Written by Chris Boggs, Executive Director of the Big “I” Virtual University (VU), originally published by IA Magazine
A homeowner is working with a general contractor on building a new a house. The builder requests that the homeowner act as the general contractor of record—pull all the permits, etc.
Under the builder’s suggested agreement, he would find the subcontractors, but the homeowner would hire them. The builder says he would not be responsible for any injuries to or caused by the subcontractors, because each will carry their own workers compensation and general liability coverage.
Question:
What are the risks for the homeowner in this case? Would he be responsible for any injuries the subcontractors sustain while working on this project?
Answer:
You will need to check your state’s workers comp laws to see if a homeowner can be held liable in this case — every state is different.
In general, though, most states do not hold the homeowner responsible for injury to independent contractors doing work on their house, nor would they be responsible for injury to employees of a subcontractor working on their house.
A subcontractor relationship is created when there are three parties: the owner, an independent contractor, and a subcontractor. Most workers comp statutes make the upper-tier contractor responsible for the employees of a lower-tier uninsured contractor.
I doubt the homeowner's act of pulling permits changes the law's application, but because each state differs, I'm not positive. You may need to consult a labor attorney. At the very least, it seems sketchy that a general contractor would want a homeowner to act as the general contractor of record.
Ultimately, I would recommend against using this builder. It sounds to me like he lost his license or is scamming the system.
This question was originally submitted by an agent through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.
