Sanders Construction Company, Inc. v. Cerda
Filed June 29, 2009
Cite asE047501

Employees of Unlicensed Subcontractor can sue General Contractor

Donald Sanders, doing business as Sanders Construction Company (Sanders), was the general contractor for the construction of Hesperia hotel. Sanders hired Humberto Figueroa Drywall Company (Humberto) to install drywall for a contract price that included labor and materials.

Humberto, in turn, hired six workers. Regarding payment, Sanders would pay Humberto then the latter would pay said workers. Humberto continued working for Sanders despite expiration of its license and disagreement about the quality of work and payments.

When Humberto stopped working on the project, the workers stopped working as well. Consequently, the six workers each filed wage claims against Sanders with the state Labor Commissioner.

The hearing officer granted the wage claims citing the case of Hunt Building Corp. v. Bernick wherein the court said that a general contractor was considered employer not only of the unlicensed subcontractors but also of the employees of the latter.

In a separate wage claim filed by Humberto, the hearing officer found that Humberto misrepresented himself as a licensed contractor and was acting as an independent contractor. Being an independent contractor, the Labor Commissioner has no jurisdiction over his claim.

Humberto did not challenge the dismissal. On the other hand, Sanders appealed with the Superior Court regarding the six awards in favor of the workers. The appellate division of the superior court decided in favor of the workers but eliminated the waiting time penalties.

Sanders applied for a certification to the court of appeal to ask an important query: whether a general contractor may be held liable for the unpaid wages of an unlicensed contractor’s workers.

The California Court of Appeal held that employees of an unlicensed subcontractor may assert a wage claim against the general contactor as provided under the Labor Code.

Moreover, the Business and Professions Code does not prohibit the workers from suing for their wages.