We’re building a new home. Our general contractor seems to be doing a good job – the project is on time, it’s within our budget, and pretty much exactly as we thought it would look. But, we live in an area where undocumented workers make up a big part of the workforce, and we’ve heard stories about undocumented workers getting hurt on the job and homeowners having to pay. Our general contractor is properly licensed, and we’re satisfied that he’s pulled all of the required permits for the project. At the same time, the likelihood that the general contractor is using undocumented workers is pretty high. What happens if an undocumented worker is hurt on the job? Are we liable?
Your liability for an injury to an undocumented worker who is employed by your general contractor depends on whether the undocumented worker is covered by workers’ compensation or not.
Workers’ compensation is an insurance program that provides eligible workers with compensation for work-related injuries regardless of negligence. The program is mandated by virtually every state. The covered employee gives up the right to sue the employer over negligence for a work-related injury in return for the right to receive financial and other benefits from a state compensation pool that is funded by payments from employers.
As a licensed general contractor, yours is likely to have bought coverage from your state’s workers’ compensation program, as per the law. (Almost all employers are covered by workers’ compensation laws. A very few states exempt nonprofit employers or employers with fewer than three employers, but, even so, many otherwise exempted employers “opt in” to their states’ workers’ compensation program.)
Workers’ compensation laws in most states expressly cover undocumented workers. If an undocumented worker in such a state is injured working on your house, workers’ compensation will cover any claim for compensation and you should not be held liable, regardless of any negligence on your part of on the part of your general contractor.
However, a few states exclude undocumented workers from coverage, or haven’t yet decided one way or the other. In such states, if an undocumented worker employed by a general contractor suffers a work-related injury as a result of the homeowner's negligence, the homeowner may by liable for any claim for compensation arising from that injury.
If you have reason to believe that your general contractor is employing undocumented workers and if you live in a state that does not expressly cover undocumented workers in its workers’ compensation program, check to see if your homeowner’s insurance policy provides coverage for claims for compensation for work-related injuries to anyone working at your house. If it doesn't, you should consider some form of supplemental insurance that gives you protection against such claims for the duration of your home building project.