Preview
MATTHEW A. HAULK (SBN: 272457) 5/21/2021
JOSE M. HERRERA (SBN: 2589590)
RAGGHIANTI FREITAS LLP
3
1 1 01 Fifth Avenue, Suite 1 00
San Rafael, California 94901
Telephone: (415) 453-9433
Facsimile: (415) 453-8269
Attorneys for Defendants
PUNIT K. SARNA and
PUJA SARNA
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN MATEO
9
LOUIS PAYCHECK, CASE NO.: 19CIV02595
10
Plaintiff, PUNIT AND PUJA SARNA'S POST-
TRIAL BRIEF REGARDING LABOR
12 vs. CODE IJ 2750.5
PUNIT K. SARNA, et al.,
14
Defendants
Complaint Filed: May 10, 2019
AND RELATED CROSS-ACTION. Trial Date: May 12, 2021
16
INTRODUCTION
17
A contractor that does not have workers'ompensation insurance, but employs
18
someone in a manner that requires him to have workers'ompensation insurance, is an
19
unlicensed contractor. (Bus. & Prof Code 5 7125 and 7125.2). An unlicensed contractor
20
is prohibited from recovering compensation for his work and must disgorge all
21
compensation received for his work. (Bus. & Prof. Code 5 7031).
22
California employers must obtain workers'ompensation insurance for
23
"employees" but not for "independent contractors". (Lab. Code Q 3351, 3353, and 3700;
24
S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341,
25
349). There is a general presumption that all persons hired for work in California are
26
"employees". (Borello, supra, 48 Cal.3d at 355). Under Labor Code section 2750.5, there
27
is a special presumption that all construction workers are employees. This special
28
presumption becomes a conclusive presumption for any workers that do not have valid
1
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750 5
contractors'icenses. (Lab. Code g 2750.5). An unlicensed contractor cannot rely on
2 Labor Code section 2750.5 to argue that he is an owner's "employee", and entitled to
3 compensation as an employee, in order to avoid the civil penalty under Business and
4 Professions Code section 7031. (Fillmore v. Irvine (1983) 146 Cal.App. 3d 649, 657;
5 Maciel Builders LLC v. US Framing lnl.'l (2020) 2020 U.S. Dist. Lexis 26238).
6 Louis Paycheck's work on this project required him to have a contractor's license.
Mr. Paycheck hired 23 individual workers and four "businesses" to perform construction
6 work on this project. Mr. Paycheck has failed to establish that any of these workers or
g businesses have contractor's licenses. He has failed to establish any of the other relevant
to factors in Labor Code section 2750.5. They are all therefore presumed to be his
employees, meaning Mr. Paycheck was required to obtain workers'ompensation
insurance for them under the Workers'ompensation Act. If the court determines that
13 Mr. Paycheck is unlicensed as a result, for example under Business and Professions
Code section 7125 and 7125.2, then his Complaint is barred and he must disgorge all
15 compensation received for work on the project. (Bus. 8 Prof. Code 5 7031).
SUMMARY OF RELEVANT FACTS
17 Louis Paycheck testified in his deposition", responses to special interrogatories,
16 and responses to form interrogatories, that he used "employees" on the project. (Trial
16 Exhibit 29-31, Interrogatory 17, 23-26). Mr. Paycheck testified at deposition that he did
2o not hire or use subcontractors on the project. (Trial Transcript, p. 109:19-110:25). When
21 asked how much he was charged for labor on the project, Mr. Paycheck responded:
22 "Paycheck was not 'charged for labor'; he paid his employees." (Trial Exhibit 29-30,
23 Interrogatory 25).
24 Mr. Paycheck testified at deposition that his employees included a regular crew of
25 3-5 people, including Giovanni Orrega, Joaquin Angeles, Victor Castro, Oscar, and an
26 unidentified fifth person, and that these employees completed demolition in November
27 2017. (Trial Testimony, 98:22-102:23). Mr. Paycheck testified that he paid Giovanni
26
'he referenced portions of the deposition were read into evidence at trial.
2
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
$ 35/hour, he paid Victor $ 25/hour, he paid Joaquin $ 25/hour, he paid Oscar $ 25/hour,
2 and he paid the fifth person $ 25/hour. (Trial Transcript, p. 107:15-108:09).
3 Mr. Paycheck testified at deposition that Giovani, Joaquin, Oscar, and the
unidentified fifth person did not have contractor's licenses. (Trial Transcript, p. 107:15-
5 108:09). In response to a premium audit for a workers'ompensation policy (obtained
5 mid-project and cancelled for non-payment of premiums) Mr. Paycheck identified Victor
Castro as his sole employee and stated that he paid him $ 1,218.17 for installing cabinets.
5 (Trial Exh. 18). Mr. Paycheck prepared a handwritten list of the individuals and
0 companies who worked for him on the project. (Trial Exh. 6). Mr. Paycheck's list included
10 more than eighteen different individuals and more than four different companies or sole
proprietorships. (/d). There is no evidence that any of these individuals or companies
12 hold valid contractor's licenses.
13 Paycheck's scope of work on the project included demolition, electrical work,
plumbing work, carpentry, sheetrock, the installation of flooring, stucco work, and
painting. (Trial Exh. 1). Mr. Paycheck is 78-years old and, at trial,Mr. Paycheck testified
15 that he supervised all of this work but did not physically perform any of it. (Trial
17 Transcript, p. 62:10-62:11; 112:02-112:14). In his interrogatory responses, Mr. Paycheck
15 testified that he was on site 5-6 days per week for 6-9 hours per day from mid-November
10 2017 (with initiated demolition) until the completion of his work in November 2018. (Trial
20 Exh. 29 and 30, Interrogatory 15 and 23). Mr. Paycheck's supervision and control over
21 the work on the project was intense and comprehensive.
22 Punit Sama, M.D. testified at trial that Mr. Paycheck told him during contract
23 negotiations that he had a crew of 14 regular employees. (Trial Transcript, 31:08-31:26).
24
25
workers'5
The
Mr.
construction
compensation
Paycheck told
contract included
insurance.
him
(Trial Exh.
(falsely) that he
a provision
1). Dr.
had
Sama
stating that Mr.
testified that,
workers'ompensation
Paycheck had
at the time of contracting,
insurance and he
27 promised to supply him with a certificate of insurance but never did so. (Trial Transcript,
23 37:22-38:07).
