{"id":892778,"date":"2017-08-23T11:55:30","date_gmt":"2017-08-23T17:55:30","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=892778"},"modified":"2017-08-23T11:55:30","modified_gmt":"2017-08-23T17:55:30","slug":"assembly-bill-1701-contemplates-broader-duty-subcontractors-employees-general-contractor","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/assembly-bill-1701-contemplates-broader-duty-subcontractors-employees-general-contractor\/","title":{"rendered":"Assembly Bill 1701 Contemplates Broader Duty to Subcontractor\u2019s Employees by General Contractor"},"content":{"rendered":"

Richard H. Glucksman, Esq. and Chelsea L. Zwart, Esq. | Chapman Glucksman Dean Roeb & Barger<\/a> | August 4, 2017<\/p>\n

AB 1701 recently passed the Assembly and is pending in the Senate\u2019s Labor and Industrial Relations and Judiciary Committees. The Bill, if signed by the Governor, would create a new section in the California\u00a0Labor Code<\/em>(Section 218.7) making \u201cdirect contractors\u201d \u2013 defined as a contractor \u201cmaking or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other private work\u201d \u2013 liable for wages a subcontractor or sub-subcontractor fails to pay to its employee for work included in the general contractor\u2019s contract with the project owner.<\/p>\n

Under the new law, direct contractors would be liable for up to one year from the date of completion of the work for unpaid wages, fringe benefits, health and welfare benefits, and pension fund contributions, including interest and state tax payments owed to a subcontractor\u2019s employee. The employee, however, would not be able to recover penalties or liquidated damages from the general contractor.<\/p>\n

AB 1701 would give the employee, Labor Commissioner, or a joint labor-management cooperation committee the right to enforce the direct contractor\u2019s liability through a civil action. It would also extend to third parties who are owed fringe or other benefit payments or contributions on the employee\u2019s behalf. Pursuant to the proposed language of the new statute, a prevailing plaintiff in such an action would be entitled to their reasonable attorneys\u2019 fees and costs, including expert witness fees.<\/p>\n

Although\u00a0Labor Code<\/em>\u00a0\u00a7 218.7 would impose certain obligations on the subcontractor to provide the direct contractor with relevant project and payroll records, the subcontractor\u2019s failure to comply with those obligations does not relieve the direct contractor from liability.<\/p>\n

Impact<\/strong><\/p>\n

AB 1701\u2019s apparent purpose is to protect employees, an undeniably important legislative goal. However, if passed, the bill could greatly increase general contractors\u2019 exposure when subcontracting work and their cost of doing business. Especially because the new law would not impact existing laws requiring a direct contractor to timely pay a subcontractor.<\/p>\n

As a result, many coalitions against AB 1701 stress the halting effect this could have on the construction industry as a whole, particularly private construction, which is not as heavily regulated as public works.<\/p>\n

CGDRB will continue to monitor this Bill and provide updates as developments occur.<\/p>\n","protected":false},"excerpt":{"rendered":"

Richard H. Glucksman, Esq. and Chelsea L. Zwart, Esq. | Chapman Glucksman Dean Roeb & Barger | August 4, 2017 AB 1701 recently passed the Assembly and is pending in the Senate\u2019s Labor and Industrial Relations and Judiciary Committees. The Bill, if signed by the Governor, would create a new section in the California\u00a0Labor Code(Section… Continue reading Assembly Bill 1701 Contemplates Broader Duty to Subcontractor\u2019s Employees by General Contractor<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[9895,88,18,157],"class_list":["post-892778","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-advise-consult","tag-california","tag-contractor","tag-subcontractor","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nAssembly Bill 1701 Contemplates Broader Duty to Subcontractor\u2019s Employees by General Contractor - 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