How Are Contractors Liable for Subcontractors?

The relationship between general contractors and subcontractors is a vital but often tenuous aspect of any construction project. It’s not uncommon for contractors and subcontractors to dispute things like payments or quality of work. In order to maintain a productive and efficient workflow on site, cooperation, communication, and cohesion between the two parties is absolutely essential. When contractors don’t pay subcontractors or a party fails to live up to their end of the deal, the entire project can suffer.

That’s why we designed ConstructionDisputes.com as a bond claim resolution hub for any and all working in the construction field. With useful resources like our experienced bond claim experts and digital document center, we can help you keep track of any important documents, contracts, or communications associated with the resolution of a given project.

Understanding a Contractor’s Responsibilities to Their Subcontractors

Whereas general contractors are responsible for overseeing the entire project on a macro level, subcontractor jobs are far more niche. They’re hired by the prime contractor for their expertise and expected to handle specific tasks such as plumbing, electrical work, or drywall. Due to this delegation of responsibilities from contractor to subcontractor, a back-and-forth between the two is necessary to make sure the project stays on schedule and avoid any unnecessary interruptions. However, anyone who has worked on a construction project will understand that things don’t always go according to plan. This can often lead to significantly heightened tensions between everyone involved. This is why it’s so important to understand what a contractor’s responsibilities are when ensuring that a subcontractor can do the job they were hired for.

• Contract Review: One of the best ways to prevent any problems is for subcontractors to thoroughly read and understand the contract prior to accepting it. A contract should include clear explanations of the subcontractor employee rights, responsibilities, payments, and duties for all parties involved in a project in order to avoid any confusion. Upon accepting the contract, the terms and conditions laid out within are set in place and both parties, contractor and subcontractor, are expected to abide by the agreement. When one of them deviates from the contract, problems arise.
• Payment: Payment is unsurprisingly one of the most common subjects of contention between a contractor and subcontractor. Before they even arrive on the construction site, subcontractors will often have to put up large sums of money to cover the cost of their materials. When contractors don’t pay subcontractors in a timely fashion, it can become difficult for subcontractors to provide payroll to their crew or acquire any additional equipment that may be required. If a contractor can’t manage the cash flow on a project, it becomes far less likely that the subcontractor will work with them again in the future.
• Permits, Insurance, and Liability: It is the responsibility of the general contractor to ensure that all of the necessary paperwork is in order prior to starting a construction project. When a subcontractor is brought on to do a job, they are responsible for that specific job and that job alone. It does not fall to a subcontractor to make sure that all of the necessary building permits and insurance policies have been put in place for the construction project as a whole. There’s also the question, “Are contractors liable for subcontractors’ work?” This can differ from project to project, but many general contractors will require subcontractors to have their own liability insurance policy.
• Worksite Management: Similar to permits and insurance, subcontractors are not responsible for the overall management of a worksite. Their primary focus is only on the job they were hired to do and not the jobs of those around them. If a subcontractor’s work is delayed due to mismanagement of the job site as a whole, that does not constitute fault on their behalf.

When any of these matters lead to a dispute, it’s important to try to work things out before escalating the situation any further. Drastic measures can be taken, such as filing a lawsuit or bond claim, but need not be the first courses of action.

Settling Contractor and Subcontractor Disputes

A large construction project can encompass dozens or even hundreds of companies called in to handle every facet of the job. With so many hands working together, it’s almost inevitable that disagreements would arise between contractors and the subcontractors they hire. Whether the dispute is due to a situation regarding payment or the quality of the work, there are several steps you can take before filing a claim against a payment bond as a subcontractor or moving to a full-on lawsuit.

Traditional litigation tends to raise both tensions and costs for everyone involved. Fortunately, there are a few methods you can try before resorting to this measure.

• Mediation: When contractors don’t pay subcontractors for their work or subcontractors dispute the terms of an agreement, tempers can flare. If this happens, it’s not uncommon for both parties to immediately assume a defensive position. This makes it all the more difficult for either side to understand the other’s grievances or see things from the opposite point of view. Mediation brings in an independent third party to help. The mediator will attempt to help them reach a compromise or offer up solutions that the parties themselves may have overlooked.
• Arbitration: Should mediation fail, an arbitrator may be asked to step in next to try to resolve the issue. Both parties involved in the dispute offer up testimony and evidence for the arbitrator to review, and then, after some deliberation, the arbitrator will make an informed decision for them.
• Dispute Review Board: A dispute review board is commonly comprised of three neutral individuals who help settle any worksite disputes that may arise. These individuals are usually hired at the beginning of a project and remain in place for the duration of its completion. When a problem occurs, the dispute review board will step in and offer recommendations or advice on how best to handle the matter. However, dispute review boards are generally given only limited authority, and it therefore falls on the parties involved in the dispute to decide whether or not to follow the board’s guidance.

Should these methods prove unsuccessful, you can then turn your attention to more serious options, such as filing a claim against a bond. By filing a claim against a payment bond, a subcontractor can ensure that they receive compensation for the labor and materials they provided on a project. If you need to pursue a bond claim, ConstructionDisputes.com can help you get started with your bond claim application right now.

Working With ConstructionDisputes.com

Settling construction disputes can be a stressful and time-consuming process, especially if it’s your first time dealing with this sort of issue. You may find yourself asking pertinent questions like “are contractors liable for subcontractors?” and “what can I do to resolve a dispute with a contractor?” Don’t worry: You can get the help you need by working with ConstructionDisputes.com. Our online communication platform and staff of bond claim experts offer a wealth of both tools and knowledge to help you get the compensation your work deserves. Whether you’re looking for a place to organize your essential documents or help filling out a bond claim form, we’re here to help.