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
1 At trial, Louis Paycheck repudiated his pleadings, deposition testimony, and
2 written discovery responses, and testified that he did not use any employees on the
3 project and that he only hired independent contractors and subcontractors. (Trial
4 Testimony, 98:22-110:25). Mr. Paycheck testified that Victor Castro had a contractor's
license but failed to introduce any other evidence to support that claim. At trial, Mr.
5 Paycheck testified that he has never had employees and that he hires workers on an as-
needed basis. (Trial Transcript, 67:06-67-14). Mr. Paycheck testified that he never used
3 employees on Mr. Sama's project and that he views hiring workers as uncovered
0 "independent contractors" a regular and acceptable business practice. (Trial Transcript,
10 p. 85:18-85-26; 142:17-142:13; 107:05-107:10).
LEGAL ANALYSIS
12
1. A Contractor That Uses Emplovees Without Workers'omoensation
13
Insurance Has His License Automaticallv And Retroactivelv Susoended.
14 A contractor's license is required for anyone who undertakes, submits a bid to, or
by himself or through others, constructs, alters, repairs, adds to, subtracts from,
improves, moves, wrecks, or demolishes any building, structure, project, development, or
improvement, or any part thereof. (Bus. & Prof. Code section 7026). This includes both
"contractors" and "subcontractors". (/d.)
19 An unlicensed contractor is barred from recovering compensation and must
20 disgorge all compensation received for its work. (Bus. & Prof Code 5 7031 ). All
contractors are required to carry workers compensation insurance or file an "Exemption"
verifying that they do not have or use employees. (Bus. 8 Prof. Code 5 7125).
A contractor that signs an Exemption states under penalty of perjury that: "I
24 understand that, upon employing anyone in any manner that is subject to the
workers'ompensation
laws of the State of California, the claim of exemption executed under this
form will no longer be valid." (Trial Exh. 14). A contractor that uses employees without
27 workers'ompensation has his license retroactively suspended by operation of law on
28
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
the first date he was required to obtain workers'ompensation insurance. (Bus. 8 Prof.
2 Code H 7125 and 7125.2; Wright v. Issak (2007) 149 Cal.App. 4th 1116).
2. The Workers Compensation Act Provide a General Presumption of
Emplovee Status.
California law requires all employers to obtain workers'ompensation insurance
for their employees. (Lab. Code tJ3700). There is a general presumption that any person
is service of another is an employee. (S. G. Borello 8 Sons, Inc. v. Department of
Industrial Relations (1989) 48 Cal.3d 341, 349). The use of employees without
workers'ompensation
insurance is a crime. (Lab. Code tt 3700.5; Bus. 8 Prof. Code H 7125.5,
7031; Wright v. Issak (2007) 149 Cal.App. 4th 1116).
Under the Workers Compensation Act, the term "employee" includes most persons
under the service of an employer under any contract of hire, except for independent
contractors. (Lab. Cod g 3351; S. G. Borello 8 Sons, Inc. v. Department of Industrial
'4 Relations (1989) 48 Cal.3d 341, 349). An independent contractor is, "any person who
renders service for a specified recompense for a specified result, under the control of his
principle as a result of his work only and not as to the means by which such result is
accomplished." (Lab. Code IJ 3353).
18
The purpose of the Workers Compensation Act is to require comprehensive
coverage of injuries in employment. "It accomplishes this goal by defining
'employment'roadly
in terms of 'service to any employer'." (Lab. Code tt 3351; Borello, 48 Cal.3d at
349). The test to determine whether a worker is an employee or an independent
contractor requires the application of a multi-factor and cumulative analysis'et forth in
S. G. Borello 8 Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341.
The relevant factors of that analysis include, but are not limited to, "control of details"
regarding the work, the right to discharge at-will and without cause, the method of
26
27
28 'alifornia law applies the "ABC" test developed under Dynamex Operations VV.v. Superior Court (2018) 4
Cal.5th 903, for relationships arising after July 1, 2020.
5
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
payment (by the job or hourly), and whether the parties believe they are creating an
2 employee-employer relationship, (/d.)
3. Labor Code section 2750.5 Provides a Special Presumption of Emplovee
Status for Construction Workers.
Labor Code section 2750.5 provides a rebuttable presumption for workers
performing services in the construction industry. This presumption supplements, and
does not replace, the applicable definitions and presumptions in the Workers
Compensation Act. (Lab. Code g 2750.5).
Under Labor Code section 2750.5, every worker who is performing a function or
service that requires a contractors'icense under the Contractors State License Law', or
who isperforming services for someone required to have a contractors'icense, is
presumed to be an employee rather than an independent contractor. Almost all
construction related work require a contractors'icense. A party may rebut the
presumption under section 2750.5 by producing "satisfactory proof" of the following
factors:
16
17 (a) The worker has the right to control and discretion as to the manner of
performance of the contract for services in that the result of the work
18 and not the means by which it is accomplished is the primary factor
bargained for. (Lab. C. 5 2750.5(a).)
19
20 (b) The worker is customarily engaged in an independently established
business. (Lab. C. 5 2750.5(b).)
21
22 (c) The worker's independent contractor status isbona fide and not a
subterfuge to avoid employee status. A bona fide independent
23
contractor status is further evidenced by the presence of cumulative
24 factors such as substantial investment other than personal services in
the business, holding out to be in business for oneself, bargaining for a
25 contract to complete a specific project for compensation by project
26
rather than by time, control over the time and place the work is
performed, supplying the tools or instrumentalities used in the work
27 other than tools and instrumentalities normally and customarily
28 'he Contractors State License Law, located in Chapter 9 (commencing with Section 7000) of Division 3 of
the Business and Professions Code, creates a licensing regime for California contractors.
6
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE g 2750.5
provided by employees, hiring employees, performing work that is not
ordinarily in the course of the principal's work, performing work that
requires a particular skill, holding a license pursuant to the Business
and Professions Code, the intent by the parties that the work
relationship is of an independent contractor status, or that the
relationship is not severable or terminable at will by the principal but
gives rise to an action for breach of contract (Lab. C. 5 2750.5(c).)
The presumption under Labor Code section 2750.5 becomes conclusive, and is
7
no longer rebuttable, ifan unlicensed worker is performing services that require a
contractors'icense.
"In addition to the factors contained in subdivisions (a), (b), and (c), ~an
Derson Derformino anv function or activitv for which a license is reauired
10
Dursuant to Chapter 9 tcommencina with Section 7000) of Division 3 of the
Business and Professions Code shall hold a valid contractor's license as a
12
condition of havina indeoendent contractor status." (Lab. Code I] 2750.5)
[Emphasis Added].
