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Old 12-15-2009, 04:05 PM   #1
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knowing your limitations


I loved the line in the Dirty Harry movies when Eastwood says a man has got to know his limitations. An important part of DIY projects is knowing my limitations and when to seek expert advice on a forum or from a dealer or to just have an experienced trades person do the job instead.

With the collapse of the US economy a lot of very experienced and hard working trades people have been laid off by their company. They have 10 or more years of experience and as professionals they are used to working without close supervision. I am finding that many companies, like insulation contractors, have gone out of business over the past year. In fact in my entire county and the adjacent county there is only one insulation contractor still in business.

I am finding Craigslist an invaluable resource for locating out of work painters, carpenters, masons, plasterers, electricians, and plumbers. I can pay them the same hourly union rate as they earned from their previous employer and save money without taking advantage of their situation.

As a result I can now afford to do many projects, some of which have been on hold for years until I could get the time free to do the work myself. For these out of work trades people it means money to buy groceries or keep the heat turned on for their families (and in California the utility companies have already shut off power to more than 273,000 homes so far this year).

The knowledge I have gleaned over the years and from forums like DIYchatroom.com enables me to better evaluate the skills and know how of the people I hire and to better direct their work when some decision point is reached during the course of the project. I source the materials to insure this aspect is covered and it makes it easier on the worker who only needs to arrive with his tools.

Just food for thought.

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Old 12-16-2009, 11:03 AM   #2
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This is what is referred to as illegal contracting. These individuals do not carry the necessary licensing or insurance of any kind to perform the work they are being employed by you to perform. Why is this important you may ask? When Joe the electrician or Bob the plumber install something incorrectly resulting in property damage or worse yet death who do you think is going to foot the bill?

Ask your HO insurance carrier how they feel about what you are doing. I am willing to bet you will not like the answer. Oh sure you can go to court and say I hired so and so to do this and they did it incorrectly. The court could also inform you that you have engaged in illegal contracting (which in some states the HO can be fined and possibly jailed along with the contractor). You could also possibly be committing fraud if one of these guys happens to be drawing unemployment and it can be proved that you where aware of it (many union guys are drawing unemployment). You could be found liable for payroll taxes as they could be considered your employee under certain circumstances. If your insurance carrier finds out you employed an unlicensed contractor there could be even more repercussions headed your way if the work of the unlicensed contractor is found to be the cause of the claim.

But you go ahead and keep trying to do projects using illegal contractors under the guise of helping the unemployed and saving money. It's amazing to me how many people will risk everything in order to save a little money. Try thinking about the big picture next time instead of only your immediate goals. Definitely try to refrain from going on a public forum and giving bad advice to others.

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Old 12-16-2009, 12:07 PM   #3
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This is what is referred to as illegal contracting. These individuals do not carry the necessary licensing or insurance of any kind to perform the work they are being employed by you to perform. Why is this important you may ask? When Joe the electrician or Bob the plumber install something incorrectly resulting in property damage or worse yet death who do you think is going to foot the bill?

Ask your HO insurance carrier how they feel about what you are doing. I am willing to bet you will not like the answer. Oh sure you can go to court and say I hired so and so to do this and they did it incorrectly. The court could also inform you that you have engaged in illegal contracting (which in some states the HO can be fined and possibly jailed along with the contractor). You could also possibly be committing fraud if one of these guys happens to be drawing unemployment and it can be proved that you where aware of it (many union guys are drawing unemployment). You could be found liable for payroll taxes as they could be considered your employee under certain circumstances. If your insurance carrier finds out you employed an unlicensed contractor there could be even more repercussions headed your way if the work of the unlicensed contractor is found to be the cause of the claim.

But you go ahead and keep trying to do projects using illegal contractors under the guise of helping the unemployed and saving money. It's amazing to me how many people will risk everything in order to save a little money. Try thinking about the big picture next time instead of only your immediate goals. Definitely try to refrain from going on a public forum and giving bad advice to others.

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Old 12-16-2009, 02:40 PM   #4
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My primary concern is getting the work done properly. If I hire an experienced tradesperson then I have been the one to evaluate their skill and approach to the job. When I hire a licensed contracting business the individual sent to do the work is not under my control. I have had many projects over the years where the people that actually show up to do the work were obviously picked up from the nearest Home Depot parking lot or are a relative of the contractor and there may not even be one real employee or true trades person on the job. Even when there is a "supervisor" I see no reason to reward a contractor who uses casual labor (meaning no payment of unemployment insurance, social security, workers comp insurance, or medical coverage) as opposed to paying union scale to a union member who will actually be doing the work.

