If you are a California Contractor who uses Subcontractors, consider the following tips to make sure your use of Subcontractors complies with Workers Compensation protocol.
Q: Do Subcontractors have to have their own Workers Compensation Insurance?
A: Yes!! By working with insured Subcontractors you can avoid issues at your Annual Audit. If they are not insured you may end up paying the portion of Workers Compensation for the work they did.
Q: How do I verify if a subcontractor is insured?
A: It is always a safe practice to verify that the Subcontractor has valid, current Workers Compensation insurance before working with them. You can do this by requesting a Certificate of Insurance.
Q: What is a Certificate of Insurance?
A: A Certificate of Insurance is acceptable proof of coverage. They are updated on a regular basis and verify the current coverage of any business.
Q: How do I document the work a Subcontractor does?
A: Keep a file of all the Subcontractors you use. It is best to keep a record of the scope of work performed by the Subcontractor, their Certificate of Insurance, and preferably a subcontractor agreement.
Q: What is the subcontractor has materials for the job as well?
A: It is best to separate the cost of materials and labor. You can document the cost of material and labor separately on each Subcontractors invoice, for each job they perform with you. If you happen to have uninsured Subcontractors, this will be very helpful to make certain that you only pay Workers Compensation for the labor performed, and not the entire invoiced amount.