13
In summary, an unlicensed construction worker is conclusively presumed to be an
14
employee for workers'ompensation purposes and it isthe contractor's burden of proof
15
to show licensure. (/d.; See a/so Bus. & Prof. Code tI 7031(d) [Contractor required to
16
submit verified certificate of licensure from the CSLB when license-status is
17
controverted].
18
4. The Special Presumotion Under Labor Code Section 2750.5 ADDlies to
19
Whether a Worker Is an Emplovee or Indeoendent Contractor for the
20 Puroose of Determine Whether Workers'ompensation Coveraae Is
Required.
21
Section 2750.5 applies to determine whether a construction contractor's workers
22
are his "employees" or his "independent contractors" for workers'ompensation
23
purposes. (State Compensation /ns. Fund v. Workers'omp. Appea/s Bd. (Meier) (1985)
24
40 Cal.3d 5, 15). A contractor that hires an unlicensed worker is conclusively presumed
25
to have an employer-employee relationship with the worker and required to obtain
26
workers'ompensation insurance coverage for that worker. (/d.)
27
28
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
1 An unlicensed subcontractor is conclusively presumed to be the employee of the
2 hiring general contractor, and an unlicensed subcontractor's employees are presumed to
3 be the employees of the hiring general contractor. (State Compensation Ins. Fund, supra,
4 40 Cal.3d. at 15; See a/so Hunt Building Corporation v.Bemick (2000) 79 Cal.App.4th
5 213, 220; Rinaldi v. Workers'omp. Appea/s Bd. (1987) 196 Cal.App.3d 571, 574; Blew
5 v. Homer(1986) 187 Cal.App.3d 1380). This is consistent with the fundamental policy
7 underlying workers'ompensation laws: "[T]hose hiring others to perform services should
5 bear the risk of injuries incurred in the undertakings." (State Compensation Fund, supra,
0 40 Cal.3d at 13-15).
10 Contractors have attempted to make mischief with this law in the past. In Fillmore
v. Irvine (1983) 146 Cal.App. 3d 649, 657, an unlicensed subcontractor sued a general
12 contractor to recover compensation for his work on a construction project. The claim
13 would ordinarily be barred by Business and Professions Code section 7031. However,
14 the unlicensed contractor argued that a contractor's "employees" are not required to have
15 a license in order to recover their wages under an "employee" exemption to the licensing
15 laws. (Bus. & Prof. Code 5 7058).
17 The unlicensed subcontractor argued that, as an unlicensed contractor, he was
15 conclusively presumed to be an employee and therefore authorized to sue for his
10 "wages". The court rejected this argument finding that itwould require an implied repeal
20 of Business and Professions Code section 7031. The court reasoned that section 2750.5
21 applies in the workers'ompensation context to determine who is an employee and who
22 is an independent contractor for workers'ompensation purposes. (Fillmore, supra, 146
23
25
workers'4
Cal.App.3d
compensation
The
at 658).
court ruled,
As discussed
however,
above,
insurance for all employees,
that the
an employer must obtain
but not for all
presumption is
independent contractors.
not applicable for determining
25 whether an unlicensed contractor is "exempt" from license requirements under Business
27 and Professions Code section 7058 because he is an "employee" rather than an
25 unlicensed construction contractor. (Id. at 657). The Fillmore holding was accurately
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
summarized by the United States District Court, Northern District Court in Maciel Builders
3 LLC: "In other words. 6 2750.5 distinauishes between emplovees and independent
3 contractors — not between persons who are and are not enaaaed in the contractor
4 business." (Maciel Builders LLC v. US Framing lnl.'I (2020) 2020 U.S. Dist. Lexis 26238
5 LEGAL ANALYSIS
6 1. Labor Code 2750.5 Applies To the Question of Whether Louis Pavcheck's
Workers Were His Emplovees Or Independent Contractors.
7
Louis Paycheck's work on the project included demolition, alteration, repair
8
renovation, construction, and improvement work to a five-unit residential building in
9
10
Burlingame, California. Mr. Paycheck's work included, but was not limited to, demolition,
electrical, plumbing, carpentry, sheetrock, flooring, stucco, and painting. Mr. Paycheck's
11
12
scope of work required him to have a contractor's license. (Bus. 8 Prof. Code 5 7026).
Mr. Paycheck's workers, who performed the physical work, were also required to have
13
contractors'icenses by virtue of their scope of work on the project. (Bus. 8 Prof. Code I'I
14
7026).
15
Labor Code section 2750.5 therefore applies in this case to determine whether
16
17
these workers were Mr. Paycheck's employees or independent contractors for the
purpose of Mr. Paycheck's obligation to obtain workers'ompensation insurance.
18
19
(Fillmore, supra, 146 Cal.App.3d at 658; Maciel Builders LLC v. US Framing lnl.'l (2020)
2020 U.S. Dist. Lexis 26238). If these workers were "employees", then Mr. Paycheck was
20
required to obtain workers'ompensation insurance for them, and ifhe did not have
21
22
workers'ompensation insurance for them, his license was automatically and
23
retroactively suspended. (Bus. & Prof. Code tI 7125.2).
2. Louis Pavcheck's Reaular Crew of Emplovees Are Considered His
Emplovees Under Labor Code section 2750.5.
25
Mr. Paycheck's regular crew of employees included Giovanni Orrega, Joaquin
26
Angeles, Oscar, and a fifth unidentified person. Mr. Paycheck used these employees to
27
perform demolition, alteration, repair, renovation, construction, and improvement work on
28
the project. The nature of their work required them to have contractors'icenses.
9
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
1 Mr. Paycheck testified that Giovanni, Joaquin, Oscar, and the fifth unidentified
2 person did not have contractors'icenses. They are therefore conclusively presumed to
3 be Mr. Paycheck's employees under Labor Code section 2750.5. (Bus. & Prof. Code 5
4 7026). Mr. Paycheck testified that Victor Castro had a contractor's license but failed to
5 present a certificate of licensure from the Contractors State License Board. This
5 testimony, particularly given Mr. Paycheck's numerous "contradictions", is not sufficient or
7 credible evidence of licensure. Victor Castro must also be conclusively presumed to be
s an employee.
9 Moreover, and even ifthese workers had licenses, they would stillbe considered
19 employees because Mr. Paycheck has not overcome the rebuttable burden of
employment status under Labor Code section 2750.5 subdivisions (a) through (c) or the
12 general presumption of employment and multi-factor test in Borello.
13 Mr. Paycheck has failed to present evidence that these individuals had the
14 right to control and discretion over the manner in which they performed their work.
