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7 years & 21 posts & your going to question experience here? Nobody’s going to read your book & your Craigslist wages you pay your hands says a lot. Oh & thinking subs are going to buy materials from you — wake up. Labor burden comes in house hands down. So get a list of some no show Nancy’s, half day Harolds & crying Charlie’s & report back

Mike
 

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The one ex-foreman already had a corp and changed the name to better reflect what he would be doing. He provided us with a W-9 and is licensed and fully insured properly not miscatagorized as I see so many others. As I stated before we have an agreed upon list of what he charges me and when I get projects I offer them to him to accept or pass on. He's only passed on one so far and he's done well for himself on the others, well enough that others want to do the deal as well.
It's seems the only real hurdle you have is getting the rest of your crews licensed, insured, and equipped. I don't see how that nets out as a cost saving method of operation, but I don't know enough about your business to have a valid opinion. It does seem to me that most of these fellows will eventually become competitors as they will have the knowledge, skills, equipment, license, and insurance to do the work. The only thing they will lack is what appears to be a proprietary waterproofing membrane that you control.
The question then becomes, is that particular material the only viable option? Will accessibility to that product be the limiting factor in their operation that ties them to you?
 

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While I rarely disagree with griz, I might on this one. Though tentatively.

At least as far as a price list. If it is negotiated between both parties and they agree, I'm not sure it is an issue.

However, any additional work, ie., change orders would need to be negotiated on an individual basis.

I do think you are trying to lessen your employer burden. As long as you do it above board, then it's all good.

Now, as far as calling griz out on a possible lack of experience, uh, that is a bit laughable.

I think don't even think Jimi Hendrix would ask griz if he was experienced.

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Thanks for a real response. Yes, the listing is an agreed upon price for regular repetitive work that we install. We have it structured that if the work is off-list then we give them the scope and they bid it out to us. Think of a GC sending out an RFQ to other trades when we run into off list items.

Referring to Griz I was not calling out his experience over all but asking in regards to the subject matter of this thread. I have a union carpenter friend who is a foreman and has hands of gold, he also knows nothing about the business end. I will never expect everyone to have knowledge of all things. Also the Hendrix reference made me laugh pretty good...

7 years & 21 posts & your going to question experience here? Nobody’s going to read your book & your Craigslist wages you pay your hands says a lot. Oh & thinking subs are going to buy materials from you — wake up. Labor burden comes in house hands down. So get a list of some no show Nancy’s, half day Harolds & crying Charlie’s & report back

Mike
Hey, sorry I only post when I have something to contribute, thought that's what this venue was for... I could post cringeworthy jaded material as filler but it seems there's already enough royalty doing that with astonishing proficiency. Plus it seems when I do post something detailed to seek help from all the "experience" here everyone just wants to comment how they don't want to read it. Audible must make a killing advertising here.

Craigslist wages? Right. My top two foreman make over $100k/yr, most junior foreman made over $65k last year and all my people are paid more than my competition from helpers to foreman, sales and office. I pay well to keep good people working with us and I've never been afraid of that. Heck two of my sales guys have already cleared over $40k in the first quarter alone and this is a slow year and Winter is our slow time.

In reference to buying materials please tell me how you would handle it. I have exclusive distribution in my territory of a membrane for the work I do. This membrane is excellent and between installation method and product it has reduced failures and callbacks. I order by half truckloads and currently I provide these specialty materials as needed for the crew to install. There have been two recent instances where the sub crew has left the material out and it was ruined by the rain because of carelessness. My thought is to increase the payout to the sub per square foot to offset the purchase of the materials but charge for the materials leaving my custody. This would not change anything except hold them responsible for any damage or carelessness, I do not want to pay for their mistakes.

It's seems the only real hurdle you have is getting the rest of your crews licensed, insured, and equipped. I don't see how that nets out as a cost saving method of operation, but I don't know enough about your business to have a valid opinion. It does seem to me that most of these fellows will eventually become competitors as they will have the knowledge, skills, equipment, license, and insurance to do the work. The only thing they will lack is what appears to be a proprietary waterproofing membrane that you control.
The question then becomes, is that particular material the only viable option? Will accessibility to that product be the limiting factor in their operation that ties them to you?
We aren't pushing anyone out of our employment but the ones who have shown interest we hook them up with an accountant who gives them advise. We have helped two previous foreman who left us to buy turn-key landscape and masonry businesses, they're doing well but are not subs with us as it is different work. The benefit we have seen so far isn't as much in "cost savings" as it is in greater income potential. The crew works at a faster pace than when they were on our payroll so, for instance, instead of doing 3 jobs a week we can do 4. Multiply that out by 50 weeks a year and by X amount of crews then it can raise the gross income potential.

