Heads up if you're in California

That’s the way I understand it. If you’re in Window cleaning, you can not sub window cleaning.

that would make sense, why would a tile guy sub a tile guy

but a tile guy might sub a drywall guy, an electrician, a plumber etc to get a job done or fixed

forget subs, have them incorporate instead

now you are hiring a corporation, I beleive that changes things dramatically since this is a payroll tax and work comp issue, a corporation is out of the scope - no work comp for owner and they are paying themselves so payroll tax paid and problems solved, issue over

1 Like

Yeah, Paul Pate. He got hosed. He was doing things right and still got hosed.

Because he needs help with a big job?
I agree on hiring a corporation, but trying to find one may be another story.

1 Like

Thats how I understand it as well.

There’s where I feel a reasonable argument could be made that the job was outside the “usual scope” of business. It would not have been on the table without additional outside help.

…But we know government is not reasonable.

@Bruce, sometimes I wonder why you are running a window cleaning company and not a law firm or something.
I am thankful, however, for your input here on the forum.

ha, good one Tory, yep for sure

I don’t mean finding one, I mean the subs/employee needs to incorporate himself for those situations where its an already existing 1099/sub deal, change it to incorporated

this puts more on the ‘sub’ directly to be a corp but I suppose it’s already on him indirectly as a 1099 sub (taxes, work comp, disability)

I understood big Bruce.
What I’m saying is unless its done FOR them, good luck trying to find someone who’s already had it done.
I’m still a DBA. I don’t know anyone else who is incorporated in my local area to use either.

Bruce, I know I ain’t the sharpest tool in the shed, and I read the ENTIRE writ. (I’ve been around legal terminology for a little while, although it don’t mean I’m completely literate either).

The way it sounded it was only clarifying what we already know and going a tad deeper in definition because it was blindingly obvious that the drivers of that company were getting shafted deliberately.

Paul was really doing things right. So am I. The guys Paul was using ALL HAD THEIR OWN BUSINESSES!
We used some of the same guys. Some had their own websites as well. Neither of us was gaming the system at all.

I was at first. Only because it was done to me, and I didn’t know it was illegal.
Everyone I used afterward all had their own business’.

What I’m saying is; my greatest mistake was sharing experience and knowledge to these guys, and only one of them didn’t use it against me-and all of them are my competition-with one of them turning into a thief and outclassing me in terms of competition.

He used to be a laborer, driving an old beat up Datsun- at 15 bucks an hour when I first got him and by the time he went completely on his own he was demanding roughly 60%, driving a brand new Tundra until getting caught stealing accounts from me.

So I am in NO way going to help to train any more of my competition again.
I try to vision how that would be Bruce with a bunch of guys with corps, and I can only see myself doing all the legwork, transforming mine then creating all of that for my own little world and again have it pop.

Know what I mean?
Our state already has us by the throat and we are hemorrhaging cash. That isn’t possible that we are expected to be functional without help. I can’t hire an employee, NOT DOING IT RIGHT, THE WAY ITS SUPPOSED TO BE DONE without lying about something in order to make it profitable. Nobody would hire me at the prices I would be forced to charge because its more than I charge using a sub which is already too high. I’m getting underbid at most RFP’s I get invited to. Unless I’m already in, and have a relationship with the shot caller, I don’t win.

Bruce, these guys are all starting to retire. Some died. Some get fired or change jobs. I had the New Childrens Museum since it was built. Never one single complaint. Only praise. Every year we got faster. They paid upon completion…I lost them last year because some punk who worked for my ex-crew leader on the high rise behind the museum decided to go on his own and take some of HIS boss’s clients (Ironic right? He was actively trying to snag the museum too and thats how his guy knew who to talk to) and I was part of the collateral damage.

Any chance Bruce you can point out and define why you read how you do? With your way of breaking it down to me “Bruce style”?

Otherwise, my stubborn self still may be reading it wrong. Come on big guy break it down for me.

Dang bro, it sounds like it’s stressful out there in cali, from the sounds of it a lot of us who sub work would be in trouble if we lived there.

You know, I’ve been giving this some thought. The reality is, even if your sub is a legitimate sub and they are owner operator you have exposure. Most guys out here sub because of workers compensation insurance. But there are quite a few scenarios where you as the contractor subbing the work can be liable for workers compensation on that owner operator if they get hurt on the job. I’d be willing to bet that if they’re hurt on your job they can sue you for workers compensation or for their medical expenses plus lost wages.

I imagine that’s why so many places require you to have work comp even if you’re an owner operator. I know our property managers require it regardless. Our largest account went with us because we had it and their owner operator guy refused to even get a bare policy, basically just paying for one for $500 a year just in case. So long story short, get a work comp policy regardless. If you’re exempt from the policy and you’re owner operator the cost is about $500 to have in place just in case. I don’t know if it has a specific name or not for this kind of policy but I know state fund does them all the time.

One thing I don’t know, is what documentation state fund requires of you to see if you are using subs. You’re probably on the hook for their cost as an employee for work comp if they don’t have any, but you’d have to ask them.

Technically yes you’re right. But if they have insurance, they are covered. The contract is clear that they are on their own as far as getting hurt. I know its more a “between you and I” thing than a legal binding thing. If they have insurance, they are covered. There’s also another way to make things right but its a grey area and not something I’d put on a forum.

Yes, I have it. But I don’t hire employees. I have in the past. And I hope to soon in the future. Its always better to have it even if you don’t need it.

What State Fund requires is this:

They have an annual audit that you can either go to their office for or they go to your office.
They ask you if you have employees or subs.
When I say subs, I only got one interviewer that tried to read me the riot act-he said " do they have their own businesses?
Do you have their business cards?
I’m sure I do. Why?

Do they have insurance?
They better. Where is this going?

Do they have workmans comp?
I don’t freakin’ know. Who cares?

Then he tells me that if they don’t have workmans comp that they are employees. I got pissed and told him "bull. look, i tell them what the job is, they go look at it and give me a price. If i like the price I tell em it needs to be done before friday let me know when its done. I got copies of their insurance and even the drug test results they all submitted. I got most of them background checked too.

He tells me “thats normally what employers do isn’t it?”
I don’t know what other people do, all I know is that if someone calls me to send someone to their house to clean the windows, they want to know who’s in their home with their kids. I want to be confident I’m not sending charles manson.

They made a ruling and I was good to go. Every year its the same questions.

Having insurance means nothing, the coverage and type does. If a sub had insurance and that insurance doesn’t cover the full amount of damages or injury it can come down on main contractor or even property owner.

1 Like

Thank you.

Just wanted to come back to this. I received an email from my business attorney, boiler plate style so i am assuming he sent it to other clients as well in regards to this law. He does a lot of real estate/construction business law. He clearly stated that you CAN NOT sub any work that you provide. So if you are a window cleaner you CAN NOT sub out window cleaning, period. Same with any other services you provide. Not even if they have a business license are incorporated, etc. He also stated that anyone that feels they are impacted by this can schedule a meeting with him to discuss further. I’m not going to since I don’t sub but I thought it could be helpful coming from a California business attorney.

Another anecdotal note, the pool cleaning company next door to me actually asked me if this was going to impact us and I said no because we have all employees, and he operates the same way. But he told me that he has had several pool cleaning “companies” asking if he wanted to buy their routes because they sub out all of their work to independent pool cleaners and weren’t going to be able to do that. I asked him what else he know about the law and he just said that he was told that he can’t give any pool cleaning business to anyone outside of the company because that’s what they do.


Thanks for the update and clarification from a trustworthy source.