Legal Implications of the Subcontractor Relationship

Discussion in 'Industry News, Training & Organizations' started by Jim McClain, Jan 25, 2019.

  1. Jim McClain

    Jim McClain TFP Owner/Founder Administrator

    From Mid Atlantic Floor Covering Association:

    Floor Covering Professionals,

    The legal implications of the subcontractor relationship has continually plagued our industry. Three years ago, the National Labor Relations Board expanded who could be potentially considered a joint employer. Under that rule, an flooring retailer could be a joint employer simply based upon direction given to an installation subcontractor on when and where to install flooring or the inspection of an installed floor. As a joint employer, the retailer could possibly be considered liable for any actions of the subcontractor.

    The National Labor Relations Board has proposed a new rule to reverse the earlier rule. This change would limit the exposure of dealers to liability based on the subcontractor's actions.

    What can you do today? Go to and comment showing your support of this rule change.

    This small action can have a lasting impact on our industry!
    • Like Like x 1
  2. Chris 45

    Chris 45 Director of P.R. on some deserted island. I Support TFP

    Don’t even get me started on subcontractor agreements. Im wondering how many subs even read their subcontractor agreement or even understand it before signing away their life. I had one shop that redid their subcontractor agreement and wanted me to sign the new one. I read it and it said that by signing it I was giving up my right to file a lien. I never signed the new agreement. Another shops contract basically said they could come to my jobsite, create an unsafe condition that could cause injury to me and I couldn’t sue them. Some have an if/ when they get paid you get paid clause.

    How many of you pros have read and fully understand the legally binding contract that you have most likely signed if you work for a shop.
    • Like Like x 1
  3. As wordy as I can be, I read through that link and it made my head hurt. :)

    Seriously, thanks for the update Jim. That's really good information.
  4. JayP

    JayP Pro Member

    I have two shops I’ve worked for for over a year now and I have never been asked to sign anything.
    • Agree Agree x 1
  5. Elmer Fudd

    Elmer Fudd Administwative Asst. Charter Member I Support TFP Senior Member

    The last shop i worked for (14 yrs.) had 18 subs, all were asked to sign as a sub, the issue I had was they required a $5K retention. I told them that the contract meant they had $90,000.00 to play with and did not require them to pay any interest. I requested a joint account with two party signatures for any dispersal. That was a no i did not sign, only one of 18. The boss came to me and said if I did not tell anyone he would make an exception for me. It worked for me for fourteen years!!
  6. A retailer wanted my brother to sign a price list. He refused. I saw the word “potentially” above

    We have distanced ourselves and work for many retailers,installers and homeowners. Some of the guys work “exclusively” for one retailer.

    I think it’s a joke. People want cheap, the installers are being scammed on pay. I wonder who is trying to manipulate the law to their advantage.
  7. Chris 45

    Chris 45 Director of P.R. on some deserted island. I Support TFP

    You as a contractor have certain rights and responsibilities. Nobody can take those rights away from you but you can certainly sign them away. Subcontractor agreements are like warranties. They are written to benefit those that wrote them.
  8. Pioneer Carpets

    Pioneer Carpets Pro Member

    That's wierd. I've never had to sign anything either. A sub-contractor is a business entity. The set up would be fine except a bunch of stores have chose to double dip and have subs that they treat like employees.
    California is starting to make legislation making the rules tighter on subcontracting. Mainly aimed at the gig economy like Uber, its unclear how it will affect the trades.
    From a business perspective it is a no brainer to abuse a system that has no repercussion for abusing it.
    Business owner/exec: 'Hey, I can pay someone a set rate, not by how much time and resources the job actually took? I am also not responsible for any legal liability that arises if the job wasn't done right? I also don't have to maintain a fleet or pay for gas? I also don't have to incur the cost of some supplies or store them in my warehouse? Oh goody, since sub has employee, there is one more employee I don't have to manage. No training costs. Mmm, No workmans comp(CA), No employers match FICA taxes, payroll is simpler. Oh yeah and since it's illegal for two businesses to get together and agree on a set price, I will have single handedly crushed any organized labor negotiations if I just subcontract out all the work!' *Laughs to self and skips away to the bank*
    • Agree Agree x 2
    • Like Like x 1
  9. Mark Brown

