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:
Monitoring subcontractors and suppliers.
Implementing a withholding or chargeback clause with subcontractors for disputed amounts, claims, or failure to comply with audits.
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 non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.