Finding Subcontractors Who Really Work
Subcontractor Agreements
The recent activities surrounding the Florida House Bill 1305 has forced a lot of attention and thought regarding subcontractors. We continue to monitor the progression of this bill, however one powerful takeaway from this conversation can already be appreciated: the importance of hiring and working with good subcontractors. But what makes a subcontractor “good”?
A good subcontractor is willing to work within reasonable parameters which should always be set out in a written agreement. A sound Subcontractor Agreement should outline important items such as:
- The Subcontractor’s responsibilities,
- Terms and conditions of the work to be undertaken,
- Safety requirements,
- Indemnity stipulations,
- Insurance requirements, and
- Any additional provisions related specifically to the job.
Here is a sample Subcontractor Agreement which speaks to recommended details for each of the above provisions.
Any company using Subcontractors should have a Subcontractor Management Plan (SMP) in place and should require all subs to adhere to the stipulations outlined in the plan. A SMP provides guidance for subcontract management activities, including the following:
- Prequalification and bidding process
- Insurance considerations
- Beginning work
- Work site’s written safety plan
- Safety training and recordkeeping policies
- Safety inspections
- Work-in-progress and post-project reviews
We have included a downloadable copy of our SMP as an example, which includes a detailed and useful safety inspection checklist, among many other important guidelines.
Well documented and verifiable proof of insurance is of upmost importance when dealing with a sub. Subcontractors should maintain Commercial General Liability, Auto Liability, Umbrella or Excess Liability and Workers’ Compensation. Of these coverages, Florida House Bill 1305 specifically focus on Workers’ Compensation. The subcontractor should secure a workers’ compensation insurance policy. The workers’ compensation policy must cover all of the subcontractor’s work and performance and provide coverage for all employees, executive officers, sole proprietors, and partners and members of a limited liability company, in the amounts required by all applicable laws. In addition, the subcontractor should secure an employers’ liability insurance policy (part II of the standard workers’ compensation policy). This type of coverage covers the damages that become due in case of bodily injury, occupational sickness or disease or death of subcontractor employees that are not covered by the workers’ compensation policy.
The attached Subcontractor Certificate of Insurance Letter is a great, single page Word document which can be used to concisely outline your insurance requirements to a sub. The document is in Word and can be amended as needed to suit you or your clients’ needs. Work with a sub should never be initiated until the items requested in this letter are received and verified.
We hope you find these documents helpful! Work smart and stay safe everyone!
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The PEO Compass is a friendly convergence of professionals and friends in the PEO industry sharing insights, ideas and intelligence to make us all better.
All writers specialize in Professional Employer Organization (PEO) business services such as Workers Compensation, Mergers & Acquisitions, Data Management, Employment Practices Liability (EPLI), Cyber Liability Insurance, Health Insurance, Occupational Accident Insurance, Business Insurance, Client Company, Casualty Insurance, Disability Insurance and more.
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