Apartment building owners should carry Workers’ Compensation insurance even when they have no employees. If the management company or owner hires a landscaper, plumber, handyman, or other worker, the association may be liable for employment related injuries even though the person hired is an independent contractor.

By law, if a management company or owner hires an unlicensed contractor, the building owner 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 can be claimed by an injured employee, including claims for pain and suffering. Apartment building owners can be held liable to pay any damages. With proper insurance, the employee’s claims are limited and the loss is paid by the insurance company.

In Heiman v. Workers Comp Appeals Board (2007), the Montana Villas Homeowners Association in Los Angeles hired Pegasus Properties as its management company. Pegasus then hired a contractor, to install rain gutters for the association. The employee was careless and a rain gutter touched a high voltage electrical wire, severely injuring him. Since the contractor was unlicensed and uninsured, the court concluded that both the association and its management company were the employers of the injured worker and both were held liable to pay him Workers' Compensation benefits for life.

Generally, as long as a contractor is licensed, the injured worker will remain the employee of the contractor and not the building owner. As long as the property owner is insured for Workers’ Compensation, the injured worker’s remedy is limited to Workers’ Compensation. If the owner is not insured, the injured worker can pursue the apartment building owner both civilly and under Workers’ Compensation.

To avoid liability and large special assessments, building owners should purchase Workers’ Compensation insurance, even if the contractor does not have employees and make certain their contractors are licensed and insured. Always require a certificate of insurance prior to the contractor coming onto the property.