The safest overall approach for a contractor who wants to avoid inheriting employment liabilities (workers' comp, wages, discrimination claims) from lower-tier workers is to:
Explanation
Three exposures close together: Labor Code §2750.5 makes an unlicensed sub's crew the hiring contractor's employees, §2810.3 makes a client employer share wage and workers' compensation responsibility for workers supplied through a labor contractor, and §2775 decides classification by the ABC test whatever the parties called it - so checking the license, taking a current certificate of insurance, keeping the §1174 records, and covering the contractor's own employees under B&P §7125 is the whole of the defense. (b) is the arrangement §2775 was written to reach. (c) destroys the records that would otherwise rebut an employee's estimate of hours. (d) forfeits the exclusive-remedy shield and invites a §3706 civil suit with no common-law defenses.
Law Reference: Labor Code §§2750.5, 2775, 2810.3; Business & Professions Code §7125This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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