Under California Law, Unlicensed Contractors Work for Free. But What About Their Employees?

Under California law, unlicensed contractors work for free. To be sure, California code prohibits an unlicensed contractor from making a claim for compensation if the contractor is unlicensed at any time during construction of the project (Business and Professions Code Section 7031). But what about employees of an unlicensed subcontractor? In a recent case, California's courts added wages of a subcontractor's employees to the list of items that a general contractor is liable for when engaging an unlicensed subcontractor (workers' compensation, unpaid contributions to the Employment Development Department and tax withholdings also make the list). Thus, employees of unlicensed subcontractors may make claims against general contractors for unpaid wages.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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