Hiring construction laborers and subcontractors is an essential part of your business, but it’s an area you don’t want to speed through or gloss over. Hiring inexperienced workers doesn’t just put a project’s completion at risk, but can expose your construction company to liability.
After bidding on a project, some general contractors have hired low-cost construction workers to keep their costs down, but this can have the opposite effect of cost savings, because:
- The contractor may face damage and liability claims if the subcontractors’ work is below average and affects the quality of the completed project
- Safety issues and jobsite incidents can result in costly workers’ compensation claims
- That’s why it’s important to do your due diligence when hiring subcontractors. These four hiring practices can help ensure your construction business completes projects correctly and safely.
1. Pre-Employment Screening of Subcontractors
While you’re going through the selection process to find a subcontractor, take a close look at the candidates you like. If it’s possible, perform a background check for construction laborers applying to work for your business. Ask the subcontractors to give you a report on their:
- Management team
- Geographic reach
You can use this report to take a deeper look at their work history and see if they had any lawsuits, claims or bankruptcies. Don’t forget to look at the sub-contractors’ schedule and projects they’re already working on. You’ll want to make sure they have enough capacity to meet your job’s demands in the required timeframe.
2. Require Quality Controls
Quality control and quality assurance (QA/QC) programs help prevent rework and warranty work. These programs can also reduce the possibility of a construction defect claim. When you’re screening subcontractors, ask about their QA/QC programs and how they work.
3. Make Sure Subcontractors are Bonded and Insured
If you need a contractor’s bond, your subcontractors should also be bonded. This guarantees their work performance and payment of all workers and suppliers.
You’ll also want to make sure your subcontractors have the proper insurance coverages. Ask them to give you proof of insurance for general liability and workers’ compensation coverages, because without them, your business can be liable for:
- Work-related injuries or illnesses
- Property damages
- Bodily injuries your subcontractors cause
4. Create and Review Your Contract
Before you sign a contract with a subcontractor, you should have a draft that clearly spells out expectations. Some essential parts of a contract include:
- Description of the services and materials the subcontractor will provide
- Scope and price of their work
- Standards of quality
- Warranties for defective products or workmanship
- Work and payment schedule
- Worksite cleanup and debris removal plans
- Insurance requirements
Limit Risks and Keep Your Workers Safe
In 2018, 259 construction laborers lost their lives.1 Young and inexperienced workers are more likely to get injured during construction jobs. In fact, an analysis of The Hartford’s claims data revealed nearly half of all construction claims occur when employees have less than one year of experience on the job.2 That’s why it’s important to properly vet your subcontractors and create a safe work environment.
Every employer has a legal obligation under the Occupational Safety and Health Act to provide and maintain a safe workplace for employees. It’s your responsibility to put policies in place and make changes to limit your employees’ and subcontractors’ risks as they work. For example, implementing a drug-free policy can help protect your workers by reducing workplace accidents and injuries.
Working with an insurer can help you identify where your business’ risks are. Our risk engineering team consists of technical specialists who help businesses operate safely and efficiently. They work closely with our construction clients and offer guidance on growth, safety and training.
2 The Hartford claims analysis as of June 1, 2020.