Using Subcontractors – A Workers Compensation Perspective

It’s an everyday occurrence! Hiring and using subcontractors not only makes the construction world go round but plays a vital part in our overall economy!

Subcontractors play an important part in the construction industry. They provide specialized work, when needed, to fulfil a general contractors needs. Roofing, plumbing, electrical, concrete, masonry, carpentry, interior and exterior finish, excavation, landscaping and many other specific work processes are provided by specialized contractors operating in a subcontractor capacity. Contractors, subcontractors and workers compensation insurance issues can pose certain pitfalls that need to be addressed.

From a workers compensation perspective, using subcontractors in your business requires special attention. There are two types, insured and uninsured subcontractors. Keep in mind this post is from a workers compensation perspective and when I mention uninsured subs I’m speaking of a contractor, operating as a sub, who has no workers compensation policy in place.

Subcontractors who do not carry workers compensation insurance, uninsured subs, will, at audit, be picked up and included on the hiring contractors workers compensation policy. The amount you pay to an uninsured subcontractor will be, possibly with some limitations, included in the final premium calculation on your workers compensation policy. So be prepared, if you use uninsured subcontractors, you will pay additional workers compensation premium.

What if you use insured subcontractors? If a subcontractor that you hire has their own workers compensation policy, can provide you with a valid certificate of insurance that covers the period of time they worked for you and were paid, then there should be no additional charge to you on your workers comp policy at audit.

Hiring and using subcontractors is important! But with it comes some potentially hidden additional costs in the form of workers compensation premium to be paid. 

You’ll find on our website a great deal of free information about subcontractors, contractors and workers compensation and certificates of insurance. So make sure you visit our home page!

If you find you are experiencing a problem with a workers compensation audit concerning subcontractors be sure to contact our office. We may be able to help!

Hope this helps out! Thanks!