Most construction projects are made up of a number of smaller, separate projects, each requiring tradespeople with varying expertise to complete. For instance, in a typical project, the carpentry, plumbing, and electrical work are usually completed by a different construction subcontractor who is specially trained in the specific trade their work entails.
The term “contractor” simply applies to anyone hired to perform work or services under contract, but the differences between an independent contractor and a subcontractor are important to be aware of. While they both might do the same types of work, building subcontractors are not independent contractors, and vice-versa.
Independent Contractors in Construction
One major difference between subcontractors and independent contractors is the range of work they’re equipped to handle. Independent contractors are usually skilled in a variety of trades, and have specialists on standby to subcontract in the event something in the project is outside their scope of knowledge.
Independent contractors are typically hired directly by a company or individual for a project. They usually have their own business and are self-employed. Independent contractors are charged with tasks like sourcing raw materials and estimating project costs, including labor, agreeing on project deadlines with the client, hiring necessary subcontractors and other tradespeople, and resolving any potential issues that could delay the project.
Subcontractors in Construction
Where independent contractors are usually jacks-of-all-trades, subcontractors most often specialize in a specific aspect of a project. Rather than being directly hired by the client, they’re called in by independent contractors to perform certain tasks, such as roofing and siding, electric work, plumbing, or tiling. Unlike independent contractors, subcontractors normally work for a construction company that provides services to independent contractors.
Most of the actual work of a construction project is the responsibility of subcontractors, so they must be skilled in operating various types of equipment and heavy machinery, as well as possess the knowledge required to ensure it’s all operated safely. Working as a subcontractor, some of the main responsibilities include clearing a site of demolition debris and other potential hazards, laying flooring or carpeting, installing drywall or tile, preparing the area around a site, and unloading tools and materials.
How Independent Contractors and Subcontractors are Similar
Independent contractors and subcontractors work similarly in construction, both playing a role in a project’s completion using their own tools and equipment. Neither a subcontractor or an independent contractor are employees of the companies they contract with, so their own respective insurance covers them on the job.
Companies hiring either type of contractor are also not responsible for tax withholding, Social Security, Medicare, or any other aspect of payroll, which are instead handled by the contractors themselves. Most states require both subcontractors and independent contractors to have their own insurance and licensing in place before bidding on jobs.
How Independent Contractors and Subcontractors are Different
Independent contractors are in essence hired to take charge of a construction project, ensuring the necessary materials and subcontractors are in place to ensure its timely completion. Part of the trust involved in hiring an independent contractor is knowing they will only subcontract out to skilled and dependable specialists, which is usually agreed upon in advance in contract language before work begins. Independent contractors are usually required to be bonded before the start of a project, while subcontractors are not held to the same requirement unless they’re bidding on a project.
Project owners contract directly with independent contractors, who in turn, pay any subcontractors they hire to complete specific project tasks like HVAC work, hanging drywall, or any needed plumbing or electrical work. This can occasionally cause problems ensuring subcontractors are paid on time, as how quickly a sub is paid is directly dependent on how fast the owner pays the independent contractor. Sometimes on a particularly complex project, subcontractors will contract with subcontractors of their own for certain tasks, which can present some problems for owners around contract requirements, labor rules or regulations, scheduling, or quality and safety concerns.
Since independent contractors are the ones paid directly by the owner, it’s the owner’s responsibility to ensure requirements governing sub-subcontractors are clearly laid out in the contract signed at the project’s outset.
Taken together, independent contractors and the subcontractors they work with are two sides of the same coin. Independent contractors understand a project’s size and scope and contract out to the appropriate subcontractors needed to complete it within certain agreed-upon parameters. Subcontractors’ role is to focus on specific parts of the project requiring a specific set of skills.