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Can a GC bring hire another contractor to finish my work because my emplyee's refuse to work?

I am a small Electrical contractor in Maryland. We have several jobs that i will be behind on very soon because my employee's are staying home and collecting unemployment. This involves my foreman also. Can the GC's hire another contractor to finish my work at my expense???

2 replies

Apr 10, 2020

Whether or not replacement workers can be brought in to finish your work will come down to the terms of the contract and potentially to your state's stay home order. Of course, keep in mind that even if a contractor isn't allowed to take a specific action, they may go ahead and do that anyway. Levelset has written an article that should be helpful here - though, it's written from the GC's perspective: 3 Ways to Deal with a Non-Performing Subcontractor | Subcontract Management.

Does the contract allow the contractor to replace you?

First, I'd look at the contract. If the contract specifically includes provisions on termination, then it's entirely possible the contractor could either terminate your contract and proceed with someone else. Obviously, though, they'd have to follow the contract's termination provisions. Even if the contract isn't fully terminated, it's possible a contractor might call for a partial termination or issue a deductive change order to you. Alternatively, it's possible they may bring in someone else to help you finish your work if supplementation is allowed under your contract. If so, bringing in someone else to finish your work or at least move the work further along would be allowed. Finally, keep in mind that even if the contract doesn't specifically permit the replacement work, it's possible that you may be considered to be in breach of your contract if you're unable to proceed with the project. If the agreement has delay provisions or a force majeure clause, that might help fend off issues caused by the work stoppage. But, if your work is technically able to continue, then failure to work might unfortunately result in a breach of the contract.

Does Maryland's stay home order allow your work to continue?

According to this interpretive guidance issued for Maryland's stay home order, electricians and most other construction-related businesses are able to continue their work. So, while it may seem unfair (and while it may be unfair), your work is legally allowed to continue. Because the work is legally allowed to continue, and because it's not being undertaken, the GC likely has a strong argument that failing to continue is a material breach of the contract.

Who must pay for the work?

Just because someone else is brought in to finish your work doesn't necessarily mean you have to pay for it. Again, it's crucial to look at the contract. But, if you think about it - the GC was going to pay for your work. So, if someone else has to do the work and you haven't been paid, then it doesn't really make sense that you'd now have to pay for the work that the GC was already going to pay for. Generally, when a subcontractor can't complete their contract and a replacement is needed - the original sub should only really be responsible for the difference between the price of the original sub and the replacement sub. Granted, if you were already paid for some work that didn't get performed, then you might either need to return those funds or pay for the completion of the already-paid work. If you haven't been paid but the contractor is demanding you pay for the replacement, it might be useful to negotiate a more favorable arrangement - like paying the difference is the new sub costs more. Though, if the GC refuses anything less than you fully paying for replacement work, it might be time to bring in a Maryland attorney to help you negotiate and resolve the matter.

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Apr 30, 2020

It really depends on the contracts you've signed for each project. With COVID-19, a lot of contractors are relying on their Force Majeure clauses to see how they might be able to turn this pandemic into their favor. It's tough to guess a best option without looking at each contract. Take a look at the FM clauses along with the termination clauses and see what you may be allowed to do for each project. Keep in mind that in many contracts you may be responsible for paying the difference in cost if they have to bring on another sub to finish the job.

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