Rhye fact-checking my ass on the painting contractor

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A couple of days ago, Rhye read my post about the painting contractor ("How not to pick a contractor") and told me what I said about the license wasn't right - that the license wasn't good at all. According to Rhye, the painters had already started working on the house when we checked their license and the decision was made to let them continue.

I couldn't believe I had remembered so badly and blogged it for everyone to see. I really, really hate to be so wrong about something like that. I knew it would soon drive me crazy if I didn't verify what Rhye said was really true.

Unfortunately, Rhye told me this really late at night. I wanted to check the contractor's license again at the state of California's web site but I didn't have the license number handy. The contracts and paperwork were in Rhye's mother's room (and she was asleep). I tried doing searches on the company name of the painting contractor but got nowhere.

Then I remembered I had taken pictures of the front of the house with our digital camera. The painters put up scaffolding and a huge net around the house, and hung a sign on the front of the net. Pulling up the picture up on my computer, I could tell the license number was on it but the number itself was too small and blurry to read. I ventured out to the front of the house and got the number off the sign.

I immediately checked the painting contractor's license. It would seem that Rhye and I were both correct (to a point, anyway). The contractor's license is valid, active, and current. The license is registered to a "sole ownership" business entity and the license claims they are exempt from needing workers compensation insurance because this business entity has no employees.

The painting contractor is not doing business under the owner's name - they are using a company name. This is what the state has to say about contractors using a DBA ("doing business as"):

You can use a DBA (doing business as) name in addition to or in place of your personal name. You must register your DBA within 90 days of making a change. You cannot use more than one fictitious name. Also, contractors must use the business name shown on their license. The name on the license can be either the license holder's personal name or a fictitious business name as defined in Business and Professions Code Section 17900. You are encouraged to provide the business name used on your license and your license number to customers. That way, your customers can easily verify the business name as listed with CSLB (Contractor's State License Board).

I did find out that the painting company has a "fictitious business name" on file with the San Francisco county clerk's office (which I found by searching for it here), but the company name shows up nowhere on their state contractor's license.

As far as the workers compensation insurance goes, the license is just wrong. The guys painting our house are obviously employees. The painting contract states that the company has workers compensation insurance for its employees, but I don't know if anyone bothered to verify that claim.

It looks to me like the painting contractor's license just needs to be updated, but it should have been scrutinized closely and questions asked about it *before* signing a contract with them.

Update 05-Aug-2003: I printed a copy of the painting company's state contractor's license info, their fictitious business name filing with the city of San Francisco, and a copy of an FAQ from the state showing that DBA business names are supposed to be registered with the state within 90 days. I showed these to the owner of the painting company yesterday. He didn't think there was a problem with the company name not being on the license - he believes that the city fictitious business name filing is sufficient. I do not agree, but it was not something I was going to argue about with him.

I also asked him about the worker's compensation exemption listed on their license. He told me, "Yeah, we hire some new guys last year." I told him that he should notify the state so that the workers compensation policy is listed on their contractor's license, and while he was at it, he could also update the license with the business name as well.

I don't think he's going to do anything about it. I told him that basically he just needs to update the information on his state contractor's license, and I thought he'd like to know so he could avoid problems down the road with future customers. I got the impression he thought I was being a nuisance. Whatever.

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Just FYI, just ran across this during a different search, but if any of those employees had gotten hurt while at your house, YOU would be liable for their injuries... That is what worker's comp is... He, as the businees owner, had told the insurance company that only he was doing the work, he didn't have any employees and therefore didn't have to have Worker's Comp insurance, and paid his guys cash so there was no paper trail... No one is covered, and the Property Owner has all the liability.

I'm a painting contractor, an industrial painting contractor, actually, with 30 employees...but I run into this all the time on smaller jobs where I compete against the smaller, ethically challenged contractor... Not paying worker's compensation insurance on employees can reduce labor costs anywhere from 10% to 30% depending on the state insurance rates.... One way to be low bidder.... Just like having fun, all is good until someone gets hurt... But the Owner could pay the sometimes staggering bills....