What Should a Subcontractor Agreement Include?

By Bill Stilwell · Last reviewed October 17, 2026

The short answer

A subcontractor agreement is the deal with another business or tradesperson who does part of your customer’s job. It should say exactly which work they do, who supervises it, who talks to the customer, safety duties, licenses and insurance, how they get paid, and who fixes problems. To the customer, it’s still your job, so their work becomes your reputation.

What this means

A subcontractor is usually a separate business you hire to do part of a job you sold. The agreement covers:

Work allocation: the exact tasks, materials, and who supplies what (link to your scope of work, see 11.1.4 Scope of Work)
Supervision: who checks the work and signs off
Customer contact: whether the sub can talk to the customer, and about what (pricing and changes usually go through you)
Schedule: start and finish dates, and how delays are handled
Safety: each side’s safety duties on site
Licenses and permits: who holds them and pulls them (see 9.5.2 State Licenses)
Insurance: what the sub carries and proof (see 11.2.6 Insurance Certificates from Vendors)
Payment: amount, timing, and whether it depends on your customer paying you
Quality and callbacks: who fixes defects, and for how long (see 11.1.9 Warranty)
Non-solicitation: whether the sub can take your customer directly

Made-up example: Westbrook Remodeling hires a licensed electrician for kitchen jobs. The agreement says the electrician pulls the electrical permit, follows Westbrook’s job site rules, sends all customer questions about price or changes to Westbrook’s project lead, and fixes any electrical defect for one year at no charge.

Why it matters

The customer blames you. They hired your business. A sub’s mistake becomes your callback and your review.
Safety duties can overlap. The Occupational Safety and Health Administration (OSHA) says that on a worksite with more than one employer, more than one employer may be cited for the same hazard, depending on its role.
Unlicensed work is a risk. Many states require a license for trade work, and using an unlicensed sub can cause problems with permits, inspections, and insurance.
Uninsured subs shift risk to you. If a sub’s worker gets hurt or damages the home, and they have no coverage, the claim may land on your policy.
Side deals hurt. A sub who quotes extra work directly to your customer confuses pricing and can cut you out.

Who this applies to

Any business that hands part of a customer job to another company or tradesperson. If the person works only for you under your direction, see 11.2.2 Independent-Contractor Agreement and 23.3 Employee or Contractor, because they may be an employee.

How to do it

Write the scope for the sub’s part of the job, tied to the customer’s scope.
Check their license with your state licensing board before they start.
Collect a current insurance certificate and set a reminder for its expiration date.
Set customer contact rules. All changes and pricing go through you (see 11.1.5 Change Order).
Share your job site safety rules and agree who handles which hazards (see 11.4.1 Hazard Identification).
Set payment terms that fit your cash flow, and say what happens if your customer pays late.
Agree on quality standards and callbacks in writing.
Sign before work starts.
Inspect the work before you tell the customer it’s done (see 17.7 Quality Control).

What proof to keep

The signed subcontractor agreement and scope
License verification printout or screenshot, with the date
Current insurance certificate
Permits and inspection results
Sign-off records and photos of completed work
Notes on any customer issue involving the sub

Common mistakes

A handshake deal with a sub you’ve used for years. Memories differ when something goes wrong.
Never checking the license or insurance, or checking once and never again.
Letting the sub approve changes with the customer.
“Pay when paid” terms without legal review. Rules on these clauses vary by state.
No callback terms, so you pay to fix their work.
Not inspecting before closing the job.

When to get help from a pro

Attorney: to draft the agreement, especially payment and responsibility clauses. Insurance professional: to set the coverage you require from subs. Questions to ask:

What coverage and limits should I require from subcontractors?
Are “pay when paid” clauses enforceable in my state?
What are my safety duties on a site where my subs work?

Bill’s note

[Bill: add a short note. For example, how SiteSmarty works with outside specialists on client projects, or a business you know whose reviews suffered because of a subcontractor.]

How I did this for SiteSmarty

[Date I did this:]
[What I actually did, step by step: the agreement, customer contact rules, and quality checks]
[What it cost and how long it took:]
[What surprised me or what I’d do differently:]
[Screenshot or photo to add, with private info blurred: the customer contact clause in a signed agreement]
[Result so far:]

Questions people ask

Who is responsible if a sub makes a mistake? To the customer, your business usually is. Your agreement with the sub decides who pays to fix it between the two of you.

Can my subcontractor talk to my customer? Only as your agreement allows. Most businesses route pricing and changes through their own office.

Do subs need their own license and insurance? Usually yes for trade work. Check your state’s licensing rules and require a current insurance certificate.

Who handles safety on a shared job site? It depends on each employer’s role. OSHA says more than one employer can be cited for the same hazard.

Audit check

Question: Does every subcontractor have a signed agreement covering work allocation, supervision, customer contact, safety, licensing, insurance, and callbacks?
Pass looks like: Signed agreement, verified license, current insurance certificate, clear contact rules, and inspection sign-offs.
Fail looks like: Handshake deals, expired insurance, unlicensed trade work, or subs negotiating changes with customers.
Evidence to collect: Agreements, license checks, insurance certificates, permits, and job sign-off records.

Where this fits

Do this first: 11.2.2 Independent-Contractor Agreement, 11.1.4 Scope of Work

Do this next: 11.2.6 Insurance Certificates from Vendors

Sources

Occupational Safety and Health Administration (OSHA), "Multi-Employer Citation Policy" (CPL 02-00-124) (checked October 17, 2026)
Google Business Profile Help, "Tips to improve your local ranking on Google" (checked October 17, 2026)

This page explains general rules and Bill's own experience. It is not legal, tax, or insurance advice. Talk to a qualified professional about your situation.