With the membrane I am thinking of talking to them and adjusting the installation price per square so the end result numbers are the same but I'm not left holding the bag for their damages or excessive waste. IE: if the membrane resells for $10/sq and I currently pay $20/sq I would up the installation to $30/sq and charge the same $10/sq resale.

Because of the specific materials, there are a few more besides the membrane, I'm wondering if going down the path of franchising would be better. I know nothing about franchising but have started looking into it and will probably consult someone if it seems like that is a good route.
 

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Thanks for the explanation, it does sound better.

If an employee wants to become a sub, good on them.

If you want to help them, good on you. Many companies make employees sign no-competes. Kind of a poverty mentality, IMO.


*You can hire this insured sub and not make this exception the standard for all your employees to become 1099 contractors *

It is not all or none.


They may figure out being an employee is much easier and come back to work for you. Or, they may be wildly successful. Either way, you’ve helped them.


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Thanks for a real response. Yes, the listing is an agreed upon price for regular repetitive work that we install. We have it structured that if the work is off-list then we give them the scope and they bid it out to us. Think of a GC sending out an RFQ to other trades when we run into off list items.

Referring to Griz I was not calling out his experience over all but asking in regards to the subject matter of this thread. I have a union carpenter friend who is a foreman and has hands of gold, he also knows nothing about the business end. I will never expect everyone to have knowledge of all things. Also the Hendrix reference made me laugh pretty good...



Hey, sorry I only post when I have something to contribute, thought that's what this venue was for... I could post cringeworthy jaded material as filler but it seems there's already enough royalty doing that with astonishing proficiency. Plus it seems when I do post something detailed to seek help from all the "experience" here everyone just wants to comment how they don't want to read it. Audible must make a killing advertising here.

Craigslist wages? Right. My top two foreman make over $100k/yr, most junior foreman made over $65k last year and all my people are paid more than my competition from helpers to foreman, sales and office. I pay well to keep good people working with us and I've never been afraid of that. Heck two of my sales guys have already cleared over $40k in the first quarter alone and this is a slow year and Winter is our slow time.

In reference to buying materials please tell me how you would handle it. I have exclusive distribution in my territory of a membrane for the work I do. This membrane is excellent and between installation method and product it has reduced failures and callbacks. I order by half truckloads and currently I provide these specialty materials as needed for the crew to install. There have been two recent instances where the sub crew has left the material out and it was ruined by the rain because of carelessness. My thought is to increase the payout to the sub per square foot to offset the purchase of the materials but charge for the materials leaving my custody. This would not change anything except hold them responsible for any damage or carelessness, I do not want to pay for their mistakes.



We aren't pushing anyone out of our employment but the ones who have shown interest we hook them up with an accountant who gives them advise. We have helped two previous foreman who left us to buy turn-key landscape and masonry businesses, they're doing well but are not subs with us as it is different work. The benefit we have seen so far isn't as much in "cost savings" as it is in greater income potential. The crew works at a faster pace than when they were on our payroll so, for instance, instead of doing 3 jobs a week we can do 4. Multiply that out by 50 weeks a year and by X amount of crews then it can raise the gross income potential.

With the membrane I am thinking of talking to them and adjusting the installation price per square so the end result numbers are the same but I'm not left holding the bag for their damages or excessive waste. IE: if the membrane resells for $10/sq and I currently pay $20/sq I would up the installation to $30/sq and charge the same $10/sq resale.

Because of the specific materials, there are a few more besides the membrane, I'm wondering if going down the path of franchising would be better. I know nothing about franchising but have started looking into it and will probably consult someone if it seems like that is a good route.
That all makes some sense, but couldn't you achieve the same thing with performance based bonuses? The job is figured at 5 days, they finish in 4 but still get paid for 5. That eliminates the added insurance, profit, and overhead involved with making them subs. Make the material used part of the package to avoid waste.
 

