What You Need to Know About Hiring Subcontractors

Subcontractors-PS

Whether you’re looking to supplement your staff or need an artisan or tradesperson with a particular skill, hiring subcontractors is a routine part of the construction business. Outsourcing helps you expand your services, speed up productivity, and increase your bandwidth, but that’s not to say it comes without a cost. Here are some guidelines to help you when hiring subcontractors.

  • Conduct a thorough search. You want someone qualified and hard-working, with the experience and the skills you need to help your construction business. Read reviews on Yelp and other platforms by past clients who have used the subcontractor to get a good feel for their work and reputation.
  • Ensure subcontractors are licensed. Many states have specific guidelines for independent contracting and can levy fines and other penalties if businesses and contractors violate labor laws. Check credentials before drafting a contract with a subcontractor who works in an industry or job that requires specific certifications, licenses, education, or experience.
  • Negotiate a contract. Ensure you and the subcontractor agree on the terms and conditions of the job assignment, including payment terms, work hours, responsibilities, and insurance and liability agreements (more on this later). Have an attorney and your insurance agent review the contract.
  • Establish accountability procedures. Ensure subcontractors follow the terms of your agreement throughout the project’s duration. Maintain ongoing communication, whether holding a weekly meeting or getting a daily report.

Proof of Insurance, Please

When you hire subcontractors, there is a risk that they will cause bodily injury, property damage, or other harm during the course of their work. If this happens, you could be held liable for their actions. There is also a risk that subcontractors will get hurt on the job. It’s important, therefore, you request proof from your subcontractors that they have General Liability and Workers’ Compensation insurance. Also, request that you be added as an additional insured on their General Liability policy.

Proof of coverage is provided with Certificates of Insurance (COI). The COI will detail the type of insurance coverage the subcontractor has in place, the policy limits, the dates of coverage, and other pertinent information.

Ask for a Hold Harmless Agreement in Your Contract with the Subcontractor

A hold harmless agreement is commonly used by general contractors to require subcontractors to accept full responsibility for any problems resulting from their work. It specifies who will be held financially liable in the event of a lawsuit.

Hire smart and be sure the right insurance programs are in effect to minimize your liability on a project when using subcontractors.