The Contractors State License Board recommends that it's best to hire a licensed contractor who is legally qualified to do the work. However, if you hire unlicensed people to perform the work, you may be considered an employer. This could make you responsible for:
Registering with the State and Federal Government as an employer.
Withholding State and Federal Income Taxes, Federal Social Security Taxes, paying Disability Insurance and making Employment Compensation contributions.
Providing workers compensation insurance unless the work is done by members of your immediate family.
Register with State & Federal Governments
If you are an employer, you must register with the state and federal governments as an employer and be subject to the above responsibilities. There may be financial risks for you if you do not carry out these obligations and these risks are especially serious with respect to workers' compensation insurance.
Information about Obligations Under Federal Law
For more specific information about your obligations under federal law, contact the Internal Revenue Service at 800-829-1040 and the U.S. Small Business Administration at 800-359-1833.
Information about Obligations Under State Law
For more specific information about your obligations under state law, contact the Employment Development Department at 916-653-0707, the Department of Industrial Relations at 415-703-5070, and the Franchise Tax Board at 800-852-5711.
Owner Builders are also responsible for many items such as:
Supervising the job, including scheduling workers and obtaining building permits and requesting inspections.
If any of the construction doesn't pass building inspections, the property owner is responsible for correcting the work and getting it re-inspected.
Making sure all workers and material suppliers are paid, or face the possibility of mechanic's liens.