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That all makes some sense, but couldn't you achieve the same thing with performance based bonuses? The job is figured at 5 days, they finish in 4 but still get paid for 5. That eliminates the added insurance, profit, and overhead involved with making them subs. Make the material used part of the package to avoid waste.
I wanted to do something like that years and years ago but the owner shot it down, never gave an explanation. Currently the only reason we are doing any of this is the ex-foreman now turned sub approached the owner and must've gotten him on a good day. Now it's a hurry up operation and the owner wants me to have all the answers and make it work for everyone. I'm looking to build a sustainable model for all parties.
 

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So it came from the bottom up, not from the top down.

Again, good on you guys for wanting to help them out. Others may be quite a bit more malicious.


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Ran into a painter who tried to us sub crews. Biggest problem was quality. As noted in an earlier post, yes, you may see productivity increase, but is the quality up to standards? From something like painting, quality is obvious. There was a mention of waterproofing. What happens if there is a problem down the road? Do you really think your "sub" is going to come back and fix it?

I tend to believe, but can't prove, most of the subs' workers were being paid in cash. The sub was able to supply a workers comp certificate. The issue is the certificate says ABC Company has workers comp. What it does NOT say is how many employees it covers. If something happens, that worker just started a couple days ago and he has not gotten a check yet.
 

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It's highly unlikely this is going to work. It's just too loose of a business model. The key to all successful businesses is one or more owners who really know wtf they are doing. Your business will now be dependant on the business sense of random foremen and their random employees who know only that they work for a guy who subs from some company they know nothing about... and that their job sucks etc.

Possible but I'd bet against it all day long.
 

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Reduction in nonsense overhead costs - I have 10 dump trucks, 5 other vehicles, 3 skid steers, 1 med size excavator and all the headaches that go with that. Then I have all the warehoused supplies in my yard from pipe and stone to specialty membranes and tools for installation. I'm sure many of you here have been yelled at by dad when you left a wrench outside overnight or misused a tool. I swear these guys just didn't have that dad. The amount of money that goes into frivolous waste and forgetfulness seems to change really fast when it's tied to their paychecks.
I would be very careful to properly vet your assumptions and logic. I happen to disagree with many, even after just a casual reading. Example (quote above):

One common equipment pool, optimally managed, will always be more efficient (cost per unit output) than 5 smaller pools of equipment (yours and 4 subs') equally well managed. Economy of scale is huge with expensive equipment operated less than 100% of the time. So while you may have a less than optimal situation now, that is not intrinsic to the business model. It has to do with less than optimal management currently. There is no evidence that each sub will be managing their equipment and/or overhead any better than you. So if your new subs make better dads than your current equipment manager, that doesn't call for a new business model. Just a better dad for your current model.
 

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Discussion Starter #31
I want to say thank you to everyone who has provided good input here. I admit, I was frustrated and almost gave up because of the initial responses. I came here because this is supposed to be a community for contractors to talk and share information. This is the business forum of that section and no matter how many Google searches I have done I'm just not finding the information I'm looking for. So thank you again to those who are contributing and making this forum what it should be. Also I'm sorry if my posts seem long winded, I am only trying to share as much as I can about my mindset and situation so that the correct conclusions can be reached.

Ran into a painter who tried to us sub crews. Biggest problem was quality. As noted in an earlier post, yes, you may see productivity increase, but is the quality up to standards? From something like painting, quality is obvious. There was a mention of waterproofing. What happens if there is a problem down the road? Do you really think your "sub" is going to come back and fix it?

I tend to believe, but can't prove, most of the subs' workers were being paid in cash. The sub was able to supply a workers comp certificate. The issue is the certificate says ABC Company has workers comp. What it does NOT say is how many employees it covers. If something happens, that worker just started a couple days ago and he has not gotten a check yet.
I agree quality is an issue when using subs, heck it's an issue when using employees! Nobody is going to do it like you do, but this is why there are systems for employees or simplicity for subs. The subs would be doing the work that is cookie cutter in nature, french drains (footing drains) are easy to install and like painting shoddy work is fairly easy to spot. Right now my sub and I agreed that he will give a warranty on his installations for workmanship so that if there is an error made he will return to repair it. So far there was one issue where he responded quickly and without complaint.

