What defines a subcontractor?

A subcontractor is defined as an independent contractor who is not an employee of the main contractor. This means that the subcontractor operates as a separate legal entity and typically has its own resources, staff, and business structure. Subcontractors are often engaged to complete specific tasks or projects that are part of a larger contract that the main contractor has with a client or customer.

The significance of recognizing a subcontractor's independent status lies in various legal and financial implications, particularly regarding liability, payment, and project management. Subcontracting allows the main contractor to leverage specialized skills and expertise without directly employing additional staff, creating flexibility in project execution and resource allocation.

In contrast to this, an employee of the main contractor would not have the same degree of independence and typically would not operate as a separate business entity. Similarly, a business that provides materials or a competitor would not fulfill the role of a subcontractor as they do not engage in the labor or services needed to complete contractual obligations as defined by the main contractor.