Contractor Talk - Professional Construction and Remodeling Forum banner

Handyman Connection - CA CLSB Law Questions

6K views 13 replies 7 participants last post by  Rob1954 
#1 ·
I’ve been a licensed contractor for over two years now and have been running my own business for a little over a year. However, I’ve been involved in the trades for over 13 years.

So, every once and a while I’ll do work for past employers or even get subbed work from a previous employer (or other contractors in general).

The other day I applied for a company that posted on craigslist and I received a phone call back. The owner/manager wanted to meet up and do an interview. Everything went fine, but I’m looking for a few answers about the legality of the business structure and if there are any guys on here that have worked for this company.

To sum it up, Handyman Connection is a licensed, bonded and insured company, that has national marking and recognition; regardless of how bad the reviews are.

Here’s where I’m concerned about the legal aspect from what they’ve told me:

1. I will be paid on a 1099, however I am not a ‘sub’ and I am working under their license.

If I’m not mistaken, a 1099 is a legal ‘independent contractor’ and in California must be licensed and or work under that license?

2. I will be covered under their workers compensation and general liability insurance.

As in the first question, since I’m an ‘independent contractor’ under a 1099, can I even be covered under their insurances and are they just saying that to get me onboard?

3. I am to pay for all materials myself, then get reimbursed from the company after progress payments have been submitted to the company from the client to me to the company. Or that the customer is to pay for all materials up front by purchasing them because I would be responsible for cost of materials if the company is not paid.

This is extremely weird to me because of the $1k or 10% rule, also if I’m classified as an employee I’m not responsible for the companies loss. Furthermore, if I’m a contractor, and I’m being subbed out, according to CA CLSB law, I should be entitled to lien rights, right?

4. Since I am a licensed contractor, with a growing customer base and clean record, could my license or credentials be damaged because of the practice of this company if anything goes wrong and I’m on a 1099?

For example, if I remodel a bathroom, and later it’s revealed that the shower’s pan leaked and caused structural damage to the building, am I responsible?

Even worse, since I’m licensed and this company gets busted for doing something illegal, and I went along with it, can my license be at jeopardy?


Here’s the situation, the pay isn’t bad. It isn’t that good when you factor in all the information above, but it’s still pay and I’ll take work on the down time, in-between, projects anyhow.

Any ideas?
 
See less See more
#3 ·
Thanks for the response, I just wanted to make sure I wasn’t being paranoid. The company has set up franchises all over the US, and I’m sure I could make some decent residual income during down time, so it still could be worth the effort.

However, as with all laws, I’m sure they’ve found loop holes to protect themselves. Which leads me to the question of ‘if I can get in trouble’ for their CSLB violations?
 
#6 ·
They can call it whatever they want, but as a 1099 you are a sub. Especially if they are the name on the primary contract. It makes no sense to say they are paying WC and also issuing 1099's. It's one of the main reasons to skirt hiring an employee in the 1st place. 1099's in SoCal are a commonly, and widely abused employment structure.
 
#11 ·
My friend did some work for them in Portland. That particular franchise was easy to work with. The only problem was they wanted you to bid all the jobs and then they would just about double it. So which is it you hope the customer will pay double for handymans good name and not work or you work for half of what a contractor needs to cover expenses.

Said it before and ill say it again, if you give up the marketing you give up the power.
 
#12 ·
As a related side note. I remember back around 2002 or so, the city of Los Angeles went on a tax witch hunt of 1099's operating within their limits. Anybody putting a hammer or brush to work under a 1099 got threat letters saying their "businesses" were not legally licensed to operate, and that unpaid city taxes on reported 1099's would be assessed with penalties.

A little nuance that many contractors overlook. Your city may require you to have a business license to operate, and ACTUALLY enforce it. Penalties are great tax windfalls these days.
 
#13 ·
I got caught up in that LA sweep back then. I had a City of Los Angeles business license, but the city sent me a letter claiming I did not, and the fun began from there.
They sent me a huge invoice for back unpaid taxes, threatening to levy my bank account if not paid in 30 days.

I finally got it straightened out, but it took more than one trip to city hall to do it.
 
#14 · (Edited)
I did some work with a handyman franchise when I first started out. I still do at times when I have some openings in my schedule that I need to fill. Fortunately, those times are few, and I can be selective about which jobs I want to participate in.

I never had any issues with the 1099 form of payment. I viewed myself as an independent contractor, carried my own insurance, and processed the 1099 payment from the francise through my own LLC. I don't think there is anything illegal or underhanded about their method.

I don't work with the franchise you mentioned, but they probably all work in similar ways. The owner does the marketing, works the phones, sets appointments and qualifies leads, and is responsible for collections. The "handyman" is responsible for bidding the job, performing the work, and any warranty service required.

There are some good things about the arrangement.....

1. no marketing costs or collection risks for your business. This is big benefit for a new business.

2. good for someone starting out who needs to at least cover their overhead, 'cause you would be doing nothing otherwise. :whistling

3. by wearing your own logo'd shirts and having signage on your truck, you will get some visibility with your own name. The franchise owner will make you sign an agreement that you won't poach leads that he gives you, but I always got calls from other folks in the neighborhood who saw my truck in their neighbors driveway. Those folks are fair game. Never understood why the franchise didn't attempt to fix that.

Lots of bad though.....

4. the handyman business is very competitive these days with so many construction people out of work. With a large cut going to the franchise owner, it's dificult to be competitive and make a buck for yourself.

5. any business with "handyman" in their name is usually viewed as a lower cost alternative to a contractor or tradesman. The prospects expect to pay less for your services.

6. there are a lot of fixed income people out there who are shocked that anyone could quote $50 bucks an hour for handyman work. Many of them still think that $15 an hour is a great "wage", and don't understand the costs of running a small business.

Because of 4, 5, & 6 above, you'll never make much more than wages in this arrangement, and will bid a lot of jobs (especially larger ones) which you will get blown out of the water by having the franchise cut in your bid price. If you are not careful, the bidding and estimating costs can also cut deep into your operating profits. Remember, you are still running a business.

Best to do this type of work only if you are starting out and need the income; or have a growing business and can be selective about work you can take to fill holes; or are semi-retired and need something to do and don't need much money.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top