The Road to Hell is Paved with Good Intentions: A.B. 1701’s Requirement that General Contractors Pay Subcontractor Employee Wages Will Do More Harm Than Good

November 2, 2017
Steven M. Cvitanovic & Omar Parra - Haight Brown & Bonesteel LLP

Tales of subcontractors who close up shop before paying their employees are not all that uncommon, but they are certainly not common enough to require General Contractors to pay for that same labor twice. Last month, the California Legislature passed Assembly Bill No. 1701, which requires the General Contractor of a private construction project to pay all unpaid wages and fringe benefits owed to an employee of a subcontractor, irrespective of the tier, and even if the General Contractor made the payment. With the Governor’s recent signature, Assembly Bill No. 1701 is now the law of the land. Here is what you need to know:

  • It applies to all private (but not public) construction contracts entered into on or after January 1, 2018;
  • It gives a subcontractor’s employee a direct cause of action against the General Contractor for any unpaid wages and fringe benefits, even if the General Contractor has fully paid the subcontractor;
  • It gives a third party owed fringe or other benefits a cause of action against the General Contractor;
  • All actions by the employee or third party must be filed within one year of the earliest of the recordation of the notice of completion, the recordation of the notice of cessation of work, or the actual completion of the work;
  • The General Contractor cannot contract to avoid the liability imposed by Assembly Bill No. 1701, but it can seek indemnity from the subcontractor; and
  • At the General Contractor’s request, the subcontractor shall provide the General Contractor with its payroll records.

Reprinted courtesy of Steven Cvitanovic, Haight Brown & Bonesteel LLP and Omar Parra, Haight Brown & Bonesteel LLP
Mr. Cvitanovic may be contacted at scvitanovic@hbblaw.com
Mr. Parra may be contacted at oparra@hbblaw.com



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