I would be very careful to properly vet your assumptions and logic. I happen to disagree with many, even after just a casual reading. Example (quote above):

One common equipment pool, optimally managed, will always be more efficient (cost per unit output) than 5 smaller pools of equipment (yours and 4 subs') equally well managed. Economy of scale is huge with expensive equipment operated less than 100% of the time. So while you may have a less than optimal situation now, that is not intrinsic to the business model. It has to do with less than optimal management currently. There is no evidence that each sub will be managing their equipment and/or overhead any better than you. So if your new subs make better dads than your current equipment manager, that doesn't call for a new business model. Just a better dad for your current model.
I would welcome your constructive criticism here or in private message. I'm posting here in an attempt to get different perspectives and try to better myself so I can lead my team and company in the right direction.

I agree with your statement on managing the pool and that stricter policies need to be put in place with the current setup. We do not have an equipment manager, we aren't that big and I'm not large enough to bring one in. Right now I rely on the foreman to care for their tools and assigned vehicles. When something is broken or needs repair they are to inform the production manager or me to get it done. I use 2 mechanics, one road mechanic and one heavy truck shop, that do all my work and maintenance programs. The road mechanic comes to my yard and has all the trucks on a schedule for routine maintenance and we use the shop for inspections, correcting violations and more involved work. I also rely on a local tool repair company for my jack hammers, demo hammers, hammer drills, etc.

The vehicles and tools seem to be a real sore point for me over the years. Just before covid in March one of my guys blew the motor in my 2000 Isuzu dump coming back from the Hamptons. After I paid for the tow to the mechanic I got the call that "this had obviously been going on for a little bit". as there was an issue that the transmission didn't shift into the top gear. My foreman, instead of recognizing an issue, just hammered the accelerator in turn overheating the truck and blowing the head. When I asked him and he told me that it had been going on for about a week I asked for an explanation why he didn't tell me and he just shrugged. The next day he was moved into something else in my fleet and he could care less that I had to rebuild that damn motor. Would this have happened if it was his own truck? Would the worker put that Bosch chipping hammer into the sand getting the motor all gunked up if it was his tool? Etc, etc, etc. Like I said, i've been dealing with this for 20 years and no matter what I try to do I'm either overruled by the owner because "you can't expect them to [insert excuse here]" or the process just doesn't work. So, I think that knowing it's his tool or his truck that suddenly there would be more thought and care placed into the process.
 

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I want to say thank you to everyone who has provided good input here. I admit, I was frustrated and almost gave up because of the initial responses. I came here because this is supposed to be a community for contractors to talk and share information. This is the business forum of that section and no matter how many Google searches I have done I'm just not finding the information I'm looking for. So thank you again to those who are contributing and making this forum what it should be. Also I'm sorry if my posts seem long winded, I am only trying to share as much as I can about my mindset and situation so that the correct conclusions can be reached.



I agree quality is an issue when using subs, heck it's an issue when using employees! Nobody is going to do it like you do, but this is why there are systems for employees or simplicity for subs. The subs would be doing the work that is cookie cutter in nature, french drains (footing drains) are easy to install and like painting shoddy work is fairly easy to spot. Right now my sub and I agreed that he will give a warranty on his installations for workmanship so that if there is an error made he will return to repair it. So far there was one issue where he responded quickly and without complaint.



I would welcome your constructive criticism here or in private message. I'm posting here in an attempt to get different perspectives and try to better myself so I can lead my team and company in the right direction.

I agree with your statement on managing the pool and that stricter policies need to be put in place with the current setup. We do not have an equipment manager, we aren't that big and I'm not large enough to bring one in. Right now I rely on the foreman to care for their tools and assigned vehicles. When something is broken or needs repair they are to inform the production manager or me to get it done. I use 2 mechanics, one road mechanic and one heavy truck shop, that do all my work and maintenance programs. The road mechanic comes to my yard and has all the trucks on a schedule for routine maintenance and we use the shop for inspections, correcting violations and more involved work. I also rely on a local tool repair company for my jack hammers, demo hammers, hammer drills, etc.