(Lab. Code 5 2750.5(a)). In fact, Mr. Paycheck testified at trial that he was
15 supervising the work and, in interrogatory responses, he testified he was there all
17 day every day. Clearly, he had control of the details of the work.
18 Mr. Paycheck has failed to establish that these individuals were customarily
19 engaged in an independently established business. (Lab. Code 5 2750.5(b)). The
29 evidence shows that Mr. Paycheck hired and used these same workers as part of
21 a "regular crew" of employees to perform work on his projects. This is consistent
22 with Mr. Paycheck's testimony to Dr. Sama that he had 14 regular employees.
23 Mr. Paycheck has failed to establish that the individuals'ndependent
24 contractor status is bona fide and not a subterfuge to avoid employment status.
25 (Lab. Code g 2750.5(c)). Mr. Paycheck testified in deposition and in interrogatory
26 responses (prepared by counsel) that he considered these individuals to be
27 employees and that he paid them on an hourly basis. Mr. Paycheck obtained a
28
10
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
workers'ompensation policy mid-project (that was subsequently cancelled) in
2 which he identified Victor Castro as his employee.
3 Mr. Paycheck failed to present any evidence on any of the other
"cumulative factors" in Labor Code g 2750.5(c) to show that his workers were
"independent contractors", for example through the production of subcontract
6 agreements or the testimony of his workers. Mr. Paycheck refused to provide
7 addresses or contact information for his self-described "laborers" and "employees"
8 in interrogatory responses, instead identifying Mr. Paycheck's attorney's address.
0 (Trial Exh. 29 and 31, Interrogatory 17).
10 The only evidence presented to show these workers were independent
contractors is a series of MISC-1099 tax forms and Mr. Paycheck's testimony that
12 he paid these individuals as independent contractors. In summary, Mr. Paycheck
13 treated his employees as employees, except when itcame to payroll taxes,
workers'ompensation insurance, sick leave, and all other employment benefits.
15 There is prima facie evidence in this case that Mr. Paycheck has engaged
16 in rampant and gross violation of employment laws, including willful
17 misclassification, failure to provide meal and rest breaks, and failure to pay
18 overtime. The violation of labor law does not establish a defense to the violation of
10 licensing law or workers'ompensation law.
20 3. The Other Eiqhteen Workers. and Four Businesses. Are Considered Louis
Pavcheck's Emplovees Under Labor Code section 2750.5.
21
22
Mr. Paycheck has produced handwritten logs and business check stubs identifying
p a y ments he has made to other individuals and corn P anies for work on the P roI ect and, in
24
certain cases, the nature of their work. (Trial Exh. 5-7).
The individual workers identified on Exhibit 6, and their scopes of work where
25
available, include but are not limited to the following: Dimiter Georgiev (window
26
27
replacement), Hadi Saidi, Gabriel Gutierrez, Lorenzo Gonzales, Pedro Vidaurri (stucco),
28
Ulises Cruz (drywall), Dennis Hausfler (welding), Juares Ramos (tile), Francisco Chavez
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
(waterproofing), Ron Huntington (tile floors), Jose Carbajal (Sprinklers), Juarez Ramos,
2 Julio Mallen (Gutters) Dario Ibarra, Raul Gonzales, Antonia Acosta (stucco), Kenneth
3 Juarez, and Miguel Angel. (Trial Exh. 6). The companies or sole proprietorships identified
4 on Exhibit 6 include, but are not limited to, the following: Benders Concrete, Oakland
5 Drywall, Solar Iron, Enrique Hardwood Floors.
6 All of these individual workers and business are presumed to be Mr. Paycheck's
statutory employees under Labor Code section 2750.5. Mr. Paycheck has failed to
8 produce any evidence to show these employees are licensed or to overcome any of the
0 factors in Labor Code section 2750.5 subdivisions (a) through (c).
10 LOUIS PAYCHECK'S "SURPRISE" ARGUMENTS
The court requested additional briefing on Labor Code section 2750.5 and its
12 application to this case. Immediately before filing this brief, Dr. Sama received a post-trial
13 brief from Mr. Paycheck which addresses a wide variety of issues unrelated to Labor
Code section 2750.5. These arguments include the general application of statutory
15 substantial compliance (Part B), the application of the statute of limitations (Part C), SSS
16 Fire Sprinkler System's work on the project (Part D), and the effect of under-reported
payroll on Mr. Paycheck's licensure (Part E).
18 The court instructed the parties to notify each other if they intended to cover
18 additional topics. Dr. Sama and his counsel were never notified of these new arguments,
20 some of which have never been raised before in this litigation. There is inadequate time
21 to address these issues, which are based on false statements and misrepresentations
22 regarding the evidence. However, as one example, Mr. Paycheck argues that the one-
23 year statute of limitations has expired under Business and Professions Code section
24 7031(b) because, he claims, he ceased work on this project in July 2018. At trial, Mr.
25 Paycheck testified that he competed work on the project in November 2018. (Trial
26 Transcript, p. 103:23-104:07). This is consistent with allegations in his Complaint (Trial
27 Exhibit 39, Complaint, tj 7) and his discovery responses (Trial Exh. 29 and 30,
28 Interrogatory 15 and 23). In fact, Mr. Paycheck's cause of action for a mechanic's lien
12
PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5
would be time-barred ifhe had, in fact, completed work on the project in July 2018. (Civ.
Code 5 8412).
3 There is also no obvious cure to this ambush. Mr. Paycheck was able to surprise
Dr. Sama and obtain some procedural advantage. The court should, however, bear in
5 mind that these arguments are a continuation of what was observed at trial. Mr.
5 Paycheck contradicted his deposition testimony, written discovery responses, and his
pleadings, and misstated the contents of documents and evidence that were in front of
8 him during his trial testimony. Mr. Paycheck's post-trial brief makes itclear this is not the
8 result of "mistake" or bad memory, but a tactic. Mr. Paycheck is attempting to "gas-light"
10 and overwhelm the court with an avalanche of false statements and contradictions.
It is generally reasonable to assume some degree of good faith in the presentation
12 of evidence and argument. The court should cast-aside any such assumption when it
13 comes to Mr. Paycheck. The court should view Mr. Paycheck's statements, and
unfortunately his counsel's summary of the evidence, with extreme suspicion. The bottom
15 line is that Mr. Paycheck is desperate and willing to say anything he has to say to avoid
15 the consequences of his illegal conduct.
