Key Takeaways
- Contractual controls are cheapest and most effective.
- Default adds 25-40%—prevention far cheaper than recovery.
- Misclassification carries severe tax penalties.
- Follow escalation path—most disputes resolve before litigation.
Review of contractor risk and compliance from Track 3.
Recap
Five risk categories need layered controls. Insurance: GL $1M/$2M, WC, auto, Additional Insured. Bonds cost-effective >$100K. Default adds 25-40% to budget. Worker misclassification: 15-20% back taxes. Dispute resolution escalation from free negotiation to $100K+ litigation.
Compliance Checklist
Control Failures
Not maintaining organized records of contractor compliance documents
Unable to prove due diligence in licensing, insurance, and classification if a dispute or injury occurs
Correction: Maintain a compliance file for each contractor with current license, insurance certificates, W-9, and signed contract
Sources
- OSHA Construction Industry Safety Standards(2025-01-15)
- NASCLA Contractor Licensing Requirements by State(2025-01-15)
Common Mistakes to Avoid
Not maintaining organized records of contractor compliance documents
Consequence: Unable to prove due diligence in licensing, insurance, and classification if a dispute or injury occurs
Correction: Maintain a compliance file for each contractor with current license, insurance certificates, W-9, and signed contract
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Test Your Knowledge
1.Minimum GL insurance required?
2.Bonds cost-effective above?
3.Default impact on remaining budget?