Board members and managers frequently ask my firm whether their Association can hire a handyman to complete projects or repairs within their Association. My response is generally yes, but there are a number of considerations that I advise the Board to first contemplate.
First, the Board should review the situation to determine whether the work should be done by a licensed contractor or by a handyman. The Arizona Registrar of Contractors states that “[a]ny business which contracts or offers to contract to build, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, development or improvement, or to do any part of the work must be a licensed contractor. Also included in work requiring a license is the erection of scaffolding, connections to utility service lines, metering devices and sewer lines, mechanical or structural service to a structure or improvement and any other work in connection with the project.” This is a broad definition that most contractors likely fall within. However, A.R.S. §32-1121 does list certain persons that are not required to be licensed in Arizona. One of the exemptions is known as the Handyman Exemption.
The Handyman Exemption essentially allows persons who install or attach products or materials where the value of the contract, including all of the labor and materials, is less than $1,000 to do the work without a license. The full description of the Handyman Exemption can be found at A.R.S. §32-1121(A)(4).
While a handyman may seem like an easier hire for small projects within the Association, hiring a handyman can be troublesome when it comes to the issue of workers’ compensation insurance. Therefore, when determining who to hire for a specific project, the Board also needs to consider whether the Association has adequate insurance coverage.
Most Boards do not think the Association has employees and therefore they wonder how and why their Association would ever need workers’ compensation insurance. This is a very logical question because most all Board members provide their services to the Association on a volunteer basis and are not considered employees of the Association. Further, while your Association may hire a professional management company to help manage the Association’s financials and other affairs, the professional management company may take care of hiring the Association’s contractors and vendors. While all of these things may be true for your Association, your Association may still need workers’ compensation insurance.
The Board should review the Association’s insurance provisions in the CC&Rs. Some CC&Rs require that the Association have workers’ compensation insurance. If this is the case, the Board has an obligation to attain the necessary workers’ compensation insurance pursuant to the CC&Rs. Further, the Board should talk to the Association’s insurance agent about obtaining the needed or recommended insurance, depending on who the Association hires to do work within the community.
If the Board decides to hire a licensed, bonded and insured contractor to complete repairs and work within the Association, there may still be situations that arise whereby it would be beneficial for the Association to have workers’ compensation insurance. For instance, most times the Association or its manager asks for proof of insurance and licensing up front. If during the course of a project, the contractor’s insurance or license expires, the Association may not be made aware of the expiration. If during that time, the contractor or his/her employees gets hurt on the job, it would be beneficial for the Association to have workers’ compensation insurance in that scenario.
If the Board decides to hire a handyman to do work within the Association, it is crucial that the Board determine whether or not the Association has the adequate insurance coverage, including workers’ compensation. In Arizona, in the context of worker’s compensation insurance, Courts typically use the “right to control test” to determine whether an individual should be considered an “employee” or “independent contractor”. [1] Courts look at a number of factors to make this determination, including: 1) the extent of control that the employer may exercise in the details of the work; 2) whether the one employed is engaged in a distinct occupation or business; 3) the skill required in the particular occupation; 4) the kind of occupation and whether the work is done under the direction of an employer or without supervision; 5) the length of employment; 6) who supplies the tools and place of work; 7) whether the work is part of the regular business of the employer.[2]
When the Association hires a handyman, the Association likely will pay the handyman by the job or by the hour; may supply the tools and place of work; and may control the details of the work or how the work is completed. The factors may weigh more in favor of the handyman being categorized as an “employee” and therefore, if the handyman was injured on the job, the Association could be held responsible for the injuries. It is important to note that each hire should be looked at on a case by case basis because of the various factors that courts consider. However, when in doubt I would highly advise that the Board discuss situation with the Association’s insurance agent and/or attorney.
[1] Ringling Bros. v. Superior Ct. of Pima County, 680 P.2d 174, 140 Ariz. 38 (Ct. App. 1983).
[2] Fry v. Industrial Commission, 546 P.2d 1149, 26 Ariz. App. 140 (Ct. App. 1976).