17 CONCLUSION
18 Labor Code section 2750.5 applies to this case. All workers on the project are
tg conclusively deemed to be employees because they did not have licenses. Mr. Paycheck
20 has otherwise failed to satisfy his burden to overcome the rebuttable presumption of
21 employee-status under Labor Code section 2750.5.
22 Dated
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MATTHEW A. HAULK (SBN: 272457) 5/21/2021 JOSE M. HERRERA (SBN: 2589590) RAGGHIANTI FREITAS LLP 3 1 1 01 Fifth Avenue, Suite 1 00 San Rafael, California 94901 Telephone: (415) 453-9433 Facsimile: (415) 453-8269 Attorneys for Defendants PUNIT K. SARNA and PUJA SARNA SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN MATEO 9 LOUIS PAYCHECK, CASE NO.: 19CIV02595 10 Plaintiff, PUNIT AND PUJA SARNA'S POST- TRIAL BRIEF REGARDING LABOR 12 vs. CODE IJ 2750.5 PUNIT K. SARNA, et al., 14 Defendants Complaint Filed: May 10, 2019 AND RELATED CROSS-ACTION. Trial Date: May 12, 2021 16 INTRODUCTION 17 A contractor that does not have workers'ompensation insurance, but employs 18 someone in a manner that requires him to have workers'ompensation insurance, is an 19 unlicensed contractor. (Bus. & Prof Code 5 7125 and 7125.2). An unlicensed contractor 20 is prohibited from recovering compensation for his work and must disgorge all 21 compensation received for his work. (Bus. & Prof. Code 5 7031). 22 California employers must obtain workers'ompensation insurance for 23 "employees" but not for "independent contractors". (Lab. Code Q 3351, 3353, and 3700; 24 S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 25 349). There is a general presumption that all persons hired for work in California are 26 "employees". (Borello, supra, 48 Cal.3d at 355). Under Labor Code section 2750.5, there 27 is a special presumption that all construction workers are employees. This special 28 presumption becomes a conclusive presumption for any workers that do not have valid 1 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750 5 contractors'icenses. (Lab. Code g 2750.5). An unlicensed contractor cannot rely on 2 Labor Code section 2750.5 to argue that he is an owner's "employee", and entitled to 3 compensation as an employee, in order to avoid the civil penalty under Business and 4 Professions Code section 7031. (Fillmore v. Irvine (1983) 146 Cal.App. 3d 649, 657; 5 Maciel Builders LLC v. US Framing lnl.'l (2020) 2020 U.S. Dist. Lexis 26238). 6 Louis Paycheck's work on this project required him to have a contractor's license. Mr. Paycheck hired 23 individual workers and four "businesses" to perform construction 6 work on this project. Mr. Paycheck has failed to establish that any of these workers or g businesses have contractor's licenses. He has failed to establish any of the other relevant to factors in Labor Code section 2750.5. They are all therefore presumed to be his employees, meaning Mr. Paycheck was required to obtain workers'ompensation insurance for them under the Workers'ompensation Act. If the court determines that 13 Mr. Paycheck is unlicensed as a result, for example under Business and Professions Code section 7125 and 7125.2, then his Complaint is barred and he must disgorge all 15 compensation received for work on the project. (Bus. 8 Prof. Code 5 7031). SUMMARY OF RELEVANT FACTS 17 Louis Paycheck testified in his deposition", responses to special interrogatories, 16 and responses to form interrogatories, that he used "employees" on the project. (Trial 16 Exhibit 29-31, Interrogatory 17, 23-26). Mr. Paycheck testified at deposition that he did 2o not hire or use subcontractors on the project. (Trial Transcript, p. 109:19-110:25). When 21 asked how much he was charged for labor on the project, Mr. Paycheck responded: 22 "Paycheck was not 'charged for labor'; he paid his employees." (Trial Exhibit 29-30, 23 Interrogatory 25). 24 Mr. Paycheck testified at deposition that his employees included a regular crew of 25 3-5 people, including Giovanni Orrega, Joaquin Angeles, Victor Castro, Oscar, and an 26 unidentified fifth person, and that these employees completed demolition in November 27 2017. (Trial Testimony, 98:22-102:23). Mr. Paycheck testified that he paid Giovanni 26 'he referenced portions of the deposition were read into evidence at trial. 2 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 $ 35/hour, he paid Victor $ 25/hour, he paid Joaquin $ 25/hour, he paid Oscar $ 25/hour, 2 and he paid the fifth person $ 25/hour. (Trial Transcript, p. 107:15-108:09). 3 Mr. Paycheck testified at deposition that Giovani, Joaquin, Oscar, and the unidentified fifth person did not have contractor's licenses. (Trial Transcript, p. 107:15- 5 108:09). In response to a premium audit for a workers'ompensation policy (obtained 5 mid-project and cancelled for non-payment of premiums) Mr. Paycheck identified Victor Castro as his sole employee and stated that he paid him $ 1,218.17 for installing cabinets. 5 (Trial Exh. 18). Mr. Paycheck prepared a handwritten list of the individuals and 0 companies who worked for him on the project. (Trial Exh. 6). Mr. Paycheck's list included 10 more than eighteen different individuals and more than four different companies or sole proprietorships. (/d). There is no evidence that any of these individuals or companies 12 hold valid contractor's licenses. 13 Paycheck's scope of work on the project included demolition, electrical work, plumbing work, carpentry, sheetrock, the installation of flooring, stucco work, and painting. (Trial Exh. 1). Mr. Paycheck is 78-years old and, at trial,Mr. Paycheck testified 15 that he supervised all of this work but did not physically perform any of it. (Trial 17 Transcript, p. 62:10-62:11; 112:02-112:14). In his interrogatory responses, Mr. Paycheck 15 testified that he was on site 5-6 days per week for 6-9 hours per day from mid-November 10 2017 (with initiated demolition) until the completion of his work in November 2018. (Trial 20 Exh. 29 and 30, Interrogatory 15 and 23). Mr. Paycheck's supervision and control over 21 the work on the project was intense and comprehensive. 22 Punit Sama, M.D. testified at trial that Mr. Paycheck told him during contract 23 negotiations that he had a crew of 14 regular employees. (Trial Transcript, 31:08-31:26). 24 25 workers'5 The Mr. construction compensation Paycheck told contract included insurance. him (Trial Exh. (falsely) that he a provision 1). Dr. had Sama stating that Mr. testified that, workers'ompensation Paycheck had at the time of contracting, insurance and he 27 promised to supply him with a certificate of insurance but never did so. (Trial Transcript, 23 37:22-38:07). PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 1 At trial, Louis Paycheck repudiated his pleadings, deposition testimony, and 2 written discovery responses, and testified that he did not use any employees on the 3 project and that he only hired independent contractors and subcontractors. (Trial 4 Testimony, 98:22-110:25). Mr. Paycheck testified that Victor Castro had a contractor's license but failed to introduce any other evidence to support that claim. At trial, Mr. 5 Paycheck testified that he has never had employees and that he hires workers on an as- needed basis. (Trial Transcript, 67:06-67-14). Mr. Paycheck testified that he never used 3 employees on Mr. Sama's project and that he views hiring workers as uncovered 0 "independent contractors" a regular and acceptable business practice. (Trial Transcript, 10 p. 85:18-85-26; 142:17-142:13; 107:05-107:10). LEGAL ANALYSIS 12 1. A Contractor That Uses Emplovees Without Workers'omoensation 13 Insurance Has His License Automaticallv And Retroactivelv Susoended. 