An ongoing and unresolved question in California is whether Labor Code section 2750.5 applies to homeowners and makes them the "employer" of an unlicensed contractor and the unlicensed contractor's employees. Think about that one. You hire a contractor to spruce up the bathroom or remodel the kitchen. One of the workers is injured. And the contractor turns out to be unlicensed.
So? So the Privette doctrine does not apply. So myriad Cal-OSHA and other regulations may be used by the plaintiff to create a presumption of negligence under Evidence Code section 669. (Elsner v. Uveges (2004) 34 Cal.4th 915, 928.) So being deemed plaintiff’s employer can also expose you to civil and criminal penalties, not just tort liability. (See, e.g., Labor Code § 6423 et seq.) And depending on the language in your homeowners’ policy, being deemed an “employer” could trigger the “business pursuits” coverage exclusion. These are only some of the ways that being deemed an employer can carry potentially devastating consequences.
As the California Supreme Court recently put it, "whether unlicensed contractors or their workers may or must be deemed the homeowners’ employees under [Labor Code] section 2750.5, either for purposes of tort liability generally or with regard to Cal-OSHA specifically, are difficult and unsettled questions in this court.” (Cortez v. Abich (2011) 51 Cal.4th 285, 291.) And unfortunately, the Court missed a golden opportunity in Cortez to resolve these issues, leaving in place instead an alternative approach that is bound to create inconsistent results in the trial and appellate courts.
In Cortez, the homeowners hired an unlicensed contractor to handle demolition and replacement of the roof as part of a large-scale home makeover. The project included addition of a new master suite, garage, and many other upgrades. The homeowners moved out and did not supervise the work. When the plaintiff arrived, not much of the house remained standing. The front appeared intact, but at the rear only some walls made out of brick and some of the roof structure remained. Plaintiff climbed onto the remaining part of the roof, took two steps and fell when a portion of it collapsed. He suffered serious injuries. (Cortez, supra, 51 Cal.4th at pp. 289-290.)
Plaintiff sued the contractor and the homeowners for negligence and premises liability. The trial court granted summary judgment in favor of the homeowners. The Second District affirmed. But the Supreme Court reversed. And unfortunately, the Court did not reach whether 2750.5 applies to homeowners, ostensibly because “Defendants …neglected to seek review of these [homeowner-as-employer] issues …” Thus, the Court focused solely on Cal-OSHA's "household domestic service" exclusion. The Court concluded that given that provision’s express listing of “employment” as “including all excavation, demolition and construction work,” then construction work of the magnitude undertaken in Cortez could not be excluded as “household domestic service.”
By taking that tack, the high court left unresolved the larger question of whether the Legislature even intended for Labor Code section 2750.5 to apply to homeowners. Instead, resolution of these disputes will turn on application of the “household domestic service” exclusion in home improvement cases. Determining whether a project is excluded or not will be governed by “the totality of the circumstances, including but not limited to, the scope of the project and the extent to which it involves significant demolition and construction work, the labor and skills required for the project, the need for building and/or other construction permits, and the extent to which those hired for the project are subject to state licensing requirements.” (Cortez, supra, 51 Cal.4th at p. 295, fn. 4.) But as the test suggests, the household domestic service exclusion will be subject to far-ranging and varied judicial interpretation. The trial and appellate courts are bound to be kept busy sorting it all out.
As for the big issue, Labor Code section 2750.5? The Supreme Court has the power to issue an order expanding the issues on review and so in Cortez, the Court missed its chance. As Justice Janice Rogers Brown previously implored, application to homeowners "cannot be a proper interpretation of [Labor Code] section 2750.5, and the Legislature should act promptly, by deleting or amending the penultimate paragraph of section 2750.5, to restore an apparently straightforward intent which has been undermined by the section's garbled syntax." (Fernandez v. Lawson (2003) 31 Cal.4th 31, 44 (Brown J., concurring).)
Justice Brown has a way with words, doesn't she? Wanted: statutory interpretation.