The vehicles and tools seem to be a real sore point for me over the years. Just before covid in March one of my guys blew the motor in my 2000 Isuzu dump coming back from the Hamptons. After I paid for the tow to the mechanic I got the call that "this had obviously been going on for a little bit". as there was an issue that the transmission didn't shift into the top gear. My foreman, instead of recognizing an issue, just hammered the accelerator in turn overheating the truck and blowing the head. When I asked him and he told me that it had been going on for about a week I asked for an explanation why he didn't tell me and he just shrugged. The next day he was moved into something else in my fleet and he could care less that I had to rebuild that damn motor. Would this have happened if it was his own truck? Would the worker put that Bosch chipping hammer into the sand getting the motor all gunked up if it was his tool? Etc, etc, etc. Like I said, i've been dealing with this for 20 years and no matter what I try to do I'm either overruled by the owner because "you can't expect them to [insert excuse here]" or the process just doesn't work. So, I think that knowing it's his tool or his truck that suddenly there would be more thought and care placed into the process.

I totally get you ambition to make them all subs. I own a small utility contracting business. There are many in my field that just go back to a "bubba with a backhoe" mentality because they can't deal with employees that don't think and work like they do.

Personally I wouldn't make them subs. If they are subs you lose all of your control. Your deadline / contract means nothing to them. They need to be more of a team, and their roles need to be known well. Most likely this is a leadership issue. I know it is in my case. For example the guy that blew up the engine, was he trained properly? Does he know to notify the mechanic when something isn't operating correctly? I know in my case I'm looking for someone to be my "assistant". I have realized I've fallen short on training and managing side of things so instead of pushing it off on the foreman, I need someone to help me do my job. Let the foreman do what they do best.

As for the leadership issue check out the book "Extreme Ownership" by Jocko Willinick and Leif Babin. Jocko also had a couple of Podcasts and talk about everything in the book.
 

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if you handle more than one job at a time, take the easier job and sub it out, let the employees do the others. The key is developing a good list of reliable subs, else you will end up with headaches. You will have to supervise the subs to make sure that they actually show up and that they do the job properly and according to specs, make sure they give current workmen’s comp and liability insurance. Make sure you understand the difference between employees and subs as pointed out above. If you can manage this split and different future splits successfully overtime you will know when to stop your employee company. As your workload increases, hire a good experienced superintendent to help supervise. If you do it right, you will be happy with the change.
 

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Looking for guidance from anyone who runs a business this way or if you have reading & info that I can dive into that would be amazing.

Our current model has 7 crews ranging from 4 installers down to 1 technician all in-house. The owner and I have discussed moving to all subs and 2020 just gave us the extra nudge in that direction. In Jan we helped 1 foreman convert over, put together a price list to work off of and so far it has gone alright, nothing amazing but it's working. With time I'm sure we will fine tune it, right now the biggest issue is the owner of our company basically giving him free lunch by allowing him to dump, operate one of our trucks and take certain materials on our dime obviously cutting into the profit.

Most materials the sub will be responsible for but the specialty materials that we are known for we provide. With this I am seeing waste material which is coming out of our end so I'm looking into changing that model to one where I resell them the materials but then I'm worried about them using the specialty materials on work not contracted with us.

I know there are a ton of pitfalls I can not see yet and I'm just looking to up my knowledge.

Thanks in advance for any help or links you can provide!
Well, don't take offense but you're a labor suit waiting to happen. The best thing you can do is find a good labor lawyer in your area and get the do's and don'ts from them. On this forum we're all in different states and the laws are different from state to state but the Federal laws are the same everywhere so get professional assistance. I can tell you for sure if these guys, subs what ever you want to call them feel like there's an issue or dispute they would have a good case against you and your company for a labor lawsuit. You're saying you want these guys to be subs but yet they're using your trucks and equipment? Subs use their own and their own tools and they work for other people at the same time and are not supervised by you or your company. You're also supervising their work and have rules and guidlines about how you want them to get things done. That's illegal. You're basically an employer that's looking to get out of paying payroll taxes and workers comp. That's misclasification of employess for the purposes of tax evation and workers comp eveasion. You're treating these people like employees and will be deemed a co employer in a lawsuit. So you're wide open for a labor lawsuit and also for the feds and possibly your state to come in and bring cases against you. Also your workers comp company can try to come after you for back workers comp payments for misclasificaton. That's how the feds will look at it, maybe your state but you're wide open for liability right now. If someone gets hurt and you have workers comp they cant file suit against you, you're indemnified. With out it, you treating these guys like subs, they get hurt sue you because they have some 200k medical bill and the court deems that you didn't treat these guys like employees when you should have you're on the hook for the bills, lawyer fees, state and federal penalties and if they say the person injured may need surgery later to correct something and a reserve for that and reablilitation is set at 500k then guess who's paying for it. Keep in mind you cannot bankrupt against state or federal governments so trying to do so after a case will get you out of somethings but not others. So if all of this sounds over the top, well, I'm in California and yes, it actually happens here. And they do occasionally toss contractors in jail for misclasifying of workers and payroll tax evasion.
 

