Working with Subcontractors — Project Management

License verification

Always verify a subcontractor's license is active and in the correct classification on the day work starts. Use the CSLB website. Ask for a current certificate of insurance naming you as additional insured, and a current workers compensation certificate, even if the sub has no employees.

Subcontracts

Use a written subcontract that includes scope, price, schedule, insurance requirements, an indemnification clause, and a pay-when-paid or pay-if-paid clause if you choose to use one. California enforces pay-if-paid clauses only when the language is very clear that payment by the owner is a condition precedent to payment by the contractor.

Paying subs

Use conditional and unconditional lien waivers on every progress payment. The conditional waiver is exchanged for the check; the unconditional waiver is exchanged after the check clears. This protects you from double payment and protects the sub from waiving rights without getting paid.