Contractor Cuts
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Contractor Cuts
Firing Subcontractors Off a Jobsite: How to Save Your Reputation and Protect Yourself Legally
Clark Turner explores the delicate process of separating from subcontractors, completing a three-part series on subcontractor management with practical advice on how to handle difficult termination scenarios.
• Creating exit strategies for subcontractors who aren't the right fit but produce decent work
• Using thorough documentation to build a case when quality issues force termination
• Taking specific legal steps when firing a subcontractor to protect your business
• Preparing detailed emails outlining quality issues and warranty expectations
• Handling property liens through bonding and negotiating settlements
• Offering reduced payments in exchange for lien release waivers to avoid court battles
• Maintaining professionalism throughout the termination process to protect your reputation
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Welcome to Contractor Cuts, where we cover the good, the bad and the ugly of growing a successful contracting company. Welcome back to Contractor Cuts. My name is Clark Turner. Thank you for joining us again this week. So today is another Coaching Cuts, finishing out our three-week series on subcontractors. So two weeks ago we talked about how to onboard subs the meeting, the conversation, how the relationship that we're trying to build is sold to the sub, to where we're partners in what we're doing, the subcontractor agreement, how we walk through it and all the documentation, paperwork that I use to sit down when I'm first onboarding a new potential sub to come into our company and be working for us.
Speaker 1:Week two last week, james and I dove deep into start to finish, how you run a sub from their first job with you all the way through being here for five to 10 years. Right, mainly we focus on that first job. How do I start them and make sure that they're good? Red flags, green flags, coaching you know the difference of coaching up a sub versus firing a sub because they're not. It. It's a really good episode. If you didn't listen to it, go back and listen to last week's after you're done with this one. Today's episode is the final of those three firing a sub, separating from a sub on a job site. Maybe you don't like working with them, you don't like the work that they do, they're just not it for you. There's a whole slew of reasons that you would want to part ways with the sub, and so today we're going to cover really the best way to do that.
Speaker 1:All right, so let's say we've got let's kind of a couple of scenarios. On this first scenario, a subcontractor is working on your job and it's just not it. They're just not there, they are late, they are decent work, but it's just not 100%. You're kind of having to babysit, tell them what to do on every stage, buy all their materials because they can't find a ride to Home Depot. They are showing up. Sometimes they miss days. There's just an inconsistency to where. It's like these guys don't get it.
Speaker 1:If their work is okay, though, if I can deal with getting them off this job and I'm not going to hire them again in that scenario, I'm going to start with sitting down and talking through everything that I'm not happy with on their job site a heart to heart, right. I'm going to sit them down, pull up a seat in the back of the truck. Let's, let's sit on the tailgate and have a conversation you guys can do better Like I don't like this, I don't like that, this isn't working well, this isn't happening. What's going on? Tell me what's happening. And sometimes they you know it's like they're in confession they're all of a sudden saying I said yes, right, so I'm trying to solve their problem.
Speaker 1:But if it gets to a spot where it's like, hey, this isn't it for right now, I'm going to tell them this Listen, I need this is my expectations to finish this job. If you want to finish this with me and get paid the money that we agreed on, let's lay out how that's going to happen. If you don't, if we want to call it today and I bring another crew out here, let me tell you how that goes and I tell them you know I had X amount of dollars on your work order. Whatever it costs to get this finished, I'm going to have to pay another crew for, and whatever's left over is going to be your money. So I let them make that decision. Do they want to continue working with me? Do they want to just go their own separate ways? And we have that and try to come to a good compromise whether they're leaving or if they're staying, what that should look like.
Speaker 1:Also, if they are staying, I'm there every single day. I'm there to start them or I'm there to finish it, depending on where they're lacking. If they're leaving the job sites dirty every day and I'm saying, hey, I need them cleaned up, I'm stopping at 4.30 to check on their job sites, right? Everything I'm doing is checking and verifying and making sure that what I thought was slacking, they pick up the slack and start really doing the job that I expect out of them. And sometimes, when we've done that, that turns into the crew working out long term.