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if you handle more than one job at a time, take the easier job and sub it out, let the employees do the others. The key is developing a good list of reliable subs, else you will end up with headaches. You will have to supervise the subs to make sure that they actually show up and that they do the job properly and according to specs, make sure they give current workmen’s comp and liability insurance. Make sure you understand the difference between employees and subs as pointed out above. If you can manage this split and different future splits successfully overtime you will know when to stop your employee company. As your workload increases, hire a good experienced superintendent to help supervise. If you do it right, you will be happy with the change.
Taking back some of the info from here and other sources I actually sat with the owner and asked to revise the plan. Currently we have 1 former foreman who has his own company doing our work, his own work and party rental work (tents, chairs, inflatable stuff, etc). Since he does not work exclusively for me and I do not have any control over his employees I think I am fine on the designation. The only thing that seems grey is that they currently are using one of our dump trucks which is in our yard. This was to be a temporary thing that the owner wanted to "gift" him to help him get off his feet (personally I think this was a bad bad move because I'm paying for it). We also have one of our technically minded guys who stepped into the role of project manager who is floating around sites and also doing small ticket work.

For working with the sub on jobs I do only try and give things that are listed on the agreed upon listing that has prices. There have been a few items so far that were off list that we pre-negotiated before he would accept the job (ie: remove & replace fence post). Otherwise yes the custom work stays inhouse. Being that he does have his own company we do have hold harmless agreement, WC, GL and a W9 on file for him and all the insurances were reviewed by my insurance company and found to be acceptable.

Well, don't take offense but you're a labor suit waiting to happen. The best thing you can do is find a good labor lawyer in your area and get the do's and don'ts from them. On this forum we're all in different states and the laws are different from state to state but the Federal laws are the same everywhere so get professional assistance. I can tell you for sure if these guys, subs what ever you want to call them feel like there's an issue or dispute they would have a good case against you and your company for a labor lawsuit. You're saying you want these guys to be subs but yet they're using your trucks and equipment? Subs use their own and their own tools and they work for other people at the same time and are not supervised by you or your company. You're also supervising their work and have rules and guidlines about how you want them to get things done. That's illegal. You're basically an employer that's looking to get out of paying payroll taxes and workers comp. That's misclasification of employess for the purposes of tax evation and workers comp eveasion. You're treating these people like employees and will be deemed a co employer in a lawsuit. So you're wide open for a labor lawsuit and also for the feds and possibly your state to come in and bring cases against you. Also your workers comp company can try to come after you for back workers comp payments for misclasificaton. That's how the feds will look at it, maybe your state but you're wide open for liability right now. If someone gets hurt and you have workers comp they cant file suit against you, you're indemnified. With out it, you treating these guys like subs, they get hurt sue you because they have some 200k medical bill and the court deems that you didn't treat these guys like employees when you should have you're on the hook for the bills, lawyer fees, state and federal penalties and if they say the person injured may need surgery later to correct something and a reserve for that and reablilitation is set at 500k then guess who's paying for it. Keep in mind you cannot bankrupt against state or federal governments so trying to do so after a case will get you out of somethings but not others. So if all of this sounds over the top, well, I'm in California and yes, it actually happens here. And they do occasionally toss contractors in jail for misclasifying of workers and payroll tax evasion.
We have a good labor lawyer (NY) and he basically said make sure we aren't the only meal ticket for the company and we cannot delegate how his employees work. What we do state in our subcontractor agreement is the days and times that we service our customers. For instance we state that our customers are told we will arrive no later than 8:30am and work no later than 5pm M-F. This is mostly for to manage customer expectations, the office has to tell them times so they can plan on other things as well. Also there are several villages and cities within our service area that have requirements for times to start and end work as well as holiday and weekend restrictions. There are also generalized specifications that need to be met for the installations but this is common with any trade.

