Subcontractors And Worker's Comp
Every year, millions of work-related injuries and illnesses occur in the US. Such incidents often result in serious injuries, which may result in disability or death.
This is why it recommended for employers to have workers compensation insurance for their employees. These insurance covers are meant to protect employees in case they suffer a work-related illness or injury.
Some of the benefits employees get from such covers include:
- Medical treatment
- Compensation for lost wages
- Permanent partial disability compensation
- Compensation for permanent total disability
If an employee is injured at the workplace, the employer may be liable for such costs if they do not have workers' compensation.
In most cases, the employer-employee relationship is well defined, and thus workers' compensation is straight forward. However, how about situations where someone is working for you, but they're not your employees?
This is why many people often overlook subcontractors and workers comp. A mistake that may prove to be costly should something go wrong. In this regard, there are two pertinent questions: Do subcontractors need workers comp, and who’s responsible for it?
Read on to find out all about subcontractors workers' compensation and why hiring subcontractors without workers comp is a risk you should never take.
Do Subcontractors Need Workers Comp?
To put it simply, Yes. Whether you are doing massive renovations for a commercial building or what may seem like minor upgrades at home, subcontractors’ worker’s comp is non-negotiable.
Even if a project seems easy and risk-free, an accident can occur, which may result in injury. This is why hiring subcontractors without workers comp is a risk you should never entertain. If they do not have workers' compensation cover, you may be liable for any injuries they suffer while working in your property.
Who Is Responsible for Subcontractors Workers Compensation?
Even in states where subcontractors do not qualify as employees, the matter of subcontractors and workers comp may be easy to grasp but a lot more complicated than it appears.
In principle, subcontractors should be insured, leaving you with the responsibility of ensuring their cover and licenses are up to date. However, the reality of how renovation projects work is what adds a twist to subcontractors’ worker’s comp.
This is because, during such projects, homeowners hire a general contractor to oversee the project. From that point onwards, it is the general contractor who then hires subcontractors for different aspects of the project.
At times, the subcontractors can even bring in a sub-subcontractor to take their responsibility, which then lengthens the chain, further complicating the issue of subcontractors and workers comp.
General contractors usually take most of the blame for hiring subcontractors without workers comp and injuries that may result. However, this does not necessarily make them liable if a subcontractor is injured.
A general contractor can only be liable if they have control over all work performed. This means that liability could ultimately go back to the homeowner. As such, even if the general contractor is responsible for overseeing the project and hiring subcontractors, it is still your responsibility to verify insurance details before any work begins.
Steps to Take If a Subcontractor Is Not Covered
Depending on your state, if a subcontractor does not have insurance cover, ask for a copy of their independent contractor registration form or their license. Ensure that the state recognizes them as a business entity.
At this point, you should ask them for a certificate of insurance for general liability of at least $300,000 that covers the project period.
Additional Measures to Ensure Your Project Progresses Smoothly
Construction and renovation projects rarely ever finish without some form of challenge or delay. If you have a good contractor, they will be able to manage such challenges and ensure that the project is not greatly affected.
However, if your renovation will result in significant alterations to the layout of your home, it is advisable to hire a construction superintendent. Their role will be to help with overseeing the project and ensuring that everything is on track.
Any delays to a renovation can result in additional costs. Unfortunately, there are times such delays are caused by contractors who breach contract terms. This is why it is vital to include a liquidated damages clause in the contract. This is just as important as verifying subcontractors’ worker’s comp.
It will help if you read more about it to understand how it can protect your renovation project.
Always Verify Subcontractors Workers Compensation
All renovation projects, no matter how minor, entail a certain degree of risk. As such, it’s not a question of ‘do subcontractors need workers comp’, but whether they have it.
Even if the contractor is responsible for the project and hiring subcontractors, you should take the initiative to verify their worker’s compensation insurance. This will protect you from any unnecessary liability if any subcontractor is injured.