Speaker 1:But most of the time, when you get that spot where it's like this isn't working, it's more of an exit strategy to try to get to the end without lawsuits, without having to pull them and slow the job site down. So that's if things are going okay, but they're just not it, they're not the crew for you. Now the other side that happens a lot more often is we get three days into the job, four days, five days a week into the job and you say these guys aren't the quality, aren't the people I thought I was hiring they aren't. They don't like. I do not want them representing me on this job site. Usually this is quality issues most of the time, and usually, along with quality issues, we've got timing issues. We've got not hitting deadlines, we have not showing up on time. So on these scenarios, when it's like I've got to get these guys off this job site, they're hurting my reputation with this client, the client's losing trust in me. I'm losing dollars on this because I'm having to have other guys pull, come behind them and do other things, whatever it is, and it's time to exit.
Speaker 1:There are some very specific steps that you need to follow for to cover you legally, and I'm going to walk you through those. And now, how many times have I sued a sub Zero? In 20 years I've never taken a sub to court, but I do protect myself and I build a whole case of ammunition to where, if they want to go the legal route, I will kill them in court. And so if I can build that case beforehand, present it to them. We're going to settle, we're going to get out of it, and I'll talk about that towards the end of this. But what I need you to do is take notes on this. Whatever. Whatever you know, listen to this again when you get home, if you're driving, take some notes on. These are the steps we need to take and we're going to put these into our processes as to when we exit a crew. This is how we do it, all right. So step one you don't like the work they're doing. They're not showing up. Whatever it is Usually it's a quality thing.
Speaker 1:I'm going to walk the job site and I'm going to take a hundred photos. I'm going to take a picture of every little thing that they've done Good stuff, bad stuff, mediocre stuff, anything in the middle. I am going to take photos, but I document everything. I'm going to upload that hundred photos that I took on the job site. I'm going to put it all in my job, my progress photos inside of the ProShort 360 software. I'm going to upload them all. I'm then going to go and email the crew. When I go to email the crew, I'm going to attach all of those photos.
Speaker 1:Okay, with those photos, I'm going to have a very specific email that I'm sending them. First and foremost, the most important thing to write in this email, in the very first sentence, is your work is subpar. This is not up to industry standard. And here are the issues I have with this job, and I'm going to list out every single thing that they've done wrong or that is not up to industry standard. Now, this might take a while. It might be two pages long, do it? We are building a case against them, so I'm going to list out the paint they didn't cut in properly. They overpainted on the ceiling and trim that, whatever it is. I'm listing everything out and I've probably got a photo that's also showing all of this stuff. I'm going to list all this stuff out in an email, next paragraph down.
Speaker 1:The next thing I'm going to do is a full explanation of what I expect them to fix and the timetable they have to fix it right. We give in our subcontractor agreement a 72-hour warranty to fix things. This is to show that I'm doing my part of our agreement. This is what I expect. This is the show that I'm doing my part of our agreement. This is what I expect. This is what has to happen. If you're not there tomorrow morning at 830 to meet me to get all of these things fixed 100% by the end of the day tomorrow, then I'm going to have to remove you from the job site and bring another crew in to finish this job, which will, in turn, affect the amount of money that you're receiving for this project. A sentence where we're describing a plan of action of how they're going to get the issue resolved and what needs to happen for this to be a satisfactory ending for them to get 100% of their money.
Speaker 1:Next, the next paragraph down is my plan of action if the warranty work is not completed. So then, after I say this is what I expect out of you, this is what you need to do, the next paragraph down I'm saying if this isn't, if you don't show up tomorrow morning between 8.30 and 9 am, at 9.01, this is my plan of action. I'm going to bring another crew over here. You have a cease and desist to show up and be on site of our property. You are not allowed to step foot at 901 or after.
Speaker 1:If you have not arrived on time, I'm going to have another crew come out there. They're going to finish the work. Whatever money you believe I still owe you, I'm going to pay that crew that finishes the work out of that money. Whatever is left over after that crew finishes the work, I'm going to give to you right? If I had a $5,000 work order and I've already paid you 2,500, so there's 2,500 left and there's a couple of days of punch out and you're just not coming back, I'm going to send this email but tell them what needs to be punched out, how much time they have to get back, and I say, listen, out of that 2,500 I have left for you, it's going to take me 800 bucks to get this finished. So I'm going to pay another crew 800 bucks to get this done if you don't show up, and you're going to get the remainder of the money once that work is complete.
