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CSLB Press Release - 12/19/12

Double Trouble: No Contractor License or Workers’ Comp Insurance

CSLB undercover sting in San Jose shows risk of hiring illegal contractors who bring uninsured help

SACRAMENTO — An unlicensed contractor who arrived ready to work and brought two helpers with him got a surprise last week in San Jose when the “homeowner” turned out to be a Contractors State License Board (CSLB) investigator. The undercover operation, conducted at a San Jose home on December 12 and 13, 2012, by CSLB’s Statewide Investigative Fraud Team (SWIFT), netted seven individuals who were issued notices to appear (NTAs) on charges of illegal contracting, one of them a repeat offender.

On the first day of the sting, Delbery Malcom Haynes Jr., of San Jose, was eager to work after submitting a bid for decorative rock removal on one of the home’s interior walls. He returned the next day with two workers in tow, but left with an NTA for being an unlicensed contractor and for not carrying workers’ compensation insurance for his helpers.

Haynes and other suspected unlicensed operators were invited by SWIFT investigators who posed as property owners seeking bids for exterior and interior projects, including painting, fencing, drywall, and rock removal services. Most of the referrals came through the online bulletin board site craigslist.org. One of those who bid was repeat offender Fredrick Bates III, of San Jose, who was cited in 2010 for contracting without a license.

“Homeowners are taking a huge risk when they hire unlicensed contractors,” cautioned CSLB Registrar Steve Sands. “They are potentially liable if an unlicensed individual gets hurt on the job, and the risk increases if workers are brought to the property. Plus, the recourse for homeowners is limited if the person’s work is substandard or is never completed.”

Property owners considering improvement projects should always consult CSLB’s online instant license check to ensure the contractor license is in good standing. By law, all home improvement jobs totaling $500 or more in combined labor and material costs in California must be undertaken by CSLB-licensed contractors.

All seven suspects face misdemeanor charges of contracting without a license (Business and Professions Code section 7028). First-conviction penalties for contracting without a license include up to six months in jail and/or up to $5,000 in fines; successive convictions bring harsher penalties. All who were cited received notices to appear in Santa Clara Superior Court on February 14, 2013.

Representatives of the Employment Development Department (EDD) joined SWIFT investigators on the sting, and will investigate to determine if the seven suspects failed to register with the state as employers.

Three of the seven face an additional misdemeanor charge of illegal advertising (Business and Professions Code section 7027.1). State law requires that contractors include their license number in all print, broadcast, and online advertisements. Those without a license can advertise as long as the ad states that they are not a state-licensed contractor, and the combined total of a project’s labor and materials costs is under $500.

CSLB conducts sting operations throughout the state each week to protect consumers, help level the playing field for legitimate contractors, and to curb the underground economy.


DAY 1 NOTICES TO APPEAR

SUSPECT'S NAME

CITY OF RESIDENCE

LICENSE CLASSIFICATION
VIOLATIONS
Felipe Sanchez Rodriguez

San Jose

D-28 - Doors, Gates and Activating Devices Contracting without a license
Noel Kou

San Jose

C-5 - Framing and Rough Carpentry Contracting without a license
Charles D. Kozacek

San Jose

C-33 - Painting and Decorating Contracting without a license

Illegal advertising


DAY 2 NOTICES TO APPEAR

SUSPECT'S NAME

CITY OF RESIDENCE

LICENSE CLASSIFICATION
VIOLATIONS
Fredrick Bates III

San Jose

"B" - General Building Contracting without a license

Illegal advertising

Delbery Malcom Haynes Jr.

San Jose

C-9 - Drywall Contracting without a license

Failure to provide workers' compensation insurance

Charlie Thomas Mahoney

San Jose

C-13 - Fencing Contracting without a license

Illegal advertising

Ralph Joseph Francis

San Jose

"B" - General Building Contracting without a license


CSLB urges consumers to follow these tips before hiring anyone to work on their property:

  • Only hire state-licensed contractors. Ask to see the license and a photo ID to verify their identity.
  • Always check the license number on CSLB's website, to make sure the license is in good standing, and that employees are covered by workers' compensation insurance.
  • Don't pay more than 10 percent or $1,000, whichever is less, as a down payment. There is an exception for about two dozen licensees who carry special bonds to protect consumers. These exceptions are noted on CSLB's website.
  • Don't pay in cash, and don't let payments get ahead of the work.
  • Get at least three bids, check references, and get a written contract with signed change orders for any additions or amendments to the contract.

The Contractors State License Board licenses and regulates California's 300,000 contractors, operating under the umbrella of the California Department of Consumer Affairs. It is regarded as one of the leading consumer protection agencies in the United States. In fiscal year 2011-12, CSLB helped recover nearly $36 million in ordered restitution for consumers. More information and publications about hiring contractors are available on CSLB's website or by calling (800) 321-CSLB (2752). You also can sign up to receive automatic CSLB email alerts.