    Mark Brown On The Surface Flooring I Support TFP

    In all the shops i have ever worked for i have never signed a single thing. Nor will I. That is not true, however i think my counter proposal to anything I am potentially inclined to sign would be so egregious to the person making me sign it that they would back off. Good for the goose is good for the gander.

    I threatened to take one shop to court for a 5% deduction on an invoice of mine that they tried to explain away as an Admin Fee. I believe it was for $27.50 and i gave them 24 hours to remedy it or legal action would be pursued. Needless to say i got my money back... and never worked for them again.
    There are so many illegal things that shops try and pull, like pool hold backs, here in British Columbia the Legal standard for contract withholding is 10% of a contract for 30 days after substantial completion. No one job can be withheld in lieu of another and each payment must be rolled back to the contractor after that time is complete. I get such a laugh at holdback pools it almost makes me sore. If you don't think in can handle my end, don't use my services. Or better yet, if you want to treat me like a slave at least give me housing and beat me once in a while
    • Like Like x 4
    • Funny Funny x 1
  10. Great post mark!

    But you have to think about how these contracts came about. I'm going to guess its because of the shop getting caught with their pants around their ankles.

    Now theres definitely shops that have so much going on & enough subs around that they can dictate. But there's also shops that have limited clientele & not the best selection with subs so they need to cover their ass. It all depends on the specific shop you're working out of. If you dont trust one another right from the gate there is a very good chance that business relationship isn't going to work out.

    That's my small town mentality.
  11. Mark Brown

    Mark Brown On The Surface Flooring I Support TFP

    You are so right, i think i was in and out of 5 shops when i first came back home here in under 2 weeks. I would do a job or two and get that vibe that i didn't want to be a part of it...

    Then i finally found home. Ill never forget the day, driving back after another round of "hi i'm Mark Brown and i am your new installer" feeling a little defeated... especially after booting myself from so many and i got a phone call from the GM of one of the stores i was relentlessly pursuing and the fellow asks me "...hey you said you can flash cove linoleum right?"

    Well since that day, minus a few ups and downs, i have been home :)
  12. Interesting question he had, but, very shallow. This can get pretty deep. Did he fully understand the knowledge, professionalism, not only the ability, but full comprehension of the flooring trade?

    Had a retailer say to me, “Mike, you’re amazing all the tools you have.” That’s really an insult as there’s so much more to just having the tools. First thing is being smart enough to know you need it. Bad part is the cost.
    • Like Like x 1
  13. kylenelson

    kylenelson You'll find me on the floor I Support TFP Senior Member

    Cost is also an a competitive advantage that you have over competitors entering your space. Not many people are going to drop the kind of dough it takes for ride on machines, grinders, etc to do thr job right. But that’s off topic. O wouldn’t sign anything that wasn’t run by a lawyer first, they’ll let you know if you’re getting the short end of the stick, and I’m guessing you already are if you’re working for a place that makes you sign
    • Agree Agree x 1
  14. I suggest if it’s online to get a Home Depot subcontractor contract and read it, or glance over it(many pages) it’s ludicrous! That alone kept us away for filler work. Now we take work away from them occasionally without trying. Customer called awhile ago complaining about dust and they use the scare tactic of doing all the work (removal)or they won’t warranty. Didn’t get that job but ammo for future game I can play.
  15. Chris 45

    Chris 45 Director of P.R. on some deserted island. I Support TFP

    Shoot, I’m more than happy to let someone do their own demo. It’s the prep and install that I care about.
    • Agree Agree x 2

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