Beginning January 1, 2018, general contractors in California will be liable if their subcontractors fail to pay their employees. A bill passed by State Legislators in September 2017 makes developers and general contractors who enter private work contracts responsible for unpaid wage claims made against their subcontractors, even if they have already paid the subcontractors for their work. Under the new law, the Labor Commissioner and Joint Labor-Management Cooperation Committees can take action to recover unpaid wages on behalf of the claimants within one year of the project’s completion.
With this new legislation, general contractors who engage in private contracts will need to take steps to ensure they are compliant with the law and prepared for the changes it brings. Contractors may wish to obtain legal advice and consult an attorney in the field to review their contracts and to discuss ways to protect the business in light of the new regulations. In addition, procedures to audit subcontractors to ensure wages are paid need to be made and potential approaches to take if claims are filed need to be considered.
Some strategies to consider may include:
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Monitoring subcontractors and suppliers.
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Implementing a withholding or chargeback clause with subcontractors for disputed amounts, claims, or failure to comply with audits.
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Requiring subcontractors to obtain a bond.
Business Consumer Alliance offers a variety of services to the public and businesses. We have a wealth of general contractors and other professionals that support our efforts and enjoy the benefits of BCA membership. From our exclusive Customer Feedback Program to Arbitration services, BCA has proven to be a valuable asset to businesses. To find out how BCA can help your business, contact us today for a free no obligation consultation.
About Business Consumer Alliance
Business Consumer Alliance (BCA) is a nonprofit organization focused on strengthening integrity in the marketplace. We help consumers by resolving disputes and providing transparent business reputation reports. At the same time, we support contractors, movers, and small business owners with contract assistance, arbitration services, reputation management resources, along with business and HR advice. We’re here to help good businesses stand out and succeed while protecting the public.