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(A version
of this article will appear in the Construction Law Digests, published
by the West Group.)
By James Acret
Hunt employed unlicensed subcontractors for work on federal military
installations in California. The subs failed to file quarterly
returns for state unemployment insurance. The state Employment
Development Department assessed Hunt for the unpaid contributions
and withholding taxes of the unlicensed subs. Hunt paid the taxes
($38,714.28) and sued for a refund. The trial court entered judgment
for plaintiff. REVERSED. Hunt Building Corporation v. Bernick,
___ Cal.App.4th ___, ___ Cal.Rptr.2d ___, 2000 Daily Journal D.A.R.
3069 (4th Dist. 2000)
California does not have the power to impose contractors licensing
requirements on contractors working on federal projects, but Congress
specifically permits California to enforce its unemployment compensation
laws for services performed on federal land. 26 U.S.C. §3305 (d).
Under provisions of the Labor Code, prime contractors are liable
for providing worker's compensation and to make unpaid unemployment
contributions for unlicensed subcontractors. Labor Code §2750.5
provides: ". any person performing any function or activity for
which a license is required pursuant to [the state contractor
license law] shall hold a valid contractors' license as a condition
of having independent contractor status."
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2000
Thelen Reid Brown Raysman & Steiner LLP
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