Governor Jerry Brown, on Saturday, issued a statement saying that he was signing Assembly bill 1701. According to the signing letter, “This bill would extend the liability against a general contractor for wages owed to workers of a subcontractor and create new wage collection remedies for private non-public work projects.” The bill as signed will be effective on January 1, 2018.
Why is this bill important to “General Contractors” who work in California?
The text reads:
“As written This bill would, for all contracts entered into on or after January 1, 2018, require a direct contractor, as defined, making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other work, to assume, and be liable for, specified debt owed to a wage claimant that is incurred by a subcontractor, at any tier, acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the original contract. The bill would authorize the Labor Commissioner to bring an action under specified statutes or in a civil action to enforce this liability, as provided. The bill would also authorize a third party owed fringe or other benefits or a joint labor-management cooperation committee, as defined, to bring a civil action to enforce the liability against a direct contractor under these provisions, as specified. The bill would provide that it does not apply to any work being done by an employee of the state or any political subdivision of the state. The bill would require a subcontractor, upon request from the direct contractor, to provide specified information regarding the subcontractor’s and third party’s work on the project and would provide that the direct contractor could withhold disputed sums upon the subcontractor’s failure to provide the requested information, as specified. The bill would provide that these obligations and remedies are in addition to any other remedy provided by law. The bill would provide that its provisions are severable.”
Basically, the law opens up the General Contractor to additional liability for the subs who misclassify or do not pay wages or benefits owed workers for work done on the job site.
Why do we bring it up on Construction Citizen? We watch the industry in California to see what might be spreading to the rest of the industry. So you or your legal teams might want to look this one over while it is still fresh.
We would expect that this one will be challenged in the courts by the homebuilders and by the construction associations in California as soon as it goes into effect.