A new California law requires prime contractors on private construction projects to be financially responsible for any wages, fringe benefits and union contributions left unpaid by subcontractors and their sub-subcontractors. The prime contractor’s financial responsibility under this new law, however, does not extend to any penalties or liquidated damages resulting from a subcontractor’s failure to pay wages. This law governs all private construction contracts entered into beginning January 1, 2018.
As a result of this new law, prime contractors on California private construction projects will need to closely monitor their subcontractors’ payroll practices and require the submission of payroll documentation similar to that required under the Davis-Bacon Act. The new law allows prime contractors to withhold payment from any subcontractor that does not provide the required payroll records.
Could we see passage of a similar law in Pennsylvania and New Jersey – two states having strong construction labor unions?