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Subcontracting and subcontractors
December 10,  2019
Subcontracting and subcontractors    
            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
Reliable Alarm
            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