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Dear Quentin,
My very intelligent and talented husband retired from a government job about 10 years ago. He has a modest pension and Social Security income. I am 10 years younger and still employed. We own our house and cars, and we have no debt. We are not wealthy at all, but I stand to inherit from a family estate within a few years.
Here is my dilemma. He has skills that are in high demand; he was once a master electrician, although he has let his license lapse. He thoroughly understands construction, plumbing, roofing, etc., and loves to do odd jobs and bring in extra income.
I guess he feels stimulated by the variety of jobs that come along, and people are so grateful to have him do handyman-type chores that he is constantly in demand — so much that in the summer, we can’t get away for a vacation.
He has built bathrooms, tiled kitchens and rewired lights. Today, he installed an electric porch awning. His reputation is great and his name has spread by word of mouth, mostly among friends and neighbors.
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‘If there is a fire in a house where he worked, he will be blamed. I am terrified because when that happens, we could be liable financially.’
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He charges a flat $20 an hour and supplies his own tools. Any materials for the job are charged to our personal account at a hardware store, and he turns in the receipts and bills the customer when the job is over, so there is no markup on materials. So far, he has never had a problem collecting payment from his grateful customers.
He isn’t claiming any of this money as income on our taxes. He has no contractor’s license and doesn’t get any permits. He isn’t bonded or insured in any way. He says that he always tells people up front that he is not a contractor, but he will work for them by the hour if they tell him what they want done. In other words, they are the contractor and he is just working for them.
Someday, something will go wrong. He may fall off a ladder and get hurt, or a pipe may break and flood a house. Even if it isn’t his fault, if there is a fire in a house where he worked, he will be blamed. I am terrified because when that happens, we could be liable financially. I am also worried that someone will report him for contracting without a license, or the Internal Revenue Service will be notified. So many things could go wrong.
When I try to point out that he is threatening my financial security as well as his own, he says I am paranoid and that he is just helping people.
Please advise me on how to protect myself and our joint assets in case he gets sued. I just want to retire someday soon, and to not have to work until I die. I really don’t want a divorce, but I don’t see any way to get him to quit moonlighting this way until something really bad happens.
Thank you so much.
Worried Wife
Dear Worried,
Your husband enjoys helping people and feeling useful in his retirement. He’s good at his job, and it gives him a lot of pleasure figuring out the source of problems.
I have a lot of respect for contractors and people who have the patience and smarts to figure out how stuff works. Sometimes it’s a simple solution that can save the customer hundreds or thousands of dollars. And those other times? It can be complex, complicated and, yes, fraught with bigger problems and risks, especially when electricity is involved.
As for the risks: Your husband is vastly underselling his services. Even a cursory look at the rates of similar services on platforms like TaskRabbit show handymen and contractors charging multiple times what your husband charges. Even hanging a picture can cost you $50 or $60 an hour, or more.
Given the risk and reward involved, his customers should be willing to sign a liability waiver. This agreement is to protect him and you. You can’t put a price on peace of mind and a good night’s sleep. Tell him that.
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‘Enlist a third party, preferably a lawyer, who can explain what is at stake: a fine, reimbursement of back taxes or even criminal charges.’
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Liability waivers are, however, not airtight. There are two types of cases: ordinary negligence and gross negligence. The former mainly deals with “unintentional” issues, while the latter typically applies to “willful disregard for customer or participant safety,” according to the Frickey Law Firm in Lakewood, Colo. The waiver cannot supersede state law or public policy.
It is still possible to sue even after signing such a waiver, usually due to the aforementioned gross negligence, misrepresentation and/or defective products, the firm adds.
The IRS issue will prove trickier. I assume he does these jobs “under the table” partly due to his low rate, which makes him popular among his customer base, but raising his price would help reduce the amount of work and the risk associated with being discovered. For this and the previous issue, enlist a third party, preferably a lawyer, who can explain what is at stake: a fine, reimbursement of back taxes and even criminal charges. This may give your husband the wakeup call he needs.
He may feel defensive when you approach him about his liability and tax evasion. Perhaps he is fearful, and avoiding having a difficult conversation seems like the easiest route to take. But approaching him in a spirit of support and providing solutions could help bring him around.
You might start out with something non-confrontational like this: “I want you to continue doing what you love and helping people, but I also want to make sure that we’re checking all the boxes.”
The idea is to help him see what he can do to help himself, rather than what you believe he is doing to you. Both points are valid, but the former may be more effective.
Also read: Jamie Dimon insists his workers return to the office — here’s why that’s a bit rich
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