ACT Contractors Forms... From The Paper Side of Contracting.

Are You a Subcontractor or a Contractor?

Posted by Bill Baird on Fri, May 9, 2014 @ 17:05 PM

D  USERS WILLIAM PICTURES Website little guyOne of my pet peeves is the misuse of the term “subcontractor.”   Why… you ask? … Does it REALLY matter?

Here’s why… Because many construction/contractor companies who call themselves “subcontractors” believe that this classification gives them a “pass” on the laws and regulations that most states require of “larger contractors”!  I frequently get phone calls from business owners who tell me they do not need to use a particular form or comply with a particular state or federal law because, as they tell it… “I am just a subcontractor”…  When what they really mean is that they are not general contractors but are a specialty contractor such as an electrician, plumber, or painter. You know… they are just one of the “little guys.”  I always explore further so…

 I ask them who their contracts are with and they almost always tell me… “Oh sometimes it is with homeowners… sometimes commercial property owners and sometimes it is with a general contractor or some other contractor on the project.”  By definition, you are a subcontractor ONLY when you sign a contract with another contractor. You are a “sub” when the work you are doing is part of another Contractor’s contract. A “sub” is hired by and paid by another contractor, not by the property owner.  In fact, the property owner might not even know a particular subcontractor is working on their project. You are simply a CONTRACTOR when you sign a contract with a property owner. It does not matter if the property is a commercial building, a home or an industrial plant and it doesn’t matter if you are doing the work of a single trade or are a General Contractor doing the work of multiple trades… you ARE NOT a SUBCONTRACTOR unless your contract is with another CONTRACTOR and you are performing some of the work that CONTRACTOR is obligated to do to fulfill THEIR contract!  

So, you say, what’s the difference? I say poTAYto you say poTATo… what does it matter?  It doesn’t… except when you call yourself a Subcontractor and operate your business as if being a “subcontractor” puts you in some special category that gives you a pass on all the laws every other contractor must follow!  As far as the laws are written… who you contract with is all important and will determine which laws apply.  Do not jeopardize your business by thinking of yourself as just the “little guy”, you know, just a SUBCONTRACTOR who the rules do not apply to! EVERY State has its own unique set of laws that every CONTRACTOR and SUBCONTRACTOR MUST COMPLY WITH… even the “little guy.” And don’t forget the requirements the Federal Government has also placed on businesses doing construction work in each and every state!

The moral of this story… Be aware of the state and federal laws you are required to follow and make sure you do. If your contracts are with homeowners and other property owners, it doesn’t matter what job you are doing… most of the same laws a general contractor and every other contractor must comply with also apply to you! Want to make sure you are operating lawfully… that’s why ACT Contractors Forms is here and has been here for contractors like you for the past 20 YEARS!

Topics: subcontractor, legal, compliance

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