J & N REALTY, INC.

Labor Code & Independent Contractors  

2750 .   The contract of employment is a contract by which one, who is called the employer, engages another, who is called the employee, to do something for the benefit of the employer or a third person. 

2750 .5.  There is a rebuttable presumption affecting the burden of proof that a worker performing services for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, or who is performing such services for a person who is required to obtain such a license is an employee rather than an independent contractor. Proof of independent contractor status includes satisfactory proof of these factors: 

(a) That the individual has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work and not the means by which it is accomplished is the primary factor bargained for. 

(b) That the individual is customarily engaged in an independently established business. 

(c) That the individual's independent contractor status is bona fide and not a subterfuge to avoid employee status. A bona fide independent contractor status is further evidenced by the presence of cumulative factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a contract to complete a specific project for compensation by project rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work other than tools and instrumentalities normally and customarily provided by employees, hiring employees, performing work that is not ordinarily in the course of the principal's work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract. 

In addition to the factors contained in subdivisions (a), (b), and (c), any person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors' license as a condition of having independent contractor status. 

For purposes of workers' compensation law, this presumption is a supplement to the existing statutory definitions of employee and independent contractor, and is not intended to lessen the coverage of employees under Division 4 and Division 5. 

Insurance Code section 11590 requires comprehensive personal liability insurance policies to include a provision for workers' compensation for "any person defined as an employee by subdivision (d) of Section 3351 of the Labor Code."  

Section 3351, which defines "employee" for purposes of workers' compensation, provides in subdivision (d) that an employee is "any person employed by the owner or occupant of a residential dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the care and supervision of children, or whose duties are personal and not in the course of the trade, business, profession, or occupation of the owner or occupant."  

Section 3352 excludes certain persons from the section 3351 definitions of "employee," and thus excludes them from workers' compensation coverage.  The exclusion pertinent here is section 3352(h), which excludes from the definition of employee a person defined by section 3351(d), but who was only employed less than 52 hours in the 90 calendar days prior to the injury.    

Section 3706 authorizes an employee who is not excluded from compensation coverage to sue his employer in tort if the employer does not have workers' compensation insurance.  The statute provides: "If any employer fails to secure the payment of [workers'] compensation, any injured employee or his dependents may bring an action at law against such employer for damages, as if this division did not apply.”  The reference "this division" is to Division 4 of the Labor Code, which governs workers' compensation.  (§ 3200 et seq.)   

Finally, section 2750.5 creates a rebuttable presumption that a worker performing services for which a license is required is an employee and not an independent contractor.  The statute also makes a valid license a condition of independent contractor status.  The Supreme Court has interpreted this statute to provide that "the person lacking the requisite license may not be an independent contractor.”  (State Compensation Ins. Fund v. Workers' Comp. Appeals Bd. (1985) 40 Cal.3d 5, 15 (State Fund);  Cedillo v. Workers' Comp. Appeals Bd. (2003) 106 Cal.App.4th 227, 233 (Cedillo).  "Accordingly, the presumption that the person who employs the unlicensed contractor is the employer is conclusive.”  (Cedillo, supra, at p. 233.)  

Section 2750.5 is not a part of the workers' compensation law, but is contained in Division 3 of the Labor Code--which deals with the employer-employee relationship.  However, by its own terms the statute supplements, and applies to, workers' compensation law.  (State Fund, supra, 40 Cal.3d at pp. 9-15; Cedillo, supra, 106 Cal.App.4th at pp. 232-234.)