14 A contractor's license is required for anyone who undertakes, submits a bid to, or by himself or through others, constructs, alters, repairs, adds to, subtracts from, improves, moves, wrecks, or demolishes any building, structure, project, development, or improvement, or any part thereof. (Bus. & Prof. Code section 7026). This includes both "contractors" and "subcontractors". (/d.) 19 An unlicensed contractor is barred from recovering compensation and must 20 disgorge all compensation received for its work. (Bus. & Prof Code 5 7031 ). All contractors are required to carry workers compensation insurance or file an "Exemption" verifying that they do not have or use employees. (Bus. 8 Prof. Code 5 7125). A contractor that signs an Exemption states under penalty of perjury that: "I 24 understand that, upon employing anyone in any manner that is subject to the workers'ompensation laws of the State of California, the claim of exemption executed under this form will no longer be valid." (Trial Exh. 14). A contractor that uses employees without 27 workers'ompensation has his license retroactively suspended by operation of law on 28 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 the first date he was required to obtain workers'ompensation insurance. (Bus. 8 Prof. 2 Code H 7125 and 7125.2; Wright v. Issak (2007) 149 Cal.App. 4th 1116). 2. The Workers Compensation Act Provide a General Presumption of Emplovee Status. California law requires all employers to obtain workers'ompensation insurance for their employees. (Lab. Code tJ3700). There is a general presumption that any person is service of another is an employee. (S. G. Borello 8 Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, 349). The use of employees without workers'ompensation insurance is a crime. (Lab. Code tt 3700.5; Bus. 8 Prof. Code H 7125.5, 7031; Wright v. Issak (2007) 149 Cal.App. 4th 1116). Under the Workers Compensation Act, the term "employee" includes most persons under the service of an employer under any contract of hire, except for independent contractors. (Lab. Cod g 3351; S. G. Borello 8 Sons, Inc. v. Department of Industrial '4 Relations (1989) 48 Cal.3d 341, 349). An independent contractor is, "any person who renders service for a specified recompense for a specified result, under the control of his principle as a result of his work only and not as to the means by which such result is accomplished." (Lab. Code IJ 3353). 18 The purpose of the Workers Compensation Act is to require comprehensive coverage of injuries in employment. "It accomplishes this goal by defining 'employment'roadly in terms of 'service to any employer'." (Lab. Code tt 3351; Borello, 48 Cal.3d at 349). The test to determine whether a worker is an employee or an independent contractor requires the application of a multi-factor and cumulative analysis'et forth in S. G. Borello 8 Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341. The relevant factors of that analysis include, but are not limited to, "control of details" regarding the work, the right to discharge at-will and without cause, the method of 26 27 28 'alifornia law applies the "ABC" test developed under Dynamex Operations VV.v. Superior Court (2018) 4 Cal.5th 903, for relationships arising after July 1, 2020. 5 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 payment (by the job or hourly), and whether the parties believe they are creating an 2 employee-employer relationship, (/d.) 3. Labor Code section 2750.5 Provides a Special Presumption of Emplovee Status for Construction Workers. Labor Code section 2750.5 provides a rebuttable presumption for workers performing services in the construction industry. This presumption supplements, and does not replace, the applicable definitions and presumptions in the Workers Compensation Act. (Lab. Code g 2750.5). Under Labor Code section 2750.5, every worker who is performing a function or service that requires a contractors'icense under the Contractors State License Law', or who isperforming services for someone required to have a contractors'icense, is presumed to be an employee rather than an independent contractor. Almost all construction related work require a contractors'icense. A party may rebut the presumption under section 2750.5 by producing "satisfactory proof" of the following factors: 16 17 (a) The worker has the right to control and discretion as to the manner of performance of the contract for services in that the result of the work 18 and not the means by which it is accomplished is the primary factor bargained for. (Lab. C. 5 2750.5(a).) 19 20 (b) The worker is customarily engaged in an independently established business. (Lab. C. 5 2750.5(b).) 21 22 (c) The worker's independent contractor status isbona fide and not a subterfuge to avoid employee status. A bona fide independent 23 contractor status is further evidenced by the presence of cumulative 24 factors such as substantial investment other than personal services in the business, holding out to be in business for oneself, bargaining for a 25 contract to complete a specific project for compensation by project 26 rather than by time, control over the time and place the work is performed, supplying the tools or instrumentalities used in the work 27 other than tools and instrumentalities normally and customarily 28 'he Contractors State License Law, located in Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, creates a licensing regime for California contractors. 6 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE g 2750.5 provided by employees, hiring employees, performing work that is not ordinarily in the course of the principal's work, performing work that requires a particular skill, holding a license pursuant to the Business and Professions Code, the intent by the parties that the work relationship is of an independent contractor status, or that the relationship is not severable or terminable at will by the principal but gives rise to an action for breach of contract (Lab. C. 5 2750.5(c).) The presumption under Labor Code section 2750.5 becomes conclusive, and is 7 no longer rebuttable, ifan unlicensed worker is performing services that require a contractors'icense. "In addition to the factors contained in subdivisions (a), (b), and (c), ~an Derson Derformino anv function or activitv for which a license is reauired 10 Dursuant to Chapter 9 tcommencina with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractor's license as a 12 condition of havina indeoendent contractor status." (Lab. Code I] 2750.5) [Emphasis Added]. 