General contractors and/or prime contractors are designated “controlling employers” in the Occupational Safety and Health Administration (OSHA) construction standard. Controlling employers are defined as those contractors who may be held responsible for the actions of subcontractors, including bodily injury and/or property damage caused by subcontractors to the public, other contractor’s employees, or for injuries to the subcontractor’s own employees.
These exposures can be broken down into the following areas:
- Employee injuries (workers’ compensation)
- Job site physical injury to others or property loss (premises liability)
- Physical injury or property damage to the public around the site (premises/general liability)
- A defect arising after work has been completed (construction defect/completed operations)
With this in mind, it is in the best interest of the general/prime contractor to select safe and dependable subcontractors and require them to be responsible not only for job site safety, but good quality control programs, as well.
Subcontractor selection
The following are some best practices that can be used to select dependable subcontractors and to encourage them to work safely. It is not an all-inclusive list, but lays out areas of consideration as a means to reduce liability. In order to assess the risks associated with selecting subcontractors, general contractors need to consider the following factors at a minimum:
- Experience modification rate
- Liability loss experience, both general liability and completed operations losses
- Auto loss experience for haulers
- Work history
- Bonding issues
- OSHA citations and incident rate
- Safety program (e.g., confined space, trenching, falls, lockout)
- Substance abuse program
- Fleet safety program (haulers)
- Orientation and training, both for new hires and ongoing training for others
- Personal interviews with the principles
- Thorough checking of references and inspection of work completed
- Identifying and requiring the “competent person” who will be assigned to the project for the subcontractors
- Reviewing the subcontractors internal quality control procedures and who is responsible for completing and documenting inspections
- Ensuring the subcontractor meets minimum insurance requirements required in the contract by having an effective risk transfer process in place
Some common mistakes that general contractors make in dealing with subcontractors that increase their liability exposure include, but are not limited to:
- Not following the above best practices and hiring a subcontractor who cannot do the job correctly
- Retaining control of a subcontractor’s activity or performing the subcontractor’s work
- Dictating means and methods of how the work is to be done rather than stating the standard that needs to be met.
- Allowing a subcontractor to undertake inherently dangerous work (e.g., blasting, trenching, confined space work, demolition) without adequate preplanning and discussion of the controls to be used to limit potential damage.
Contractor’s risk management plan
1. Build safety into the contract.
- The general contractor should ensure that the contract defines the subcontractors:
- Scope of work
- Duty to comply with federal, state and local safety requirements, including, but not limited to, OSHA standards, building codes, and local ordinances
- Duty to comply with all of the general contractor’s requirements that are beyond the minimum OSHA requirements
2. Select competent project management
The general contractor should ensure that the management team for each project is capable of:
- Managing and coordinating the type of project assigned
- Providing leadership
- Communicating
- Setting a positive example
- Establishing that safety will not be compromised for production
3. Emphasize job safety
It is the responsibility of the general contractor to establish a “safety attitude” on the job. Safety must be emphasized on a daily basis. Some ways to emphasize job safety include:
- Conducting pre-bid and/or pre-construction meetings to discuss safety requirements
- Discussing safety at each scheduled job meeting
- Requiring job hazard analyses be performed prior to tasks being performed by the subcontractor
- Utilizing a disciplinary policy for noncompliance with safety requirements
- Conducting periodic (weekly, bi-weekly) job-wide safety meetings with all personnel
- Monitoring subcontractor safety performance (i.e., checking that required inspections and safety meetings are
- conducted)
- Including subcontractors in training sessions
4. Positively reinforce safe behavior
- Include subcontractors in safety meetings
- Enforce safety consistently
- Assist subcontractors in strengthening their safety programs; share ideas that have been successful
- Establish a job site safety committee with all subcontractors represented
- Build incentives into the contract for on-time completion with no accidents
- Promote good housekeeping on the construction site by having daily clean-up times and providing adequate
- safety for staging of materials
- Recognize and reward safe practices
5. Negatively reinforce unsafe behavior
- Document safety violations
- Back-charge for violations that the general contractor corrects
- Implement a progressive monetary penalty system for repeat violations
- Shut down work for repeated noncompliance or inherently dangerous work
- Suspend or terminate the contract
- Reducing general/prime contractor’s liability
Listed below are ways in which the general contractor can reduce the potential for liability in relation to subcontractors.
Do:
- Have an effective contractual risk transfer process in place that outlines state-specific indemnification clauses and insurance requirements.
- Consult with a competent construction contract attorney for the correct indemnification clause
- Contact your agent for the correct insurance requirements to be used.
- Require the use of professional engineering where required, e.g., for trenches more than 20 feet deep or design of fall anchor points.
- Take photographs to supplement the written documentation of safety problems
- Investigate all accidents
Do not:
- Loan equipment or vehicles without operators
- Repair another contractor’s equipment or vehicles
- Borrow equipment
- Supply or pay for the materials of subcontractors
- Hire the subcontractor’s employees
- Include the subcontractor’s employees in the general contractor’s workers’ compensation insurance
Reference: OSHA Standard for the Construction Industry (29 C.F.R. Part 1926).
The information provided in this document is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law.