This is the first installment of a two-part article. Part 1 looks at the benefits of being a subcontractor and working with subcontractors. Part 2, in a future issue of TCI Magazine, will look at how to become and operate as a subcontractor.

Running a business is no easy task. The effort it takes to run a business, and the level of investment, varies widely between small, medium and large companies. Regardless of the company size, efficient and safe job completion is a priority.

A “large” company may have a career-development program that includes a week or more of introductory information, regular visits from trainers and competency checks for various tree care activities. For a small company, training may look a bit different, possibly occurring predominantly on the job and carried out by the company’s owner/operator.

In either case, both entities desire an employee who is effective and safe. Unfortunately, training is not instantaneous, and individuals have limitations that may result from their current or potential skill level. Both these challenges and more may be solved by a company utilizing a subcontracted tree care professional.

Defining a contractor
In this article, the definition of a subcontracted tree care professional (STCP) is a person who is well experienced in tree removal, pruning, climbing and/or aerial-lift operation, and/or plant health care. Ideally, this individual is a Certified Arborist, a Board Certified Master Arborist (BCMA) or has earned a well-rounded degree in arboriculture or urban forestry. Another ideal credential for an STCP is being a Certified Treecare Safety Professional (CTSP).

To be a professional means you follow the industry’s code of ethics (see the Tree Care Industry Association’s [TCIA’s] and the International Society of Arboriculture’s [ISA’s] websites for their respective code of ethics/conduct), you respect the industry’s safety standards and follow the industry best management practices (BMPs) and are capable of respecting and working with others regardless of their skill level. It’s a high bar to set. However, if you’re going to be a “for hire” leader for another company, you should be capable of leading by example.

Another aspect of a professional is that, when asked questions, the individual will have the answers or will know where to find the answers and is willing to follow up with the client’s request for information. Nobody knows all the answers. But are you willing to put the effort into finding out, and do you know where to go for answers? Our industry is unique in that you can become a professional with no degree. However, it’s likely easier and your growth will be faster if you pursue either a degree or registered apprenticeship.

The author rigging out a cottonwood log near a house in La Crosse, Wisc. A company’s productivity should be at least doubled when employing a subcontracted climber.

In the example provided in this article, I am assuming an STCP is a person hired to work directly with your crew. In Wisconsin, where I am based, the state statutes allow for this type of business relationship to exist. I realize that’s not the case in every state, and some states may require that the work be completed entirely by the subcontracting company, separate from and not in coordination with the primary contracting company. Unfortunately, digging for and understanding state statutes is not easy. As a starting point, I’d recommend asking other businesses or support professionals, such as an insurance agent, for more details.

A large cottonwood removal being performed by a subcontracted tree care professional for a company in Milwaukee, Wisconsin. All photos courtesy of the author.

Subcontractor, or employee?
Each state has definitions or requirements that need to be met to be considered an independent contractor. For example, in Wisconsin, there are nine criteria described by the Wisconsin Department of Workforce Development that must be met to distinguish an individual as a separate business rather than an employee of a company. The nine-part test is as follows:

• Maintain a separate business.
• Obtain a FEIN (federal employee identification number) or file a business/self-employment tax return.
• Have a specific contract for the work being performed.
• Be responsible for the main expenses of the business.
• Be responsible for satisfactory completion of work.
• Be paid per job or per contract.
• Have the ability to realize profit or loss for each job/contract.
• Have recurring business expenses.
• Have the opportunity to succeed or fail based on expenses relative to gains.

The author pruning cottonwoods over the Mississippi River in downtown La Crosse, Wisc., looking across at Minnesota. Each state has definitions or requirements that need to be met to be considered an independent contractor.

Your state will have its own list that is required, and the ability to be a subcontractor will vary per each state’s specific statutes.
Additionally, the Federal Department of Labor (DOL) has definitions found in the Fair Labor Standards Act (https://www.dol.gov/newsroom/releases/whd/whd20240109-1). You also must meet these definitions, which are:

• Opportunity for profit or loss.
• Investments made by worker and potential employer.
• Degree of permanence of work relationship.
• Nature and degree of control of the work being completed.
• How integral is the work to the potential employer?
• The skill and initiative of the contractor.