13 In summary, an unlicensed construction worker is conclusively presumed to be an 14 employee for workers'ompensation purposes and it isthe contractor's burden of proof 15 to show licensure. (/d.; See a/so Bus. & Prof. Code tI 7031(d) [Contractor required to 16 submit verified certificate of licensure from the CSLB when license-status is 17 controverted]. 18 4. The Special Presumotion Under Labor Code Section 2750.5 ADDlies to 19 Whether a Worker Is an Emplovee or Indeoendent Contractor for the 20 Puroose of Determine Whether Workers'ompensation Coveraae Is Required. 21 Section 2750.5 applies to determine whether a construction contractor's workers 22 are his "employees" or his "independent contractors" for workers'ompensation 23 purposes. (State Compensation /ns. Fund v. Workers'omp. Appea/s Bd. (Meier) (1985) 24 40 Cal.3d 5, 15). A contractor that hires an unlicensed worker is conclusively presumed 25 to have an employer-employee relationship with the worker and required to obtain 26 workers'ompensation insurance coverage for that worker. (/d.) 27 28 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 1 An unlicensed subcontractor is conclusively presumed to be the employee of the 2 hiring general contractor, and an unlicensed subcontractor's employees are presumed to 3 be the employees of the hiring general contractor. (State Compensation Ins. Fund, supra, 4 40 Cal.3d. at 15; See a/so Hunt Building Corporation v.Bemick (2000) 79 Cal.App.4th 5 213, 220; Rinaldi v. Workers'omp. Appea/s Bd. (1987) 196 Cal.App.3d 571, 574; Blew 5 v. Homer(1986) 187 Cal.App.3d 1380). This is consistent with the fundamental policy 7 underlying workers'ompensation laws: "[T]hose hiring others to perform services should 5 bear the risk of injuries incurred in the undertakings." (State Compensation Fund, supra, 0 40 Cal.3d at 13-15). 10 Contractors have attempted to make mischief with this law in the past. In Fillmore v. Irvine (1983) 146 Cal.App. 3d 649, 657, an unlicensed subcontractor sued a general 12 contractor to recover compensation for his work on a construction project. The claim 13 would ordinarily be barred by Business and Professions Code section 7031. However, 14 the unlicensed contractor argued that a contractor's "employees" are not required to have 15 a license in order to recover their wages under an "employee" exemption to the licensing 15 laws. (Bus. & Prof. Code 5 7058). 17 The unlicensed subcontractor argued that, as an unlicensed contractor, he was 15 conclusively presumed to be an employee and therefore authorized to sue for his 10 "wages". The court rejected this argument finding that itwould require an implied repeal 20 of Business and Professions Code section 7031. The court reasoned that section 2750.5 21 applies in the workers'ompensation context to determine who is an employee and who 22 is an independent contractor for workers'ompensation purposes. (Fillmore, supra, 146 23 25 workers'4 Cal.App.3d compensation The at 658). court ruled, As discussed however, above, insurance for all employees, that the an employer must obtain but not for all presumption is independent contractors. not applicable for determining 25 whether an unlicensed contractor is "exempt" from license requirements under Business 27 and Professions Code section 7058 because he is an "employee" rather than an 25 unlicensed construction contractor. (Id. at 657). The Fillmore holding was accurately PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 summarized by the United States District Court, Northern District Court in Maciel Builders 3 LLC: "In other words. 6 2750.5 distinauishes between emplovees and independent 3 contractors — not between persons who are and are not enaaaed in the contractor 4 business." (Maciel Builders LLC v. US Framing lnl.'I (2020) 2020 U.S. Dist. Lexis 26238 5 LEGAL ANALYSIS 6 1. Labor Code 2750.5 Applies To the Question of Whether Louis Pavcheck's Workers Were His Emplovees Or Independent Contractors. 7 Louis Paycheck's work on the project included demolition, alteration, repair 8 renovation, construction, and improvement work to a five-unit residential building in 9 10 Burlingame, California. Mr. Paycheck's work included, but was not limited to, demolition, electrical, plumbing, carpentry, sheetrock, flooring, stucco, and painting. Mr. Paycheck's 11 12 scope of work required him to have a contractor's license. (Bus. 8 Prof. Code 5 7026). Mr. Paycheck's workers, who performed the physical work, were also required to have 13 contractors'icenses by virtue of their scope of work on the project. (Bus. 8 Prof. Code I'I 14 7026). 15 Labor Code section 2750.5 therefore applies in this case to determine whether 16 17 these workers were Mr. Paycheck's employees or independent contractors for the purpose of Mr. Paycheck's obligation to obtain workers'ompensation insurance. 18 19 (Fillmore, supra, 146 Cal.App.3d at 658; Maciel Builders LLC v. US Framing lnl.'l (2020) 2020 U.S. Dist. Lexis 26238). If these workers were "employees", then Mr. Paycheck was 20 required to obtain workers'ompensation insurance for them, and ifhe did not have 21 22 workers'ompensation insurance for them, his license was automatically and 23 retroactively suspended. (Bus. & Prof. Code tI 7125.2). 2. Louis Pavcheck's Reaular Crew of Emplovees Are Considered His Emplovees Under Labor Code section 2750.5. 25 Mr. Paycheck's regular crew of employees included Giovanni Orrega, Joaquin 26 Angeles, Oscar, and a fifth unidentified person. Mr. Paycheck used these employees to 27 perform demolition, alteration, repair, renovation, construction, and improvement work on 28 the project. The nature of their work required them to have contractors'icenses. 9 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 1 Mr. Paycheck testified that Giovanni, Joaquin, Oscar, and the fifth unidentified 2 person did not have contractors'icenses. They are therefore conclusively presumed to 3 be Mr. Paycheck's employees under Labor Code section 2750.5. (Bus. & Prof. Code 5 4 7026). Mr. Paycheck testified that Victor Castro had a contractor's license but failed to 5 present a certificate of licensure from the Contractors State License Board. This 5 testimony, particularly given Mr. Paycheck's numerous "contradictions", is not sufficient or 7 credible evidence of licensure. Victor Castro must also be conclusively presumed to be s an employee. 9 Moreover, and even ifthese workers had licenses, they would stillbe considered 19 employees because Mr. Paycheck has not overcome the rebuttable burden of employment status under Labor Code section 2750.5 subdivisions (a) through (c) or the 12 general presumption of employment and multi-factor test in Borello. 