Should You Hire Subs or Employees?

If you're turning down jobs, paying overtime week after week and running your crew into the ground, you have two options: hire employees or bring in subs. Most contractors go with whoever picks up the phone first. That's how you end up with a crew you can't control and labor costs you can't afford.

In episode 1 of Working Overtime, we look at subs vs. employees through three lenses: the real cost, control, and how steady your work is.

In this episode

• The true cost of an employee vs. a subcontractor. A $30/hr wage can mean $37–$42/hr once you add payroll taxes, workers' comp and benefits.
• Worker misclassification: how the government tells a sub from an employee, and the back taxes and penalties if you get it wrong.
• Subcontractor insurance risks, and why you need a COI, TIN and contract before any sub steps on your job site.
• Flexibility vs. control: “Subs rent you capacity. Employees build your company.”
• Why constant overtime means you're short-staffed, and what it's costing you.
• A 90-day test to decide whether to hire or sub out.

Do this week

Pull up the next 90 days of sold work and list every job. Next to each one, write “sub” or “employee” based on three questions: Is this our core work? Is it steady or a one-off? How much control do we need over how it gets done?