Notice the overlap between the state of Wisconsin and the federal government. Essentially, to be a separate business, the business needs to work for multiple clients (other tree care companies or non-tree care company clients, i.e., residential/commercial), have an opportunity to fail, have expenses, be the party responsible for the decisions regarding the company, have something to define the relationship between the subcontractor and the contractor (i.e., a contract) and pay self-employment taxes. The IRS also identifies an individual as being a separate business if the “owner” controls what will be done and how it will be done.

Remember, these rules are in place to protect both parties. There’s a potential value in being a separate business for an STCP. As a separate business, you can demand a higher wage. Additionally, you have the power of writing off expenses against your income, reducing your tax liability.

For the business owner, hiring an STCP is an opportunity to transfer risk and possibly gain an experienced employee, on a per-job basis, who may or may not also be able to provide training. Rather than paying a premium for an employee of that level of experience daily, the owner can bring in a subcontractor on an “as needed” basis, reducing overall business expenses.

Contracts and insurance
Establishing a contract is a great starting point in developing the relationship between an STCP and a company. The contract must address five questions:

• Who is involved in the arrangement?What services will be provided?
• Where will the services or business activity take place?
• When will the services or business activity take place?
• Lastly, how much compensation will be provided?

A contract also may include a stipulation of insurance requirements. As an STCP, at minimum, you must have business liability insurance. If you damage an air-conditioning unit while working, the repairs may be your responsibility, since you were the business completing work. Most likely, in that scenario, both businesses would supply insurance information, and the homeowner’s insurance would likely be involved.

Unlike many personal homeowner’s coverages, business liability insurance does not provide compensation for new replacement, only actual cash value (ACV). In other words, if a 15-year-old AC compressor is damaged beyond repair, the business insurance will compensate the homeowner for the value of a 15-year-old AC compressor. However, you won’t find one available on the market, so the difference in cost will need to be addressed by the business, the homeowner’s policy or by some other arrangement.

Regardless of the situation, causing significant property damage is not worth the risk of completing a job faster. It is better to complete work in a less risky manner than to take a significant risk just to save five minutes on a job. If you’re just becoming an STCP, a re-evaluation of your work practices may be necessary, since the cost-benefit relationship will now reflect your direct income or profit. We’ll cover that in more detail in Part 2 of this article.

Why hire a subcontractor?
We’ve covered that hiring an STCP may not be as straightforward a relationship as hiring an employee. Why would a business consider it, then? There are five positives to hiring an STCP that I’ll cover in this article.

The first positive is the potential for increased job profitability. An STCP is not a new hire. For example, when I first became an STCP, I had been an accomplished climber for four years and had worked as a foreperson for at least one year. The STCP should be at least as competent and efficient at completing work as your crew leader. As a side note, I’d still recommend that the normal crew leader retains their duties for the day, since the company employees know the company paperwork and systematic expectations. The STCP should work in tandem with the crew leader to determine the most efficient methods for completing the day’s assigned work.

The company’s productivity should be able to be at least doubled at the job site, provided there is a solid plan for managing cleanup or debris. Since the job is being completed more quickly, the per-hour profitability of the company’s employees will increase for the job, and the company should still be able to earn some profit from the client above the wage being paid to the STCP. In other words, the STCP is costing the company a greater-than-normal wage, however, the rate of completion should compensate the company at a greater benefit than the expense – especially if this was a job that was bid on a premium because it was specialty work.

Some subcontracted tree care professionals (STCPs) may be able to provide training, demonstrating new skills or equipment for your crews. Shown here is a job completed by the author as an STCP. This tree had failed onto the lake home, and there was no access for equipment or overhead rigging opportunities.

Extra gear and skills
Additionally, this may be an opportunity for your company to accept or bid for work that may be beyond the abilities of your team or equipment. Some STCPs have specific skills or equipment that are not normally purchased by tree care companies. Some examples are a Good Rigging Control System (GRCS), a Wraptor or other unique ascending devices, 200-foot-or-longer rigging and/or climbing lines and numerous blocks/pulleys. Or, combining the business equipment with that of the STCP may be enough to complete a rigging job that requires rigging from multiple trees or other complex rigging.

