It’s common for a commercial property inspector to act as the project manager for a particular job. This inspector is in charge of the overall planning and execution of a particular project, which typically involves hiring specialty consultants, also known as independent contractors or subcontractors.
A specialty consultant is typically hired to help the inspector tackle larger, more complex projects, or when the scope of work requires extensive knowledge or expertise about a particular system. The specialty consultant is considered an independent contractor, rather than a regular employee. He or she acts as an independent entity and performs specific tasks for the company.
For example, this independent contractor may be:
- a roofer hired to inspect and possibly take core samples of the roofing materials;
- a structural expert to help inspect the roof and floor systems;
- an electrician hired to inspect the service, transformers, distribution and panels;
- a plumber to help with sewer scoping, and inspection of the service and distribution;
- an elevator inspector to review all mechanical vertical transportation systems;
- an indoor sprinkler and backflow expert to review the fire suppression system;
- a security and fire alarm consultant or expert to test smoke detectors, fire alarm pull stations, fire alarm horns and strobes, and security other systems;
- a fenestration expert for assessing curtain walls, windows and doors;
- an HVAC expert to review and inspect the installed heating and cooling systems; and
- a commercial kitchen inspector to review fire suppression systems, vent hoods, and appliances.
Vetting an Independent Contractor
It’s important to find the right independent contractor for your specific needs. If possible, always speak with multiple parties to ensure that you find the best person, and also to compare their rates. Make sure they take projects of the type you’re dealing with. Check with them for their availability and project load.
As most independent contractors will be hired as specialized help, it’s important to verify their credentials. Each state keeps records of all state-issued licenses, and most cities do the same. Some of their websites have a license lookup feature.
Your state and service area may also have specific insurance requirements. Aside from the obvious (such as auto insurance), there may be additional insurance requirements for various types of independent contractors. You should emphasize to any prospective hires – and your contract with them should explicitly state – that they’re required to carry the mandatory insurance coverage per their license stipulations. Finally, see if they will provide you with financial references and/or a list of former clients and projects.
Taxes and Other Considerations
As a business hiring independent contractors, you have obligations, too. If their compensation or fee is expected to exceed $600 over one calendar year, you must have your sub complete a W-9 before they begin work for your business. The W-9 form is an IRS form that serves the same purpose as a W-4 form for regular employees. They’re required to fill out this form only once, regardless of how many jobs they perform for you. The information provided in the W-9 is used to prepare the 1099-MISC to report their earnings, and is required for both parties to prepare their federal taxes. These forms can be downloaded from the IRS.gov website.
Since an independent contractor is not the same as a regular employee, their work is not subject to the Fair Labor Standards Act (FLSA). The FLSA sets the basic wage and work hour requirements for most employees in the U.S., including minimum wage, overtime, what constitutes work versus breaks, and many other things. Whether an employee is classified as an independent contractor or an employee is reviewed by your state revenue department, the IRS, and the Department of Labor, so it’s important to classify the individual accurately for tax and other purposes. The main factors used to determine their status is how integral their services are to your business, the duration of their contract period, the subcontractor’s financial investment in the project (if any), and how independent the two operations are. These factors may be determined on a case-by-case basis, but they should all be considered when hiring additional help for a project, and when keeping a particular contractor on file for future work as part of your team of experts. Please consult a qualified tax professional for guidance on your specific situation.
CCPIA has a template for an agreement you can use with independent contractors. The Independent Contractor Agreement and Professional Services Contract is between your company and the independent contractors your company hires. It includes provisions for the services he or she will perform, and the compensation he or she will receive. You may also want to include the time period that the subcontractor has to complete these tasks.
As many residential inspectors expand their business to perform commercial inspections, creating a team of expert consultants to rely on for future projects is essential. Researching and vetting these independent contractors ahead of time will spare you many last-minute headaches. Different laws in different states may govern the hiring of independent contractors, including Florida, which may require additional licensing. Be sure to check with your state to make sure. CCPIA has an article, Creating a Team of Expert Consultants For Your Commercial Inspection Business that offers further guidance for creating and organizing your team.