Speaker 1:I lay out the next steps of what will happen when they don't show up or make whatever the issue is right. After I've laid that out, I do an expectation about the payment. Like, if this gets done on time, I will have a check waiting for you at the end of the job. If you do not if 9 tomorrow, I don't see you on the job site, then this is what happens with your money. Like I just explained it, it's going to go to somebody else. Now, at that point, you've communicated that I'm texting them saying hey, check your email. I just sent you a warranty claim on the email. I need you to respond to it ASAP. I want it all in writing. I don't want a phone call. I don't want to walk the job site with them in person. I want it in writing to where we can come to an agreement together Once they've either responded, not shown up, or maybe they'll text me and say I read it, I'll be there in the morning.
Speaker 1:Great, whatever it is, I'm documenting all of that. At that point, if they don't show up, I'm going to give them the. I'm going to honor my agreement right, I'm going to let them come out and warranty the work Outside of them cussing out my client or doing something offensive on the job site. I'm going to give them the opportunity to warranty it because that's in our agreement. If they are that bad of a crew that it's time to fire them, most likely they're not going to come out and warranty their work. I got to give them opportunity to show in court. I did all of the things that I'm supposed to do correctly. I honored our agreement. I gave them fair warning. I explained to them what was going to happen. I documented to prove that I'm correct and they are wrong, that their work was not up to industry standard. I followed all of those steps.
Speaker 1:At that point, 901 hits. They're not there. I call them up and send them a text message and say hey guys, don't worry about coming out here. It's 901. You are not allowed to come to this job site. I'm letting you know that this is a cease and desist to showing up on this property. You have no authority to be here. If they have tools I've got your tools I'm putting them in my truck and bring it to my office. I'm not letting them come back on to get their tools. I don't want them touching my job site again. So I'm making sure that they know that and know that their tools aren't on the job site. If you don't have an office, put them in your truck and meet them at Starbucks, whatever it is. I'm not letting them come back out there after the timetable that I've laid out expires.
Speaker 1:At that point you're going to start getting angry texts hey, what about my money? I need to get paid. I need to get paid. You can't do this. All that starts happening and that's when you stick to your guns. You say listen, I'm going to pay you after the crew is finished with the work, I will pay you what's remaining, but I've got to repair the issues that you caused with the money that's remaining in this job and then I will pay you whatever's left over. At the end of that. They're not happy about it, they're angry about it, and this is usually where the crew is like all right, fine, I'm going to put a lien on the property. Put this in your pocket and use this whenever a crew says I'm going to put a lien on your property. All right, it's called a lien Our.
Speaker 1:What that means is you can go to a bonding company, a surety company, an insurance company, and say listen, I have a subcontractor who put a $5,000 lien on our property. We're paying weekly so we don't owe the sub $30,000. It's $5,000, $4,000, $1,500, whatever it is. They put a lien on the property for that amount. You go to the bonding company, the insurance company, and say I need a bond for $5,000 against a lien on this property. With this crew, they will give you a bond. You give the insurance company $5,000. They give you a bond on the lien for $5,000. And what that does? You take that to the city and that releases the lien from the property. Now the property could be sold and is not harming your client, because you go to court against that sub. Whoever wins takes it to the insurance company, the judgment and gets that $5,000 release. So when I beat them in court, I'm going to get that $5,000 back. If they could beat me, I've got that money bonded to make sure that the lien is covered.
Speaker 1:So that is my go ahead and put a lien. I'm going to bond out of it. You know what that means. So that is my go ahead and put a lien. I'm going to bond out of it. You know what that means. I've said that probably 15 to 20 times in my life to subs.
Speaker 1:If they say, hey, I'm going to put a lien on the property, no problem, that's fine, I'm going to bond out of it. You won't see a penny. What do you mean bond out of it? Well, I will do this and explain do not see a penny of this job because of you, of of how you're acting, what you're trying to do. You will have $0 moving forward. Or and this is the big, this is how I exit with them. I say or, instead of doing all of that, I will. You know I'll get a reasonable number If I think you them $5,000 left and I think that I should pay them about two. I'm gonna say, hey, I'll give you $1,500 today to sign a lien release form and on that lien release form, you're releasing this and that $1,500 will be me buying you off to not put a lien on the property and for us to go our own separate ways. So that's your option.