Some companies do not own a high CC saw, such as a Stihl 660, Husqvarna 395 or greater, or bars longer than 28 or 36 inches. However, an STCP who specializes in large-tree removals will be more likely to own this equipment.

Another benefit I’ve noticed as an STCP is that I’m often capable of sharpening my saws faster than company employees. Often, I’ve observed arborists trying to push through the last of the job with dull chain saws. The result is extra wear and tear on the equipment and the people, as well as added frustration at the end of a long day. Being able to sharpen a ground saw in 5 to 10 minutes is a huge benefit when trying to complete a job when everyone is tired. Since I am the only one sharpening my chain saws, I don’t have to reset angles when sharpening, and the task goes more quickly than with crews that share sharpening duties and sharpen to different preferences or styles.

Hub-and-spoke cable installed in a sugar maple in
La Crosse, Wisc. Some STCPs may have specific skills that provide new opportunities for your company.

Growth and training
Another benefit? Having a positive outside influence provides an opportunity for a company’s team to grow.

Climbing competitions have been highly popular and influential for multiple decades since the competitions began in the 1970s. The positive attention isn’t entirely due to the competitor’s drive for competition. Most competitors will not win prizes for top three in the events, and there are only three or four climbers who make it to the Master’s Challenge. However, all climbers stand to gain understanding and knowledge of new climbing equipment and techniques, and they have the opportunity to ask questions from climbers who learned from different mentors.

Having an STCP provides a similar opportunity, albeit on a smaller scale. However, unlike a competition, your team can observe and learn from an STCP in a more practical working environment. The collaboration may provide your company’s climbers with interest that can lead to personal growth within the company and better long-term productivity.

Along with growth, the STCP may provide an opportunity for your team to observe and work with equipment they have not seen or haven’t had an opportunity to utilize. If the STCP has more experience in climbing or complex rigging, your team will have the opportunity to see new techniques and the utilization of equipment that your company doesn’t own.

For example, if there is a large tree overhanging a house, a GRCS might allow you to remove the section away from the house and fell the remaining over-hanging portion of the tree using the GRCS to overcome the backward lean and/or canopy weight. This example describes a work practice that removes multiple higher-risk rigging activities by using equipment to fell the tree at the base and avoid the most complex challenge of the job.

Providing that example on a job site with a company that doesn’t own or isn’t trained to use a GRCS can be an eye-opening and exciting experience. Likewise, for a company with climbers who are only knowledgeable in moving rope systems (MVS), using a single or static rope system (SRS) to climb and prune a large tree also can be eye opening and might motivate the company’s climbers to grow and try new things.

As a trainer and college instructor, I’ve observed how boredom can lead to complacency and a lack of enthusiasm for the work. When the curiosity about what we do dies away, a career becomes just a job, and opportunity and/or interest in growth begins to wilt. Having an STCP on your job site can provide new life for a crew if they aren’t beyond the permanent wilting point of their career.

Some STCPs have equipment that many tree care companies do not have. The author, with a large saw, is shown here during the removal of a large, decayed red oak.

Bottom line
Lastly, there is a business side to the benefits of hiring a STCP. The business transfers at least some of the job risk to the STCP. Since the STCP is functioning as a separate business eligible for a 1099 tax status, the individual will be carrying his/her own liability insurance.

Further, the STCP will either have their own workers’ compensation insurance or will have chosen to be exempt from workers’ compensation insurance as a business owner. By transferring the risk of property damage and personal injury away from your crew and your business, the company can lower the risk of a workers’ compensation claim or property-damage claim on a job that likely carries higher risk than the business’s normal day-to-day operations.

Coming up…
In Part 2 of this article, we’ll look at the pros and cons of being a subcontracted tree care professional and how to become and operate as one.

Aaron Schauer, CTSP, is an instructor and program director with Gateway Technical College in Kenosha, Wisc.

Eric Petersen is president of ArboRisk Insurance, an 11-year TCIA corporate member company based in New Berlin, Wisc. He also is a member of TCIA’s Board of Directors.

This article was written by Schauer with content contributions from Petersen. It is based on their presentation on the same subject during TCI EXPO ’24 in Baltimore, Maryland. To view a recording created for that presentation, go to tcimag.tcia.org and, under the Resources tab, click Video.