Independent Contractors, Worker’s Comp, “C-32” & LLC Licensing

When is a worker an employee? For contractors the question is critical to doing business legally in California. Another corporate contractor is hoping to ‘change horses’ now that LLC licenses are a reality. For those with the “A” we take a look “C” at what specialties you might also perform…

Q:  First thank you so much for all the past advice you’ve given me.  My question relates to workman comp insurance.  I read that I can no longer hire an independent employee and must provide workman’s comp, even though he has his own insurance. Is this true?

A:  Hiring independent employees commonly referred to as “independent contractors” has always generated questions.  Either a person is your employee or a “contractor” (independent or otherwise).  Employees are covered by Worker’s Compensation and have payroll taxes deducted each paycheck; whereas, licensed contractors are responsible for their own taxes, etc.  So, yes you should be providing these “independent contractors” with Worker’s Comp coverage unless they have a valid CA contractor’s license (in which case they’re a sub-contractor).


It would be very unusual for an unlicensed contractor to have a Worker’s Compensation insurance policy.



Q:  Our Company is a Limited Liability Company (LLC) based outside California.  Several years ago we obtained a California license and formed a corporation because the CSLB wasn’t issuing licenses to LLC’s.  We are now in the process of applying for a license in the LLC’s name and we’re moving our Qualifying Employee from the corporate license to the LLC license.  The problem is we still have multiple projects going on under the Corporation’s license number.  We’d like to cancel the corporation’s license once the LLC license is issued, but what happens to those ongoing projects?

A: To avoid getting ‘drowned’ from changing licensing while in the middle of a ‘stream’ of projects let us suggest a better way. Once the corporation license is cancelled it cannot sign any new contracts or continue work on existing projects.  So rather than cancel the corporate license let it run its course.  The CSLB gives you a 90-day grace period from the date you move your Qualifying Employee.  During those 90 days the license remains in good standing as if the Qualifier was still there. During the 90-day grace period it would be best to work with the parties involved and assign all existing contracts to the LLC.




Q: I have a company with the ‘A’ license in California.  I now want to start a separate parking lot maintenance and striping business.  I’m trying to figure out the best way to move forward.  I have striped many parking lots that we have built using my “A” license.  If we intend to concentrate on striping with this new company, would I need to get a “C-32” license or would an “A” be sufficient?  If I have to get a “C-32” I hope my experience striping lots in the past will suffice (there have been many).  I would probably want to incorporate this new company.


A:  While the “A” (General Engineering) classification would likely suffice, I would recommend applying for the “C-32” (Parking and Highway Improvement).  “A” contractors can properly handle a wide variety of projects that are also performed under a specialty “C” license.  For example, General Engineering contractors can handle virtually all aspects of the “C-12” (Earthwork and Paving), “C-34” (Pipeline), “C-42” (Sanitation Systems), “C-46” (Solar) and “C-32” classifications.  However, what I’ve found over the years is that some owners (both public and private) specify or, at a minimum, prefer the contractor to have the specialty class.  Since you have done many parking improvement projects, call us to discuss how you may qualify for a waiver of the “C-32” trade exam.