I suppose you request documentation from the contractor to verify that all the workers are being paid properly and that the contractor has workers comp insurance and a liability policy with a separate certificate with you as the "named insured", and that you verify that the workers have medical coverage and that the contractor is paying social security taxes?

The status of what states consider to be independent contractors makes it very clear that is someone brings their own tools to a job site and performs a task without supervision they are not employees. There is currently an effort to clamp down on the thousands of contractors who sub out work to what are functionally employees, people who have been working for them on hundreds of projects on a weekly basis over a period of years. When a small home building outfit brings a floor guy or a drywall installer or a plasterer onto the job site it is under the builder's license but if anything happens it is you who will be responsible and your insurance company may or may not cover any claim. In California home insurance companies have stopped covering water damage of any nature from failed plumbing regardless of the reason. If a pipe fails or a seal leaks or a water heater bursts it is the homeowner who pays. If the homeowner thinks that a contractor or their sub is responsible it is up to the home owner to pay all the legal fees. Even if the homeowner is successful in suing the contractor the homeowner will still have to pay for the repairs and the homeowner will not be reimbursed for their legal expenses, only the costs to repair the damage to their home.

Anyone who thinks that hiring a licensed contractor is going to insure quality work that is done legally and safely and with all the necessary permits is living in a dream world and will get a rude awakening sooner or later. All one has to do is read the posts on the complaint boards or to the BBB or on other forums about contractors who did not do the work properly. If the contractor does enough damage over a long enough period of time the state may revoke their license but only after a lot of damage has been done. And if the contractor files for bankruptcy they can be released from all claims and open up a new business the following day working under another contractor's license.

A journeyman electrician with a union card has gone through a supervised training program that includes both classroom and on the job instruction. When I hire a contractor with an electrical license it means that the contractor has passed a written test. Whoever the contractor decides to send to do the actual work is up to them and there is no guarantee that the person has any level of competency. I have been directly involved with commercial building projects for decades and the skill and knowledge level of the workers on the non-union job sites varies tremendously. This is where people cut corners and where the risk lies. I can walk into any commercial building on day one after it is turned over by the general and find wiring problems every time. I had one project that looked perfect and the work overall had been meticulous. But even then it turned out that the surge suppressor had been installed on the wrong subpanel and was not protecting the circuits for which it was needed. When a surge hit 10 months later and damaged a computer do you really think that the lessee would be able to get reimbursement from the general or the electrician or anyone's insurance company?

Licensing contractors is a good idea that is poorly implemented. With scab laborers being used by most contractors the actual quality of the work being performed is very low. And this low quality is seldom reflected in the amounts charged to the homeowner. Consider the tens of thousands of homeowners who will now have to pay $15,000 or more to have all the Chinese sheetrock removed from their houses. The builders have said it is not their fault and are doing nothing for the homeowners affected. No insurance company to date has agreed to pick up the tab. No doubt the builders were licensed to contract in Florida and Louisiana, the states where this is most prevalent, but that does absolutely nothing for the homeowners that have had to move out of their homes while continuing to make mortgage payments to their bank (often the same banks that got taxpayer bailout money).

I operate differently than you as I put the emphasis on the worker who is actually doing the work and care about the quality of the work they do and the amount I pay out for a job that actually goes into their pockets. If a general performs as a general and actually has competent people supervising the jobs they accept it is one thing but in my experience and that of everyone I know the general contract is out on the job site once or twice a month and meanwhile the actual work is being done by people working independently. Inspectors catch some problems before jobs are completed but having managed cleanup operations on large projects I know that inspectors miss many defects as well. Buyer beware applies to services as much as it does to goods and I put no more trust in the state licensing boards than I do in the Good Housekeeping seal of approval.
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Old 12-16-2009, 02:55 PM   #5
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knowing your limitations


More to the point I see many posts, in particular in the HVAC and Electrical sections where homeowners have decided that they cannot afford a contractor and so are seeking advice on how to do it themselves. The real danger is from home owners doing work on areas that have safety aspects that could lead to electrocution, home fires, CO poisoning or expensive repairs.

