Are you responsible for insuring subcontractors, casual laborers, or other non-employees?
In some cases, you might end up being responsible for insuring contractors or workers who should have their own insurance. The issues can be complicated when you have outside workers performing jobs on your property without clearly defined roles and responsibilities.
Subcontractors, casual laborers, or other non-employees bring with them a whole new set of liability issues above and beyond your own business operations. If they aren’t your employees, you may have a difficult time controlling their actions and preventing the liability problems they create. Theoretically, workers and subcontractors are responsible for their own actions, but they might not have the resources to cover their negligent acts.
Insuring subcontractors and contractors
Contractors and subcontractors should have their own liability insurance, but it’s up to you to make sure they have coverage in force before they begin working for you. You can do this by requiring a certificate of insurance from their insurance company.
You might also require that independent contractors name your company as an additional insured on their liability policies. If you allow an uninsured contractor to work on your property, you’ll be making a choice to accept their liability exposures, whether intentionally or not.
Define responsibilities in a contract
A written contract is a great tool for documenting responsibilities and minimizing hassles related to insuring contractors and their liability exposures. Before a subcontractor begins working for you, you should execute a formal contract that reviews duties, expectations, requirements, and costs.
Your contract should also include hold harmless, duty to defend, and indemnification clauses. These compel a contractor to be responsible for the damages and injuries they cause. They also require them to indemnify your company for costs incurred because of their actions. Even if a subcontractor has no insurance, you’ll have a right of recovery for your costs to pay or defend claims because of their negligence.
Insuring casual laborers and non-employees
One concern with casual laborers or non-employees is that they may actually be employees by definition. The IRS topic, “Employee or Independent Contractor? Know The Rules” should help you determine if your arrangement with casual laborers and non-employees constitutes an employer/employee relationship.
The key issues involve your financial and physical control over a worker’s activities and your working or contractual relationship. If your workers meet IRS employee guidelines, you may be legally responsible for their on-the-job actions even if you don’t consider them employees. In addition to their liability exposures, you may also be responsible for their unemployment, workers’ compensation and other compulsory benefits.
You can’t eliminate all contractor-related liability issues
You should choose your subcontractors and casual workers carefully. Their actions may cause liability issues you can’t avoid. Connecticut and Massachusetts Premises Liability Statutes require you to maintain your property and warn of dangerous conditions or hidden hazards. Even if a negligent subcontractor, casual worker, or non-employee has liability insurance and you have a contract in place, as a property owner, you’ll always have some responsibility for their actions.
Sometimes responsibility issues don’t come up until after a subcontractor or worker causes damage or injuries while they’re working on your property. That’s why you should address key responsibility issues ahead of time. Consider reviewing any liability or employee vs non-employee concerns with your legal representative.
You should iron out your insurance issues ahead of time as well. Call us at 800-367-2482 to discuss your concerns about insuring subcontractors and minimizing risks to you and your company. We can help you assess your insurance needs before you hire another non-employee.