Homeowner associations should carry workers' compensation insurance even if they have no employees If the board hires a painter, landscaper, roofer, plumber, part-time handyman, etc., the HOA could be held liable for employment-related injuries even though they are independent contractors

Under California law, if a board hires an unlicensed contractor, the association automatically becomes the employer of the injured worker. This is true even if the contractor misrepresented the fact that he or she was licensed and insured. Without workers' compensation insurance, there are no limits on the damages that may be claimed by an injured employee, including claims for pain and suffering The association can be held liable and the membership could face large special assessments to pay any damages. With insurance, the employee's claims are limited and the loss is paid by the insurance company.

In Heiman v. Workers Comp Appeals Board, the Montana Villas Homeowners Association hired Pegasus Properties as its management company Pegasus hired Hruby, a contractor, to install rain gutters for the association, Hruby's employee was careless and a rain gutter touched a high voltage electrical wire, severely injuring the employee. Since Hruby was unlicensed and uninsured, the court determined that both the association and its management company were the employers of the injured worker and both were liable to pay him substantial benefits.

Worker's compensation policies generally do not protect the association when a volunteer is injured while acting on behalf of the association. Such volunteer work should be discouraged.

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Workers' Compensation Questions and Answers for Employers

State Compensation Insurance Fund

Workers' Compensation Insurance Required

Failure to Carry Workers' Corporation Insurance