Subcontractor Compliance and Liability Issues Every Retailer Should Know

May 30, 2022

Subcontractor Compliance: Know the Facts Before Hiring Skilled Tradespeople

Subcontractor compliance can be easy to overlook, especially when retailers are under tight deadlines and are working quickly to fulfill customer demands. Providing quality subcontracted work to your customers can drive incredible revenues but can also come with complicated liability and insurance risks that can cost your company a small fortune. Oftentimes, subcontractors could be dishonest about their professional experience or trade certification, prompting a disaster should they injure themselves on the job or do subpar work.

Many big-box retailers and hardware stores continue to subcontract out services like home maintenance, HVAC, plumbing, lawn care, and electrical work without fully understanding the risks facing the business. Today, there is a serious need to ensure that subcontracted tradespeople comply with all local regulations, complete the job at hand, and have appropriate insurance coverage.

What is Subcontractor Compliance?

Retailers have a legal and moral obligation to ensure that their subcontractors are operating within the details outlined in their contract. Simply put, contractor compliance means that the contractor is capable of completing the job outlined within their agreement and that the retailer has taken steps to monitor whether the subcontractor is working in adherence with any local laws and regulations and has appropriate insurance policies.

The process of monitoring subcontractor compliance ultimately protects the retailer's bottom line against claims against their insurance policy or any other legal or liability risks. Many third-party services offer compliance tools to conduct pre-employment screening and professional licence verification, continuously monitor any lapses in compliance, and notify the retailer.

Subcontractor Compliance and Damages to a Customer's Home

Independent contractors can be held liable for damages they have caused to a customer’s home, and retailers can also face a long list of financial, legal, and reputational damages. For example, if a subcontracted plumber or lawn care specialist accidentally damages a client’s home, both parties can be held accountable. Liability rests on the finer points of the relationship between the labourer and the retailer, where bonafide subcontractors share liability issues with big-box retailers. Either way, many customers may be unaware that the services they have purchased from the retailer are contracted out. Ultimately the subcontracted labourer represents your brand, despite not being a full-time employee.

Ensuring ongoing subcontractor compliance can help protect your business’s reputation and ensure that the tradespeople you collaborate with conduct themselves professionally while representing your company.

Subcontractor Compliance and Workplace Injuries

Retailers may learn a difficult lesson if a subcontracted labourer is injured while performing work on behalf of your brand. Proof of insurance is a major issue for retailers. Many corporations are likely to have insurance policies that protect their staff, but not the subcontractor labourers conducting work outside the job site.

Should the worker become seriously injured while completing work and not have sufficient insurance coverage or no insurance policy at all, a claim could be filed against the retailer's insurance policy. This would prompt a sudden increase in the retailer's premiums which could last for several years. The financial impact of this issue could have been avoided entirely if the retailer had properly screened their subcontracted labourers for insurance and compliance.

Subcontractor Compliance and Criminal Background Checks

While subcontractors are not full-time employees, retailers can find themselves facing complicated litigation if it is proven that a contractor was sent to work at a customer’s home despite having a problematic criminal history. Subcontractors must be subject to the same screening as full-time employees, helping to protect your customers. The retailer could be deemed responsible if a labourer commits a criminal offense while visiting a customer’s home.

These issues can be avoided with regular screening and criminal background checks of subcontracted labourers. The tools provided by specialized third parties can paint a complete picture of their subcontractors and make highly informed decisions that can protect both the general public and the business itself.

Ensure Ongoing Compliance When Hiring Subcontractors Alongside ISB

Ensuring that every contractor meets your high standards of qualifications, insurance, workmanship, and conduct requires ongoing monitoring and access to the right tools. Protect your brand by leveraging the Contractor Compliance Platform of ISB Global Services, and rest easy knowing your customers are in good hands and your brand is protected. Proper vetting of contractors requires so much more than a simple criminal background check, especially for regulated trades representing your brand and working directly with your customers.

ISB Global Services Contractor Compliance Management tools ensure that all authorized subcontractors have the proper insurance and credentials while meeting all regulatory requirements for the work they complete. Leveraging QR code technology with a digital badge that allows for real-time verification ensures that tradespeople are in good professional standing while verifying to customers that they are trusted service people entering their homes.

By working alongside ISB Global Services, any corporation can maintain the regulatory compliance requirements of their subcontractors while offering their customers peace of mind that only those that meet the highest possible professional standards will be authorized to represent you. Be confident knowing that you have taken the right steps towards offering quality and secure subcontractor services to your customers with the assistance of ISB Global Services.

Contact us directly to learn more about available solutions for the retailers utilizing subcontractors, general labourers, and workers.