Hiring Unlicensed Contractors for Cheap Work Can Be Costly
by Dyane Hendricks
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It seems like such a good idea at the time. A homeowner has work that needs to be done and finds a contractor willing to charge a rate incredibly lower than other bids. But what appears to be a dream come true can become a nightmare for a homeowner, often costing anywhere from thousands to millions of dollars to deal with damaged property and even lawsuits.
Work involving structural change, including remodeling and additions, requires that every employee on the job be licensed by California’s Contractors State License Board.
Jane Regan of HB Design Services, Inc. says that unlicensed workers usually have no formal training and are not accountable to any standards. “If they haven’t bothered to get licensed, they may not have bothered to learn their craft,” Regan said. She added that such workers may also have lost their licenses because of poor workmanship or other problems. Her firm was recently hired to correct work done by unlicensed contractors — work involving decks, damaged doors and improperly installed insulation.
Joey and Ron Frediani Associated Window Cleaning. Photo courtesy of Associated Window Cleaning.
Unlicensed contractors might also be trying to avoid paying taxes, worker’s compensation or child support, said Jerry Epstein of Epstein Construction Co. And there may also be contractual issues with unlicensed contractors. “There probably is not a contract or if there is, it’s not binding,” he said, adding that there is no recourse except in court and unlicensed contractors probably have little money.
Regan said that without a binding contract the tables can be turned, and the homeowner may be sued by the contractor or subcontractor. There are currently cases in the San Mateo courts where workers who fell off roofs are suing homeowners for millions of dollars.
If permits are required for a project, the unlicensed contractor cannot obtain the necessary documents.
When the contractor is not licensed, the subcontractors are probably not licensed and are likely working for minimum wage. “Most jobs require subcontractors, and how do they get paid?” asked Epstein. Those employees are usually paid off the books and Regan said that she has actually seen workers get paid cash in a paper bag.
Ron Frediani of Associated Window Cleaning said he wished a contractor’s license was a requirement in the janitorial trade. Legitimate businesses are being undercut by contractors who do not pay taxes and workers’ compensation. In addition, the homeowner is risking poor workmanship, damage and additional cost, he said.
Deck by Hammer Construction. Photo courtesy of HB Design Services.
“The feedback I get is that they break screens and windows and wreck plants,” said Frediani. “If I do damage, I have to take care of it.”
He said that customers have come to him because they could not find the contractors they had originally used.
For the homeowner who wants to hire a licensed, legitimate contractor, there are several read flags to watch for.
Regan says that a licensed contractor must carry liability insurance, and homeowners are entitled to ask for a rider for work done. If the contractor can’t provide that, they will have no recourse if something goes wrong.
“Call or get on the Internet and check with the Contractors Licensing Board,” advises Epstein, adding that the CSLB will supply all the information necessary. That information will include license number and status, current contractor’s bond, worker’s compensation insurance status and history, and information about any judgment or complaint against the contractor.
The CSLB Web site states that, by law, a contractor cannot require a down payment of more than 10 percent or $1,000, whichever is less. It’s a warning sign if the contractor requires more than that.
Epstein, Regan and Frediani all agree that the biggest red flag is if the contractor wants to be paid in cash.
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