13 Mr. Paycheck has failed to present evidence that these individuals had the 14 right to control and discretion over the manner in which they performed their work. (Lab. Code 5 2750.5(a)). In fact, Mr. Paycheck testified at trial that he was 15 supervising the work and, in interrogatory responses, he testified he was there all 17 day every day. Clearly, he had control of the details of the work. 18 Mr. Paycheck has failed to establish that these individuals were customarily 19 engaged in an independently established business. (Lab. Code 5 2750.5(b)). The 29 evidence shows that Mr. Paycheck hired and used these same workers as part of 21 a "regular crew" of employees to perform work on his projects. This is consistent 22 with Mr. Paycheck's testimony to Dr. Sama that he had 14 regular employees. 23 Mr. Paycheck has failed to establish that the individuals'ndependent 24 contractor status is bona fide and not a subterfuge to avoid employment status. 25 (Lab. Code g 2750.5(c)). Mr. Paycheck testified in deposition and in interrogatory 26 responses (prepared by counsel) that he considered these individuals to be 27 employees and that he paid them on an hourly basis. Mr. Paycheck obtained a 28 10 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 workers'ompensation policy mid-project (that was subsequently cancelled) in 2 which he identified Victor Castro as his employee. 3 Mr. Paycheck failed to present any evidence on any of the other "cumulative factors" in Labor Code g 2750.5(c) to show that his workers were "independent contractors", for example through the production of subcontract 6 agreements or the testimony of his workers. Mr. Paycheck refused to provide 7 addresses or contact information for his self-described "laborers" and "employees" 8 in interrogatory responses, instead identifying Mr. Paycheck's attorney's address. 0 (Trial Exh. 29 and 31, Interrogatory 17). 10 The only evidence presented to show these workers were independent contractors is a series of MISC-1099 tax forms and Mr. Paycheck's testimony that 12 he paid these individuals as independent contractors. In summary, Mr. Paycheck 13 treated his employees as employees, except when itcame to payroll taxes, workers'ompensation insurance, sick leave, and all other employment benefits. 15 There is prima facie evidence in this case that Mr. Paycheck has engaged 16 in rampant and gross violation of employment laws, including willful 17 misclassification, failure to provide meal and rest breaks, and failure to pay 18 overtime. The violation of labor law does not establish a defense to the violation of 10 licensing law or workers'ompensation law. 20 3. The Other Eiqhteen Workers. and Four Businesses. Are Considered Louis Pavcheck's Emplovees Under Labor Code section 2750.5. 21 22 Mr. Paycheck has produced handwritten logs and business check stubs identifying p a y ments he has made to other individuals and corn P anies for work on the P roI ect and, in 24 certain cases, the nature of their work. (Trial Exh. 5-7). The individual workers identified on Exhibit 6, and their scopes of work where 25 available, include but are not limited to the following: Dimiter Georgiev (window 26 27 replacement), Hadi Saidi, Gabriel Gutierrez, Lorenzo Gonzales, Pedro Vidaurri (stucco), 28 Ulises Cruz (drywall), Dennis Hausfler (welding), Juares Ramos (tile), Francisco Chavez PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 (waterproofing), Ron Huntington (tile floors), Jose Carbajal (Sprinklers), Juarez Ramos, 2 Julio Mallen (Gutters) Dario Ibarra, Raul Gonzales, Antonia Acosta (stucco), Kenneth 3 Juarez, and Miguel Angel. (Trial Exh. 6). The companies or sole proprietorships identified 4 on Exhibit 6 include, but are not limited to, the following: Benders Concrete, Oakland 5 Drywall, Solar Iron, Enrique Hardwood Floors. 6 All of these individual workers and business are presumed to be Mr. Paycheck's statutory employees under Labor Code section 2750.5. Mr. Paycheck has failed to 8 produce any evidence to show these employees are licensed or to overcome any of the 0 factors in Labor Code section 2750.5 subdivisions (a) through (c). 10 LOUIS PAYCHECK'S "SURPRISE" ARGUMENTS The court requested additional briefing on Labor Code section 2750.5 and its 12 application to this case. Immediately before filing this brief, Dr. Sama received a post-trial 13 brief from Mr. Paycheck which addresses a wide variety of issues unrelated to Labor Code section 2750.5. These arguments include the general application of statutory 15 substantial compliance (Part B), the application of the statute of limitations (Part C), SSS 16 Fire Sprinkler System's work on the project (Part D), and the effect of under-reported payroll on Mr. Paycheck's licensure (Part E). 18 The court instructed the parties to notify each other if they intended to cover 18 additional topics. Dr. Sama and his counsel were never notified of these new arguments, 20 some of which have never been raised before in this litigation. There is inadequate time 21 to address these issues, which are based on false statements and misrepresentations 22 regarding the evidence. However, as one example, Mr. Paycheck argues that the one- 23 year statute of limitations has expired under Business and Professions Code section 24 7031(b) because, he claims, he ceased work on this project in July 2018. At trial, Mr. 25 Paycheck testified that he competed work on the project in November 2018. (Trial 26 Transcript, p. 103:23-104:07). This is consistent with allegations in his Complaint (Trial 27 Exhibit 39, Complaint, tj 7) and his discovery responses (Trial Exh. 29 and 30, 28 Interrogatory 15 and 23). In fact, Mr. Paycheck's cause of action for a mechanic's lien 12 PUNIT AND PUJA SARNA'S POST-TRIAL BRIEF REGARDING LABOR CODE 5 2750.5 would be time-barred ifhe had, in fact, completed work on the project in July 2018. (Civ. Code 5 8412). 3 There is also no obvious cure to this ambush. Mr. Paycheck was able to surprise Dr. Sama and obtain some procedural advantage. The court should, however, bear in 5 mind that these arguments are a continuation of what was observed at trial. Mr. 5 Paycheck contradicted his deposition testimony, written discovery responses, and his pleadings, and misstated the contents of documents and evidence that were in front of 8 him during his trial testimony. Mr. Paycheck's post-trial brief makes itclear this is not the 8 result of "mistake" or bad memory, but a tactic. Mr. Paycheck is attempting to "gas-light" 10 and overwhelm the court with an avalanche of false statements and contradictions. It is generally reasonable to assume some degree of good faith in the presentation 12 of evidence and argument. The court should cast-aside any such assumption when it 13 comes to Mr. Paycheck. The court should view Mr. Paycheck's statements, and unfortunately his counsel's summary of the evidence, with extreme suspicion. The bottom 15 line is that Mr. Paycheck is desperate and willing to say anything he has to say to avoid 15 the consequences of his illegal conduct. 17 CONCLUSION 18 Labor Code section 2750.5 applies to this case. All workers on the project are tg conclusively deemed to be employees because they did not have licenses. Mr. Paycheck 20 has otherwise failed to satisfy his burden to overcome the rebuttable presumption of 21 employee-status under Labor Code section 2750.5. 22 Dated