should I be paying my subcontractors during this outbreak even though they are not working?
1 reply
Mar 26, 2020
Whether or not payments should continue to be made to subcontractors will depend on a number of different variables, and it will certainly be a case by case basis. If you're continuing the project as-is and the subcontractor is continuing their work - then there's little doubt. The subcontractor should be getting paid in accordance with their contract. Otherwise, it's important to pore over the contract to fully understand your rights and obligations.
If the project has ceased, and if the subcontractor is no longer performing work on the project, then a contractor likely isn't obligated to continue making payments to their subcontractor. This would seem especially true when the amounts owed to the subcontractor are tightly tied to the exact work being done (like on a time and materials contract). If, somehow, payments aren't actually tied to the work that they're doing - then I suppose it's possible that the subcontractor may still be owed payment. But, going back through the contract and really drilling into the payment terms of the agreement should clarify things there.
Finally, if the subcontractor is owed payment for work they've already done, then a shutdown due to COVID-19 wouldn't change that. Subcontractors must still be paid for the work that they've done. But, it's also a good time to reassess your business to determine how best to protect yourself going forward. In terms of managing subcontractor payments and business relationships, consulting with a local Florida construction attorney might be helpful.