{"id":893607,"date":"2018-02-14T14:19:42","date_gmt":"2018-02-14T21:19:42","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=893607"},"modified":"2018-02-14T14:19:42","modified_gmt":"2018-02-14T21:19:42","slug":"direct-contractors-california-take-steps-now-reduce-exposure-unpaid-wages-subcontractors","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/direct-contractors-california-take-steps-now-reduce-exposure-unpaid-wages-subcontractors\/","title":{"rendered":"Direct Contractors In California Should Take Steps Now To Reduce Exposure For Unpaid Wages By Subcontractors"},"content":{"rendered":"

Nora Stilestein, Candance Matson and Mercedes Cook | Construction & Infrastructure Law Blog<\/a> | February 6, 2018<\/p>\n

As of January 1, 2018, direct contractors in California who make or take a contract \u201cfor the erection, construction, alteration, or repair of a building, structure, or other private work\u201d are jointly and severally liable with their subcontractors for any unpaid wages, fringe benefits and other benefit payments or contributions owed to wage claimants. Governor Brown approved\u00a0AB 1701\u00a0on October 14, 2017. The new law puts the onus on direct contractors to not only monitor their own payroll practices, but to ensure that their subcontractors and lower tier subcontractors are engaging in proper payroll practices.<\/span><\/p>\n

AB 1701 does not afford individual workers a direct right to sue contractors. Instead, only three groups have the right to sue directly: the Labor Commissioner; a joint labor-management cooperation committee (29 U.S.C. \u00a7175a); or a third party owed fringe or other benefits on a wage claimant\u2019s behalf. The bill also precludes recovery of liquidated damages or penalties. Nevertheless, critics of the bill anticipate that it will ultimately increase building costs, and will only exacerbate the current shortage of affordable housing in California.\u00a0Indeed, direct contractors who have already paid a subcontractor in full for completed work may later find themselves on the hook for unpaid wages to subcontractors\u2019 employees as well as lower tier subcontractors.\u00a0 A direct contractor wishing to avoid that outcome must bear the burden of monitoring subcontractors\u2019 payroll practices, including confirming that employees were timely paid with owed wages.<\/p>\n

To reduce potential exposure, contracts may need to be revised to include provisions:<\/p>\n