What are the rules regarding workman's comp and free lance day laborers?

November 3, 2011 2:24 PM

Am I required to carry workman's comp on free lance day laborers?

I have a big restoration project coming up next year on my house in California and expect to hire everybody from licensed and bonded sub-contractors for major jobs to day laborers for little jobs.

My question involves the legalities of workman's comp. Mostly I want to protect myself in the event of accidents. Obviously, I will carry my own general liability policy. What I want to know is for whom do I have to carry workman's comp if any? Everyone will be free lance and hired to do a specific job. Some may work for a period of a few months, others a few hours, depending on the task.

Has anyone been through this who can give me advice so I can be certain to protect myself from unwanted law suits in the event of accidents?

posted by zagyzebra to law & government (9 answers total)

What do you mean, exactly, by "freelance?" Do you mean these are 1099 contractors or what? The DWC faq says you need to cover anyone you "hire," even temporarily.
posted by SMPA at 2:54 PM on November 3, 2011

(To put it another way: I am a heck of a lot more concerned about your day laborers than the bonded sub-contractors.)
posted by SMPA at 2:57 PM on November 3, 2011

"The DWC faq says you need to cover anyone you "hire," even temporarily."


For employees you hire. The questions is whether the worker is an employee or an independent contractor.

As a general matter, the distinction between employees and independent contractors is a question of law based on a number of different factors. Probably the most important factor is the degree of control you exert over them. The more control you have over how they perform their task, the more likely they are to be an employee under the law.

That's the law as it pertains to tax withholding, and I'm guessing it's a similar analysis for workers' comp.
posted by mikeand1 at 3:13 PM on November 3, 2011

I just got a permit to build a shed/workshop in my back yard here in a small city (60k people) in Northern California. Among the items I had to initial on the "Permit Worksheet" document I signed:

I understand a frequent practice of unlicensed persons is to have the property owner obtain an "Owner-Builder" building permit that erroneously implies that the property owner is providing his or her own labor and material personally. I, as an Owner-Builder, may be held liable and subject to serious financial risk for any injuries sustained by an unlicensed person and his or her employees while working on my property. My homeowner's insurance may not provide coverage for those injuries. I am willfully acting as an Owner-Builder and am aware of the limits of my insurance coverage for injuries to workers on my property.

and

I understand if I employ or otherwise engage any persons, other than California licensed Contractors, and the total value of my construction is at least five hundred dollars ($500), including labor and materials, I may be considered an "employer" under state and federal law

and

I understand that if I am considered an "employer" under state and federal law, I must register with the state and federal government, withhold payroll taxes, provide3 worker's compensation disability insurance, and contribute to unemployment compensation for each "employee." I also understand my failure to abide by these laws may subject me to serious financial risk.

I am not a lawyer. I do have a sole proprietorship/partnership company with my wife which has a Federal EIN. I took this to mean that I basically couldn't hire people without contractor's licenses on a 1099/independent contractor basis (which makes sense, it isn't really 1099 work, and the "licensed contractor" bit limits how much a project done by an unlicensed contractor can cost generally), and that if I paid them with W2s I'd be liable for worker's comp.
posted by straw at 3:17 PM on November 3, 2011 [1 favorite]

STRAW - Thank you, man! This is just the info I was looking for. Basically, illegal laborers are out altogether. If I hire anyone at all who isn't a contractor or a sub, I am responsible for workman's comp, et al.

So what are you doing on your shed? Are you going to do all the work yourself, hire a contractor, or hire someone to help out and then do the W2 filing and workers comp?

Man, this really puts the kibosh on day laborers -- illegal and legal.

If this applies to your small city of 60,000 people, I'll bet the same thing happens in bigger metropolitan areas, too.
posted by zagyzebra at 3:57 PM on November 3, 2011

I'm hiring licensed contractors for the portions I don't want to learn how to do.

So far I've hired help for the foundation pour (because it included a pump, and because everybody told me "don't try to do your own concrete finishing", and there's enough technique involved in that that I think they were right), and the city wants me to run gas to it for climate control so I'm soliciting quotes from plumbers for that portion.

I was going to do the construction mostly by myself, but my Dad has insisted on flying out to help me do the build, and I may have to get a friend or two to help us lift roof trusses into place (85 lbs a piece).

