Wright v. Issak, A Warning to Maintain Workers Compensation Insurance (149 Cal. App. 4th 1116)
A case was decided upon in March of 2007, which carries significant implications for the California contracting community. The Sixth District California Appellate Court found for defendant Ghyath Issak, a homeowner, a decision that was upheld by the Court of Appeals, subjecting plaintiff Laurence Wright, a contractor, to pay damages and costs of over $134,000 to Issak.
Wright initially sued homeowners Issak and Weber for failing to complete payment on the remodel he had contracted, to which Issak responded with allegations that Wright was not actually a licensed contractor. Wright was found liable for operating without a license for the duration of his employment by Issak, because the contractor under-reported the amount of his payroll to the State Compensation Insurance Fund. Under Business and Professions Code section 7125.2, this is equivalent to failing to provide adequate workers’ compensation coverage, which results in immediate revocation of a contracting license.
Contractors should use this case as a warning of what happens when they cheat on their workers’ compensation insurance payroll. California courts will respond to this illegality with severe discipline.