They're only using the truck because it was a "gesture of kindness" from the owner to the former foreman which I was not a fan of. That was supposed to have stopped already and he want's to buy the truck from us however the owner and him have been procrastinating. I'm not their supervisor however we do periodically send either the salesperson or the project manager to visit with the customer, verify installation location and scope, collect payment etc. The crew there is under the direction of the crew's foreman or the owner himself.
 

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Taking back some of the info from here and other sources I actually sat with the owner and asked to revise the plan. Currently we have 1 former foreman who has his own company doing our work, his own work and party rental work (tents, chairs, inflatable stuff, etc). Since he does not work exclusively for me and I do not have any control over his employees I think I am fine on the designation. The only thing that seems grey is that they currently are using one of our dump trucks which is in our yard. This was to be a temporary thing that the owner wanted to "gift" him to help him get off his feet (personally I think this was a bad bad move because I'm paying for it). We also have one of our technically minded guys who stepped into the role of project manager who is floating around sites and also doing small ticket work.

For working with the sub on jobs I do only try and give things that are listed on the agreed upon listing that has prices. There have been a few items so far that were off list that we pre-negotiated before he would accept the job (ie: remove & replace fence post). Otherwise yes the custom work stays inhouse. Being that he does have his own company we do have hold harmless agreement, WC, GL and a W9 on file for him and all the insurances were reviewed by my insurance company and found to be acceptable.



We have a good labor lawyer (NY) and he basically said make sure we aren't the only meal ticket for the company and we cannot delegate how his employees work. What we do state in our subcontractor agreement is the days and times that we service our customers. For instance we state that our customers are told we will arrive no later than 8:30am and work no later than 5pm M-F. This is mostly for to manage customer expectations, the office has to tell them times so they can plan on other things as well. Also there are several villages and cities within our service area that have requirements for times to start and end work as well as holiday and weekend restrictions. There are also generalized specifications that need to be met for the installations but this is common with any trade.

They're only using the truck because it was a "gesture of kindness" from the owner to the former foreman which I was not a fan of. That was supposed to have stopped already and he want's to buy the truck from us however the owner and him have been procrastinating. I'm not their supervisor however we do periodically send either the salesperson or the project manager to visit with the customer, verify installation location and scope, collect payment etc. The crew there is under the direction of the crew's foreman or the owner himself.
Sounds like you guys are taking the right steps to try and minimalize the damage from a lawsuit and it's great you're getting real legal advise. Another thing that will be looked at is were at any time these people employees. So if they were and now subs, that will raise red flags. Also make sure that who ever you guys are making a check out to is a buisness, if not that's another red flag. If they have a business bank account and even better a contractors license and insurance you should be good. If they don't have any of that and you're paying these people with a check written out to them and not a company and you 1099 it's a red flag. Again, glad you're getting real legal advise and good luck.
 

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Sounds like you guys are taking the right steps to try and minimalize the damage from a lawsuit and it's great you're getting real legal advise. Another thing that will be looked at is were at any time these people employees. So if they were and now subs, that will raise red flags. Also make sure that who ever you guys are making a check out to is a buisness, if not that's another red flag. If they have a business bank account and even better a contractors license and insurance you should be good. If they don't have any of that and you're paying these people with a check written out to them and not a company and you 1099 it's a red flag. Again, glad you're getting real legal advise and good luck.
Thanks! Yes, checks to business and they do have a license to operate where we are sending them. 3 of the 5 are past employees, the when the foreman left 2 guys decided to go with him.

If the borrower should happen to get in a traffic accident, that gesture of kindness will morph into a huge nightmare for you.
I keep asking what if they hit a school bus... sadly the owner is optimistic. This morning the truck they use also decided to leak a whole lot of oil, so yeah, maintenance issues are fun too.
 

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Thanks! Yes, checks to business and they do have a license to operate where we are sending them. 3 of the 5 are past employees, the when the foreman left 2 guys decided to go with him.



I keep asking what if they hit a school bus... sadly the owner is optimistic. This morning the truck they use also decided to leak a whole lot of oil, so yeah, maintenance issues are fun too.
It is the owner’s worry.

You advised him of the risk.

Don’t lose sleep.


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