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Subcontractors Are Not Employees
Subcontractors Are Not Employees!
Carl, we are acting as general contractors of a second home in Virginia.
We have run into a snag with how to insure the carpenters and possible tradespeople for workman's comp. Can you help?
The insurance agency is suggesting we pay a significant amount to insure a $150K home. Is there a way around (legally, by paperwork) of making these independent contractors take care of their own insurance so we do not have to pay an enormous amount to insure the entire project? HELP!!!!! From: W A
Dear Help,
The following is from my book, Chapter 6: Subcontractors, and Getting Started, resource #10, Subcontractors PDF (A FREE file):
A subcontractor (sub) is an individual or a firm that contracts to perform part or all of another contract. In your case you are technically the builder or general contractor, and you will build your house by subcontracting with others for specific jobs.
You will pay for the project by setting a predetermined contract amount with each sub. This is important. You will have no hourly wage employees working for you, which means you will avoid all of the governmental red tape and taxes concerning employees.
Your subcontractors are not considered to be employees. Hire absolutely no subcontractor who does not carry insurance. Subcontractor’s commercial policies are paid in advance for a whole year by the subcontractor.
And, from the State of VA web site: http://www.vwc.state.va.us/employers_guide.htm
Virginia law requires every employer who regularly employs three or more full-time or part-time employees to purchase and maintain workers' compensation insurance. Employers with fewer than three employees may voluntarily come under the Act.
The following are generally not considered employees: Individuals who are properly classified as independent contractors under Virginia law (unless they specifically and formally choose to be included in their own workers' compensation insurance policy).
Hope this helps. If not, let me know.
Carl