1

If company A contracts company B to be paid by the hour, and company B contracts an individual C, also paid by the hour, is it legal for company B to pass on the hours their own contractor C billed them for to company A is if the individual C were company B's employee?

Real world example: a company is contracting a software development LLC for some development worked paid by the hour. The software development LLC wants to hire a tester via contract to test this software for a few hours. The softwere dev LLC pays their tester, then bills the hours the tester works on the client's project to their client.

I know that companies bill their clients for hours their on-payroll employees worked, but my question is specifically whether or not the hours of one contractor can be passed on by another to their client for working on the client's project.

Also, the question is regarding United States law.

2

Yes

One of the major factors that distinguishes a contract relationship from an employment relationship is the ability of the contractor to sub-contract.

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