Not uncommon for a recessed can light project to turn into a cracked plaster ceiling repair job that costs 4x as much was saved by not hiring a skilled worker who has the right tools and experience.

Many projects which can be legally done by the home owner nonetheless should not be attempted by the average person and the nature of the questions asked often begs the question as to whether the home owner should be doing the work in the first place.

DIY forums and places like Home Depot with their sales clerks providing electrical installation advice, lead people to believe they can tackle jobs that in the past they would not have entertained undertaking. The current economy also forces people to make decisions on how to proceed with a project or repair that is different than in the past when they would have simply hired a professional to do the work.
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Old 12-16-2009, 02:59 PM   #6
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knowing your limitations


I too have used Craigslist to find contractors to do work on my house. I recently wanted to screen in my patio. I called several local screen companies and obtained estimates. I decided on Frank's Aluminum & Screen, Inc. in Cocoa, Fl. He is insured and licensed. He told me that he uses Craigslist to advertise because it is effective and free. The estimate that he gave me was a considerable amount less than another, larger screen company. He provided drawings for the homeowners' assoc and the city permits. The job was completed in a workmanlike manner, in the proper time frame. He provided his insurance info, and I checked out his business license with the state. Many reputable tradesmen use Craigslist. It is up to the homeowner to properly screen anyone that is going to do work on their home to ensure that they know what they are doing, have the proper insurance and permits. Using this method did not take the bread off anybodys table, it just enabled me to find a contractor that gave a reasonable price. Around here, many do not use the Yellow Pages to advertise because of the high monthly cost of a listing.
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Old 12-16-2009, 03:03 PM   #7
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knowing your limitations


Quote:
Originally Posted by ARI001 View Post
This is what is referred to as illegal contracting. These individuals do not carry the necessary licensing or insurance of any kind to perform the work they are being employed by you to perform. Why is this important you may ask? When Joe the electrician or Bob the plumber install something incorrectly resulting in property damage or worse yet death who do you think is going to foot the bill?

Ask your HO insurance carrier how they feel about what you are doing. I am willing to bet you will not like the answer. Oh sure you can go to court and say I hired so and so to do this and they did it incorrectly. The court could also inform you that you have engaged in illegal contracting (which in some states the HO can be fined and possibly jailed along with the contractor). You could also possibly be committing fraud if one of these guys happens to be drawing unemployment and it can be proved that you where aware of it (many union guys are drawing unemployment). You could be found liable for payroll taxes as they could be considered your employee under certain circumstances. If your insurance carrier finds out you employed an unlicensed contractor there could be even more repercussions headed your way if the work of the unlicensed contractor is found to be the cause of the claim.

But you go ahead and keep trying to do projects using illegal contractors under the guise of helping the unemployed and saving money. It's amazing to me how many people will risk everything in order to save a little money. Try thinking about the big picture next time instead of only your immediate goals. Definitely try to refrain from going on a public forum and giving bad advice to others.
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Old 12-16-2009, 03:09 PM   #8
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knowing your limitations


BTW, if you think so highly of union workers, hire a union company to work on your house and see how expensive it is.

I agree most contractors are just "pimps" and hiring others to do their work, but not everyone is like that. We have always done our own work and right now we are slow on work because of Contractors that you are talking about and others (like union workers) are out doing this stuff illegally for pennies on the dollar. The problem that needs to be solved is people that hire like this just to save a few bucks on their own project. Sounds rather selfish to me.
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Old 12-16-2009, 03:35 PM   #9
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"I am finding Craigslist an invaluable resource for locating out of work painters, carpenters, masons, plasterers, electricians, and plumbers. I can pay them the same hourly union rate as they earned from their previous employer and save money without taking advantage of their situation." --------- But you are. They are not licensed. They rely on their boss to pay:

IRS income taxes - - - - - - - - - - - - - - - If not claimed and payed, off to jail if caught.
Social Security taxes ----------------- Now when retire, not enough to live on, didn't claim it.
Labor & Industries Compensation =========== Accident or death, sue you, lose your car, house, etc. because H.O. Policy rejected-- not a Contractor

The liability is taken from the Contractor, and put on YOU!

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Old 12-18-2009, 05:31 AM   #10
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knowing your limitations


You know, give yourself a gift for Christmas and call your insurance agent/broker to make sure you have an umbrella policy for liability of just about any kind attached to your policy. It will cost you chimp change per year to get $2M worth.

