Actually i don't know how contractors can charge a sub contractor a percentage or flat rate to cover thier work comp. 2 things on this:
1st thing he not really considered a sub if this is going on.
2nd thing if the prime gets a real audit they are screwed
3rd thing if a sub gets hurt and wants to file a claim on the primes policy it will most likely not get covered.
now there are a few gli's out there that will cover a sub, but if the tax man, ( state or feds ) get hint of this and audit they will give you a list of the criteria that applies to employee / sub relationship to the prime or employer and the prime pays for it.
bottom line,if you are paying for work comp, ask to see the clause where it shows a sub will be covered
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