Top Tips for Hiring a Subcontractor
As you likely know, the lack of skilled labor is one of the biggest challenges facing the construction industry. If you are facing this challenge with your company, one strategy is to hire a subcontractor. But how can you be sure you are hiring the right sub for your project?
Getting an Initial List
As you begin to consider subcontractors, you will need to network with your peers. Talk to your fellow contractors and project managers to get recommendations. You can also submit a request for proposals (FRP) on BuildingConnected, AGC Connection, or similar platforms. In your RFP, you will outline the scope of the project, including its timeframe.
Checking Their Qualifications
Once you have a list of potential subcontractors, you will need to assess their capabilities. Find out if they have the available staff and equipment to do the job. Ask for references, and talk to contractors who have worked with them in the past. Determine if their experience and reputation are a good fit for you.
Getting to Know the Crew
Choose a few subcontractors to meet, and talk to as many crew members as you can. You want to determine if this team will work well with yours, if you have common goals and outlooks, and if they have the ambition to get the job done.
Reviewing Their Records
Before you make a hire, make sure that any subcontractor you are considering is licensed. Licensing requirements are different, depending on your state. Also, make sure the subcontractor is insured and carries its own workers’ compensation policy.
Request review of safety records and reporting. Learn about any OSHA citations or safety violations, and find out how those were resolved.
Determining Worker Status
Once you have decided which subcontractor to hire, make sure it is clear whether the subcontractor is an employee or considered an independent contractor. In general, independent contractors are in business for themselves and are not solely reliant on you for work, but there are specific criteria to meet. Hiring an independent contractor is beneficial for you because you will save on paying benefits, payroll taxes, unemployment insurance, and workers’ compensation. You will also have reduced liability for injuries. But use caution in determining that status, as misclassification can lead to litigation.
Including Contract Provisions
As you create a contract with a subcontractor, you must include some specific provisions that outline everyone’s responsibilities:
- Anti-Controlling Contractor Provision—A controlling contractor is expected to prevent or detect all safety issues on a worksite. In your relationship with a subcontractor, you do not want to be a controlling contractor. Instead, you should make it clear that the subcontractor is responsible for controlling and implementing safety standards that relate to the subcontractor’s work.
- Reporting Injury, Illness, or Dangerous Conditions Provision—This provision clarifies that the subcontractor must follow all OSHA safety guidelines and report to the general contractor any accidents, injuries, or illnesses that occur on-site.
- Indemnification Provision—If the subcontractor violated any safety regulations, this provision states that the contractor is not liable for resulting illnesses or injuries.
- Safety Training & Safety Inspection Responsibilities Provision—The provision explains that the subcontractor is responsible for training all subcontractor workers and establishing safety protocols. The contractor is not expected to supervise the subcontractor on safety issues.
- Independent Contractor Provision—Once you have determined that the subcontractor is, in fact, an independent contractor, include that in the contract. This provision clarifies that the subcontractor is not an employee, partner, agent of, or joint venture with the contractor.
- Liability Provisions—The contract should include language explaining that the subcontractor is responsible for construction defects resulting from faulty work and will remedy those defects. There are limitations on the scope of this liability that vary from state to state.
If you have questions when drafting a contract or have concerns about worker status and other issues, do not hesitate to consult an attorney. You want to be sure that all expectations and responsibilities are stated and understood. For you and the subcontractor to experience a mutually beneficial working relationship, clear communication is critical.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.