If I fall down in your house? And even if I did something stupid to end up splayed on your floor? I would claim it be your fault and I will suit you for everything you've got including that $2M in the umbrella policy. It is the American way!

Obviously, liability insurance is the first thing an attorney would look to see if you had but it may, not necessarily will, protect you from Craigs List should the folks you are finding do something really stupid and hurt themselves on your property.

I think the folks threatening the IRS will be on your door are going a little overboard. Just write checks and issue 1099 forms if you pay over the allowed amount. You are not obligated to pay an independent contractor, his spouse or children any benefits.

Signed contracts for any work being done is a good idea for lots of reasons. First one is you can establish whether the person you hire is a contractor or an employee I should think.

Cash under the table deals seldom work. Pay fairly and on the surface. Keep records. The audit trail back to you can haunt you for years, or even come back to bite you in the you know what, a decade later.

Last edited by user1007; 12-18-2009 at 05:36 AM.
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Old 12-18-2009, 11:10 AM   #11
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You know, give yourself a gift for Christmas and call your insurance agent/broker to make sure you have an umbrella policy for liability of just about any kind attached to your policy. It will cost you chimp change per year to get $2M worth.

If I fall down in your house? And even if I did something stupid to end up splayed on your floor? I would claim it be your fault and I will suit you for everything you've got including that $2M in the umbrella policy. It is the American way!

Obviously, liability insurance is the first thing an attorney would look to see if you had but it may, not necessarily will, protect you from Craigs List should the folks you are finding do something really stupid and hurt themselves on your property.

I think the folks threatening the IRS will be on your door are going a little overboard. Just write checks and issue 1099 forms if you pay over the allowed amount. You are not obligated to pay an independent contractor, his spouse or children any benefits.

Signed contracts for any work being done is a good idea for lots of reasons. First one is you can establish whether the person you hire is a contractor or an employee I should think.

Cash under the table deals seldom work. Pay fairly and on the surface. Keep records. The audit trail back to you can haunt you for years, or even come back to bite you in the you know what, a decade later.

I wonder if your boss treats and thinks of you as a piece of dirt. Your attitude is totally wrong and immoral. It will catch up with you one day. Good luck.
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Old 12-18-2009, 12:05 PM   #12
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let's play nice now....

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Old 12-18-2009, 12:28 PM   #13
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Setting aside the issue of insurance, don't electricians (as an example) obtain licences from the state as individuals? I was under the impression that each electrician would have his own electrician's licence. Or is that not the case? I tried reading the rules on my state's website but it wasn't really clear what they were saying.

Another form of licence a person might need is a business licence, but whether a person needs that at all depends on the local area. He might need two (one for where his office is, and one for where the job is) but he might not need any.

Are there other forms of licences subcontractors need to have? If the subcontractor does have whatever licences are necessary, then if you can act as a GC can you not hire him? I do know that it's not my job to make sure an independent businessman pays his taxes!

Aren't there some kinds of subcontractors who don't need trade licences? As far as I can tell, South Carolina does not licence landscapers or painters, for instance.

It is certainly a risk to hire someone who does not carry insurance, but is it illegal?

According to South Carolina 40-11-360, an owner does not need to use licenced contractors if the work is done by his employees -- so if you can keep the dollar value low you can hire him as an employee for a short period of time and not break any laws. Obviously if you do this you need to follow all labor, tax, and other laws (hint: a babysitter is an employee.)

It also says that if the total dollar value of the construction is under $5000 then it's exempt as well. So if you are only doing $2500 of renovations you can aparently hire anyone to do any of the work -- although it also says that a building department is responsible for verifying that any work done under a permit is done by licenced contractors -- I don't see how to reconcile those two -subsections.
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Old 12-18-2009, 01:02 PM   #14
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A homeowner can be the contractor and subcontract, but it is then their responsibility to make sure the subcontractor has the legal licenses and insurance. Subcontractors must have own tools, materials, etc... and contract the job as a whole.
Paying by the hour makes you an employer, then you are responsible for the legal insurance, taxes, etc... as GBR in WA said.
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Old 12-18-2009, 01:28 PM   #15
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I don't think a worker can collect unemployment insurance and be employed at the same time, especially a union worker. That's rather obvious.

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