Speaker 1:Sub. You can either take $1,500 in cash and check today. I will cut it to you today. If you sign this lien release or put a lien on the property, I'm going to fight you and I'm going to win and you're not going to see a penny. It's going to be six months down the road. I've got bigger lawyers than you do. Feel free to do what you want to do, but I will give you cash today just to end this and not give me the headache of dealing with lawyers and going to court over this Every single time this works.
Speaker 1:I have not a single time in 20 years of doing this had a crew say no, I'm not going to take the money, I'm going to put a lien on the house. They might try to negotiate, they might try to push back. I'm not in a negotiation at that point. I'll. I'll pay you 1500 bucks because I think I owe you two, but it might need an extra 500 bucks to cover any issues that I don't know about. I'll give you a thousand bucks. I'll give you 500 bucks to go away today.
Speaker 1:Either way, cash in hand to most subs is going to Trump them trying to sue you over the next six months. And on top of that I've got now this documentation that I show them. I say, look, I took all these photos that, that, that, that, that, that and that are all wrong. You did this. I'm going to have to actually charge you money to go back and rip this sheet rock out and replace it. I start going down the list of all the money I'm going to go after them for and say I sent you this. All of those emails, all of my texts, all of our communications I've got in a binder that's going to court with me. So I win this case and I'm also going after you for legal fees. So this isn't just you're going to, we're going to end up. You know, I win, you lose and I get to keep my money. This is. I'm going to counter sue you for another five to $8,000. So if I have all of that ammo sitting there ready with those emails and everything I've sent.
Speaker 1:At that point. If a sub's trying to screw me, I'm like go for it, put a lien on the house, I'll bond out. You won't see a penny, I'll come after you. We'll do that dance. And they know that I've done my research. They know I know what I'm talking about because I've got all of my ammo of the emails and my documentation and the bonding out of the lien prepared and you do this. And again, don't abuse subs this way. This is not about hurting subs. This is not about trying to rip them off. This is about not getting screwed by the subs that said that they could do one thing and ended up not being able to do it. That's what you're protecting yourself from. But this bonding out of the lien and then making a negotiation with that sub to settle for an amount of money in an exchange for signing a lien release waiver.
Speaker 1:And on that lien release waiver, if you're in the ProStruck 360 coaching program, I give that to you. I gave it to a guy a couple weeks ago because he had an issue with the crew. That lien release waiver also includes verbiage that says it's for this property with the address on it and all work completed before today's date. And you put the date on there. That way, any sort of job they can't try to put a lien on in the past. I show up to the court I say, look, they signed this, I got it notarized, they agreed to this, they cashed this check. I wrote on there check number 1054 for this amount of money on this date confirms that this blah, blah, blah, blah, blah. And they sign it. We release it. I never hear from them again.
Speaker 1:That is how we have to fight a bad sub that we have to fire off the job site. We don't want it to explode. We don't want the client to get involved. We want to control the situation and be ahead of it. We don't want to hope and pray that maybe the crew will come around. I'll give them another week out there. At that point you're too far behind. They're going to mess the job up. It's going to cost money to fix it. It is something that you have to do the right way, with all of your proper documentation, with all of your ammunition. We'll save your reputation and save your dollars.
Speaker 1:If you have a question about this, please call me, go to ContractorCutscom and contact me directly. I'd love to set up a one-on-one call. Also, I don't know if you've signed up yet or if you've looked into coming on the retreat yet, but we are about to start signups on that. If you want to come on the retreat, you get three free coaching sessions. What we do is an end of the year coaching program. It's three separate sessions that I'm going to do to finish out 2025 strong with you, prep you for the retreat.
Speaker 1:When you come on the retreat, which is a two and a half day intensive. It's two days of intensive. Then we kind of have a cocktail party night, one for everyone to get to know each other. But it's a two day intensive in Nashville, tennessee, that you are invited to come to. So if you want to take your company seriously, if you're ready to go to the next level and really launch into 2026, where we double triple your revenue sign up today so you can get the free coaching sessions now to lead you into 2026 and finish this year strong. All right, thanks so much for listening. We'll talk to you guys next week. Bye, all right. Thanks so much for listening. We'll talk to you guys next week.
