My business is 2 months old, I am a general contractor in CA, I had a proposal of getting a crew of 3 to classify them as 1099, the work is a short burst (about 2 weeks) single family remodel, the job will cost about 3-5k in materials and labor, i dont control their time, vehicles and how they do it, i would tell them what needs done and take it from there. The job will be small plumbing, electrical and window/door replacement. The proposer has no license but is willing to work under a 1099 rule.
Do they qualify for 1099? Do I go with piecework? if so, how fo i deduct taxes and what does their paycheck look like?
This is a bad idea, and is in violation of the law.
Unless the workers are working directly under the control and direction and supervision of the owner and are paid by the owner, they cannot be used as "independent contractors" on such a job.
If you find them and hire them and give them work to do, they are your employees unless they each have of the group has their own contractor's licenses.
The Labor Code makes them your employees for purposes of workers compensation insurance and payment of hourly wages, and you would be liable if they were injured if you did not provide workers compensation insurance for them.
If you have employees and do not have workers compensation insurance for them, then your license is effectively suspended by operation of law, even if it otherwise appears that you have a valid contractor's license.
If that happens, then you could not collect money owed you in court, and the owner may be able to sue you for the return of all money they paid you, even if your work was perfect.
The License Board can also suspend or revoke your license for this conduct.
(See the Legal Article on this topic on our website)
Plus you may owe withholding etc to the State and the IRS on these workers.
Trying to skirt the law and hiring of unskilled "independent contractors" is not a good way to start out in the construction business, and could result in a very short career as a contractor!
This is NOT legal advice, just a general discussion of the law, as we are not familiar with the specific documents and facts of your case, etc. Please consult with a competent attorney in this area of the law for specific legal advice regarding your particular case, as the advice may vary depending on the facts.
Anyone working under you either must have their own license for the work they are performing or they must be your employee, not a 1099'ed independent contractor. Otherwise, you risk being considered "not duly licensed" and could be sued for disgorgement of all money paid to you.
I agree that this is a bad idea. They should either have their own licenses or be your employees to avoid breaking the law nd putting your license at risk.
here really is no such thing as an independent contractor for construction purposes. Either they are your employees, or they are subcontractors. If they do not have a license, they cannot legally perform construction work except as an employee of a licensed contractor.
You will be aiding and abetting an unlicensed contractor by doing this which could subject your license to discipline by the CSLB.
If you do this and do not have workers compensation insurance, then your license is automatically suspended as of the first moment these workers show up on the job. That could result in discipline by the CSLB, and if the owner finds out, they would not have to pay you for that work and could sue for return of any amounts they did pay.
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