Thomson Reuters Practical Law recently featured a Wage and Hour blog post, “California Passes New Law Making Contractors Jointly Liable for Their Subcontractors’ Failure to Pay Wages,” authored by Michael S. Kun, Member of the Firm, and Kevin D. Sullivan, an Associate, in the Employment, Labor & Workforce Management practice, in the firm’s Los Angeles office.
Following is an excerpt from the post:
On October 14, 2017, California Governor Jerry Brown signed Assembly Bill 1701, which will make general contractors liable for their subcontractors’ employees’ unpaid wages if the subcontractor fails to pay wages due. The new law will go into effect on January 1, 2018.
Specifically, section 218.7 has been added to the Labor Code. Subdivision (a)(1) provides the following:
For contracts entered into on or after January 1, 2018, a direct contractor making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other private work, shall assume, and is liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf, 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 contract between the direct contractor and the owner.