB takes a dim view of WC evasion whether a licensed or unlicensed contractor is involved. CSLB's battle against WC violations was strengthened this year through a new law that allows investigators to directly issue citations to unlicensed contractors who bring along uninsured workers to a job. Previously, only district attorney's offices could take legal action against non-licensed operators upon the recommendation of CSLB.

Another important step for licensees in the WC process is the accurate reporting of payroll to their insurance carrier. Contractors need to provide that information to the carrier either monthly or quarterly. Based on the payroll, the insurance company will assess the contractor's premium. Underreporting one's payroll for the purpose of receiving a lower WC premium is a felony in California.

When WC insurance and payroll are accurately reported by all contractors, the premiums cost less for all.