Concrete Pumpers – Are You Subcontractors?

by Robert Edwards, NBIS

Anyone who runs a business knows that one of the keys to the business’s success is the ability to foster meaningful business relationships. This is especially true in the concrete pumping industry. Since the concrete pumping industry has gotten so specialized over the years, the ability to foster these relationships is especially important; most customers will continue to hire your company to pump concrete if you perform the job safely, are on time and have good equipment.

However, having loyal customers can often create problems, especially in the area of contract negotiation. Sometimes, your customer is a general contractor, builder or developer that will want you to sign a master service or subcontractor agreement that is very onerous. Because concrete pump companies value their business relationships with customers and clients, it is not uncommon for these agreements to be one-sided with no negotiations done to manage the risk. As we will discuss, failing to manage the risk with your contracts can cause devastating problems for your concrete pumping company.

Often a general contractor or upper tier subcontractor will try to classify you as a subcontractor for the purpose of their contracts. Doing so gives the contractor or upper tier subcontractor certain legal advantages:

• The contractor can demand that your insurance indemnifies them for anything that goes wrong on any of their job sites.

• You can be held contractually responsible for defects in the finished project, years after the job is done.

• After you’ve left the job, an incident can happen that could drag you into a lawsuit weeks, months, or even years later. Example: The floor collapses because of inadequate bracing underneath or faulty engineering design. They blame the pump because it placed the concrete.

• By giving you the same contract they give everyone else, and establishing you as a subcontractor instead of a service provider, the laws of the state may treat you and your liability differently.

The problem is that those items are all to their benefit, and do not change the fact that, in almost all cases, concrete pumping companies are service providers, not subcontractors.

Think about it: Do you supply material to the job? Do you have access to the job site? Do you have access to the blueprints? Do you control the timing, scheduling, location, or employees of anyone on the job site? In the vast majority of cases, the answer is no to these questions.

The person who hires you typically works for a subcontractor. Especially on a commercial job site, it’s the concrete subcontractor that hires the pumping company for the pour of the day.

READ BEFORE YOU SIGN

Your total commitment to a job site could be one pour, from 7:00 am until noon on one given day. If you’ve signed a subcontractor agreement for that contractor, or for an upper tier subcontractor, you may be accepting responsibility for all liabilities that stem from contractor or subcontractor work during the time of the agreement that you signed. These agreements are written 100 percent in their favor, and they know it. Are there exemptions? Yes, there can be, based on your state. Your state might have specific indemnity provisions for consideration—your legal representative will be able to recommend relevant actions to take in your area.

AVOID THE PROBLEM

How can you avoid this?

• Your job ticket language must be clear because, as a service provider, it is the contract you put into place every day: the types of indemnity you’ll give away, what responsibilities you’ll accept, which states the job ticket can be used in, when it must be signed, and who can sign it. NBIS provides this contract management service for your job ticket; a service provided to all NBIS insureds’.

• Don’t sign any subcontractor agreement without reading it or having your attorney read it. In most cases your insurance will cover you either way, so it comes down to a business decision not based on coverage.

• In the case of your job ticket: if you’re going to get something signed, get the right thing signed, with correct terms and conditions giving you the best chance should a claim arise. A job ticket signed at the end of the day may only protect the cost of today’s pumping job. A job ticket signed before the job starts sets the contract language in place, and can protect your entire company.

• In cases where you have to sign someone else’s contract to go to work, become educated on what clauses will really hurt your company. Understand the difference between the types of indemnity and the “arising out of” clause versus the “caused by’ clause. You work hard to keep your company safe—work just as hard to protect it from lawsuits where you were not involved in the liability claimed against you.

RISK MANAGEMENT PARTNERSHIP

In this ever-changing and challenging climate of litigation, make sure you are partnered with the right insurance broker and insurance carrier. This partnership should involve people who not only provide paper to insure your company and its services, but understand what you do for a living and how to protect your business and defend your services in the event of a claim. Your insurance costs are a significant part of your business expense each year—but it’s not the premium you pay today that controls your future costs—it’s how claims are handled and the total losses that have the most impact on costs.

Contact the concrete pumping experts at NBIS today to learn more about contracts and other risk management resources that protect your company as much as property and casualty coverage does in the event of a claim. Contact NBIS today at (866) 668-NBIS for more information about policyholder benefits, including contract management services and other effective tools to manage the risks within your company.