California Employment Law
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Hi Vik, I am Angie
Because subcontractors are NOT employees...you do not have to pay them anything other than what they are owed for the jobs they do. Subcontractors do not accrue vacation, as they are considered their own entity. If they are truly subcontractors, they can take a vacation anytime they want...if they want to be paid they work....
If an employer wants to pay their employees vacation, that is well and good, but that is solely up to the employer and is not your responsibility. If they are not your employees, then you have nothing to do with their compensation at all. If they are subcontractors, they are agreeing to do a job at a certain price ...there is no obligation on your part to pay for anything other than work performed by your subcontractors.
What state are you in?
A company can bill you for whatever they choose to....but if it is not the agreed upon billing amount then you would not be obligated to pay the bill.
I do not have any references to refer to for this, but it would seem to me that your contract would indicate what is expected of you. I believe this would best be answered by an attorney who could review your contract and determine what exactly you are liable to pay.
I am going to request the question be moved to the law category rather than the tax category.