Free tool · Hire or sub it out
Is an employee cheaper than a sub?
A sub’s rate looks high next to a wage because you are comparing the wrong two numbers. The honest comparison is what each one costs you per hour of work that actually gets done.
Why the wage is the wrong number to compare
Three things sit between a wage and what an hour of finished work costs you.
Burden
Payroll taxes, workers’ comp, paid leave contributions and benefits. In construction this commonly adds a quarter to a third on top of the wage before anyone picks up a tool.
Paid but not producing
Holidays, vacation, sick days, drive time, shop time and rain days. You pay for roughly 2,080 hours and get perhaps 1,500 productive ones. A sub invoices only for the productive ones.
Everything around them
Truck, fuel, phone, hand tools, training, uniforms, and the payroll admin that arrives every fortnight for the rest of their employment.
Before you decide
Cost is not the only test
Classification is not your choice
Whether someone is an employee or a contractor is decided by how the work is actually controlled, not by what the agreement calls them or whether they send an invoice. Both Oregon and Washington enforce this, and the penalties reach back over past years.
The questions that decide it
Who sets the hours. Who supplies the tools and materials. Whether they carry their own insurance and licence. Whether they can take other work, send a replacement, or make a loss on the job.
What it is worth checking
Ask any sub for their CCB or L&I registration and a current certificate of insurance before the first invoice. An unlicensed sub can land on your workers’ comp policy as though you had hired them.
This is general information, not legal advice. Classification disputes turn on specific facts — talk to an employment lawyer or your state agency before reclassifying anyone.
Questions
Why compare per productive hour instead of per paid hour?
Because a sub only invoices for productive hours. Comparing a sub’s rate against an employee’s paid-hour cost flatters the employee by roughly a quarter, which is usually enough to reverse the answer.
What is the break-even sub rate?
The hourly rate at which a sub costs exactly what an employee would for the same amount of finished work. Above it, hiring is cheaper; below it, subbing is.
Does this account for the risk side?
No, and that matters. An employee is a fixed cost that continues through a slow quarter; a sub is a variable one you can stop using. If your work is seasonal, a sub can be worth paying more for.
What if the employee would be more productive than the sub?
Raise the productive share to reflect it. That input is where crew quality, supervision and travel time all show up in the answer.
Not sure your inputs are right?
A Books Checkup is a fixed-fee review by an accountant who works only with contractors. You get the real numbers to put in these boxes, and a list of what your books are currently hiding.
Get a Books Checkup — $75Other calculators
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Open the calculator →A planning tool, not tax, legal or accounting advice. Rates and classifications vary by employer and change over time — confirm yours against your own records before relying on them.