With an increase in home remodeling, the California Professional Association of Specialty Contractors (CALPASC) is urging homeowners to think twice before hiring contractors who may be members of the underground or semi-underground economies for remodeling projects.

California law holds that a "significant residential remodel," defined as projects including demolition and rebuilding a significant portion of the house, and new construction fall under Cal/OSHA safety regulations. As such, the homeowner is treated as an employer and required to furnish a safe place of employment. Like other employers, homeowners hiring an unlicensed independent contractor, who may hire subcontractors, will be held responsible for the workers' safety (see California Labor Code Section 2750.5), and an injured worker can bring a lawsuit against a homeowner and use evidence of the homeowner's violation of the Cal/OSHA regulations to show the homeowner is at fault.

This is in contrast to "domestic household services," such as home maintenance, both inside and outside of the house, which are exempt from Cal/OSHA regulations as are projects where homeowners are doing the work themselves. 

CALPASC is all too familiar with the negative impact of the underground and semi-underground economies, where unlicensed contractors and subcontractors thrive, and is sending a warning flare to homeowners who often are unaware of the risks associated with remodeling projects and hiring unlicensed contractors.

According to CALPASC Chief Operating Officer Cees Molenaar, "Homeowners who are remodeling their homes often are in the dark about this requirement. They assume the contractors they hire are licensed professionals and carry the necessary insurance to abide by Cal/OSHA regulations. Unfortunately, today's growing underground and semi-underground economies create opportunities for contractors and subcontractors to take advantage of homeowners."

The underground and semi-underground economies consist of contractors who refuse to comply with state laws and regulations and conduct illegal business by hiring individuals without proper certifications, not training employees, under reporting payroll, not obtaining workers' compensation insurance or paying compensation premiums and more.

"In 2010, we implemented the LEVEL Program to work closely with state agencies in cracking down on contractors who intentionally cheat California out of hundreds of thousands of dollars and take advantage of consumers," says Molenaar. "There have been some successes in cracking down on those who 'skirt the law,' but we need homeowners to be a part of the solution."

Homeowners often are unaware of the consequences of hiring unlicensed contractors and assume homeowners' policies cover unlicensed contractors, which is not the case. Besides the obvious lack of professional ethics and not abiding by California's legal standards, unlicensed contractors often generate inferior work products and services and subject homeowners to financial exposure if an injury occurs.

In a recent press release issued by the Contractors State License Board (CSLB), consumers were urged to consider the following before hiring someone to work on their home:
• Hire only licensed contractors, and ask to see their license and a photo ID to verify their identity.
• Don't pay more than 10 percent or $1,000, whichever is less, as a down payment. There is an exception for about two dozen licensees who carry special bonds to protect consumers.
• Don't pay in cash, and don't let payments get ahead of the work.
• Get at least three bids, check references and get a written contract.

For more information, visit www.calpasc.org.  

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