It's a bit of a beast: I'm doing a living roof and every time I talked to a building inspector or someone in the building department or to an engineer, I got different answers as to how much they wanted me to engineer for. So a circa 300 square foot building is engineered for roughly 50 tons: 120 lbs/sq.ft for the roof area (yes, water is 65 lbs/cu.ft., dirt is circa 60 lbs/cu.ft (doesn't float, but doesn't pack) and the roof is going to be 6" thick, but somehow we got a number like both could occupy the same space and be twice as thick. Go figure). Thus I've got an engineer's stamp on the roof trusses, and a separate engineer's stamp on the plans and the roof truss integration. When I was pouring the concrete, the various people involved in that (cement truck driver, pump operator, finisher) asked "4 stories?".

But, yeah: I've learned way more about building code than most building and construction professionals I've talked to know in the process of drawing up the plans and doing my own structural engineering (that I then got an actual PE's sign-off on), I've cut the concrete patio where it's going out, dug 7 yards of dirt out of the foundations myself, and I expect to do my own wiring and painting.

But that's a digression...
posted by straw at 8:55 PM on November 3, 2011

STRAW: Better be careful with that shed of yours. We put up one earlier this year. It started off small, and then grew in height and width, way beyond city code...ridiculous, I know. So we called it Shedzilla.

It didn't take long for our new Shedzilla to get reported. The city's solution? Cut the structure in half. We did. Now we call it Shedzillaplex.

We just got around to puting the roof(s) on a month ago. It's a step-by-step process that had kind of gotten out of hand.

Why are you doing a living roof? Just curious.
posted by zagyzebra at 9:42 PM on November 3, 2011

One correction: That should be 25 tons, 50k lbs.

Why the living roof? This started out as a visit to Tuff Shed where we got about a $7.5k quote from them. On the way home we stopped at Lowe's to price out what it would take if I did the labor, and discovered that in a place where the standard 2x4s weren't to code for basic construction, we couldn't buy materials as chintzy as Tuff Shed used (2x3 studs, etc).

And, in fact for about half that in materials I could do a 2 hour fire wall assembly with excellent noise suppression, and then the project started to mushroom into living roof and such. So we're not saving any money, but... We have a 4k square foot lot and we do a bunch of gardening, and the project became "gee, for $7k in materials, we could have space to grow strawberries...". Our plan also grew in scale, and then we put up some story-sticks, looked at the outline of the behemoth we were considering, and scaled back.

Back to the original question: Last few times we've moved we've hired day laborers (hopefully the last time was the last time we move). The last time, we had a really steep driveway, and were having trouble getting the loaded truck up it. I got the truck mid-way up, and it started slipping, I managed to get it stopped before it slides into trees, hunched over the steering wheel, breathing heavily, and our helper comes running up behind the truck and throws a big rock under the wheel.

On one hand I'm thinking "holy crap, that's awesome, we may get the truck up the driveway yet", and "damn, that's a work ethic, there's no way I'd do that for ten bucks an hour", and then the other part of me said "whoah! No way do I want to be responsible for encouraging that."

So that was kind of the end of my casually using day laborers. As much as I appreciate that people who've crossed Mexico from Guatemala on foot in order to find paying jobs have a work ethic that I really want to encourage in my community and that I've always found them so motivated that I feel guilty when, at the end of the day, I pay them half again over what they asked for.

Even though I realize that when I'm paying someone else to do the labor, what I'm usually doing is giving them a cut for hiring the same day laborers. Sigh.

(And my sister is a Spanish teacher who pays particular attention to various Central American dialects, and has made some undocumented friends who have amazing "holy crap I want that work ethic and life attitude in my world" experiences.)
posted by straw at 7:47 AM on November 4, 2011

STRAW - Yeah, I hear you. Day laborers are ubiquitous, especially in Cali. Your incident with the rock...I've decided not to use day laborers for anything that involve heights, moving vehicles (new rule inspired by you), power tools, and heavy objects.

Good luck with your own Shedzilla project. It sounds like it will be awesome when it's done. I'd love to see a picture!
posted by zagyzebra at 2:45 PM on November 4, 2011