KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Subcontracting and subcontractors
December 10,  2019
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Subcontracting and subcontractors    
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Ken
            It just occurred to me that there is often the mention of subcontracting here.
Rather than having to search piece meal though all your posts, I was wondering if you could give us a list of the following from your perspective and any other thoughts you might have on the subject.
  *  Subcontracting advantages (if any )
  *  Subcontracting disadvantages
  *  Subcontracting precautions
Thanks
Gene
Reliable Alarm
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Response
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            Thanks for the question; great topic.  
            There’s 3 ways to get things done:  1) do it yourself; 2) hire an employee to work for you and do it; and 3) engage someone else to do it.  The “someone else” is a subcontractor.  
            What’s the advantages of subcontracting?
·         You don’t have to have an employee who you have to pay full or part time and provide benefits
·         You don’t have to carry insurance that is required for employees, like workers comp, auto insurance, and disability insurance or make employer contributions on top of wages or withhold taxes.
·         You don’t have to provide tools needed to perform the work
·         You don’t need to transport the subcontractor to the job site
·         You don’t have to supervise the work
·         You can engage the subcontractor only when you need them and not have wasted cost for unproductive employees or slow periods with no work.
        ​   What’s the disadvantages of subcontracting?
·         You may be unfamiliar with the skill set of your subcontractor or its employees, including license compliance
·         You may not know if the subcontractor maintains the appropriate insurance
·         Subcontractors may not be available when you want them
·         Subcontractors may not perform the work in the manner you prefer
·         Subcontractors may not be engrained with your business culture and practices and may reflect on you poorly when dealing with your customer
·         Work may be unreliable in both performance and outcome
            Subcontracting precautions
·         Check for licensing of the subcontractor and all employees who will be on your customer’s job
·         Check for proper insurance.  Subcontractor should maintain workers comp and should maintain all insurance that you as an employer should maintain
·         Make sure subcontractor maintains general liability insurance with E&O coverage and names you as an additional insured, primary and non-contributory.  
·         If you engage a single – one person – subcontractor you have to be extremely careful to ensure that the subcontractor is properly classified as a subcontractor and not as your employee.  Calling a subcontractor one and issuing a 1099 rather than a W2 does not make the subcontractor a subcontractor.  In fact it’s more likely that this subcontractor is really your employee and you will be liable for all kinds of issues.
·         Be sure your subcontractor is party to a Subcontract which has appropriate provisions for confidentiality and non-compete.  After all, you are sending the subcontractor out to meet your customer and it won’t take much for the subcontractor to develop a closer relationship with the customer than you have.  
·         Be sure to use the Standard Subcontracting Agreement.
 
    There is a comprehensive list of subcontractors and those looking for subcontractors on The Alarm Exchange.  None vetted, so do your own due diligence and report any problems to me.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com