Agreements with your subs

The tile setter you have used for six years starts Monday. You know his cell number, his rate, and that the work is good. What you have nowhere in writing is who eats the cracked substrate under the old floor, whether he is covered if something gets broken, or what happens to his check if the homeowner pays you in September instead of August.

The sub's scope has to be at least as tight as your own

You already wrote a scope of work for the customer. That document is your exposure, and the sub agreement is where you hand part of it to somebody else. Every gap between the two stays with you.

So the sub's description should read the same as yours or narrower — never looser. If your estimate promises "all framing, blocking and joist hangers, debris hauled daily" and the sub agreement says "framing labor," you just bought the blocking, the hangers and the dumpster runs.

Quantity, location, finish, supply, and cleanup answer most scope disputes.

The paragraph that pushes your customer's terms downhill

The rest of your customer contract has obligations in it too, and the sub is bound by none of them unless you say so. That is what a flow-down clause does: one paragraph stating that for its own work, the sub owes you the same terms you owe the customer, with a copy attached. It only works if the sub can read what he is signing.

Flow the terms that touch the work — warranty length, cleanup and site protection, work hours and HOA rules, permit and inspection responsibility, lien waivers. Do not blanket-flow your payment terms. That is a separate decision, and it is the next section.

When you owe the sub, and when your customer's slowness is your problem

Start from the default: the sub earned the money by doing the work, and his right to be paid does not depend on your customer paying you. Shifting that risk takes a written clause, and the two people reach for are not the same thing.

Pay-when-paid is timing. You pay the sub within so many days of receiving the owner's money, and in most states it is read as a delay rather than an escape — payment still comes due within a reasonable time even if the owner never pays.

Pay-if-paid is a condition: the sub gets paid only if you get paid. Enforceability is genuinely mixed. The high courts of California and New York have refused to enforce these clauses, on the reasoning that they amount to an indirect waiver of the sub's mechanic's lien rights. A few states have gone further and banned them by statute — Virginia, for contracts signed on or after January 1, 2023. Other states enforce them where the language is unmistakable. Which camp yours is in, and what wording it demands, is a question for a construction attorney licensed in your state.

Two things may constrain the answer either way, and both depend on where you work. Over half the states have prompt-payment statutes covering private jobs, setting a deadline for passing money down after you receive it, with interest if you miss — though several of those carve out small residential projects, so read your own state's act before relying on it. And an unpaid sub may be able to lien your customer's property even after the customer paid you: that is the rule in "full price" lien states, while "unpaid balance" states cap the lien at what the owner still owes on the prime contract, and most states kill the lien outright if the sub skipped a preliminary notice. Either way it can turn a dispute between the two of you into a call from a title company.

Then write the mechanics down: net 15 or net 30 from an approved invoice, what that invoice has to include, the retainage percentage if you hold any, and a signed partial lien waiver with each payment. On a $6,200 framing sub, 10 percent retainage is $620 held until final inspection — say so in the agreement rather than on the last check.

Proof of insurance before the first day, not the first claim

Ask for a certificate of insurance, from his agent, before the sub sets foot on the job. A photo of a two-year-old policy jacket proves nothing.

Workers' comp is where this gets expensive quietly. If your sub carries none and someone he brought along gets hurt, that injury can land on your policy — and at audit, carriers routinely charge payments to uninsured subs as if they were your own payroll. You find out months later, as a bill.

Collect the certificate in the same packet as the signed agreement, the W-9 and the license number, before the first check.

Indemnification, in a sentence you can read out loud

Indemnification is the sub agreeing to cover you for claims arising out of his own work: if his cut nicks a water line, his insurer and his money deal with the drywall.

Two limits. Most states have anti-indemnity statutes restricting how far this can go in a construction contract, and a clause making the sub indemnify you for your own negligence is unenforceable in many of them. And indemnity from a sub with no assets and no policy is a promise, not a remedy — which is why the additional insured endorsement above does more work than the paragraph itself.

A 1099 does not settle whether he is really a sub

If you set a sub's hours, tell him not just what to build but how and when, supply his tools, and he works continuously and exclusively for you, the IRS or a state labor agency may treat him as your employee regardless of what you filed in January. That means back payroll taxes, penalties, and a comp exposure you thought you had contracted away.

It is not one test, either. The IRS weighs the overall relationship, several states apply a stricter ABC standard for wage and unemployment purposes, and two agencies can reach different answers about the same person. If a sub is on your jobs every week and nobody else's, that is a conversation with a CPA or an employment attorney in your state.

The subs you trust are the ones with nothing in writing

Strangers get paperwork. The guy you have worked with for six years gets a text. Then one bad job arrives — a callback he does not want to drive back for, a slow month where he needs money you have not collected — and there is nothing to point at but two memories of a conversation in a driveway. A written agreement is what lets a good working relationship survive that job, which is the only test that matters.

Copying your own words into the sub's agreement

The scope you send the sub should be the scope you sold, because that is the only version that closes the gap. Keep the work you routinely sub out as its own line items in DoneQuote, written the way you want a customer to read them, so when you hand a piece of a job to somebody else you are copying language you already committed to instead of describing the work again from memory.