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Wage Theft Laws Extend to GC

15 June, 2021

Painters in certain states who are having trouble getting paid on subcontracting jobs may have a new avenue to redress their grievances. In the most recent action, the New York State Senate and State Assembly have passed legislation that would extend payment liability to general contractors in the event of wage theft by a subcontractor involved in the project. If signed by the governor (and he is expected to sign it), New York would join California, Maryland, Nevada, New Jersey Virginia and Washington D.C., which have already adopted this type of legislation.

The bill would make a construction manager or general contractor on a private construction project liable for any non-payment of wages by a subcontractor. Whereas earlier a worker in New York would file suit with the subcontractor they worked for, this bill would include the GC in liability.

Wage theft in New York has been estimated to cost workers as much as a billion dollars a year. This new legislation would mean a general contractor wouldn’t be able to shield itself from liability by having workers sign waivers.

There is opposition by the Associated General Contractors of New York State, who stated that this could make a GC may be liable for wages withheld by contractors several tiers down even if they were unaware of the wage theft, and that the way the bill is written, these contractors may not find out about it until years later.

The Virginia law, passed about a year ago, makes the GC and subcontractors at any tier of the project jointly responsible for paying workers on any project valued at over $500,000, and deems the GC as the employer of the subcontractor’s employees. This means if the subcontractor fails to pay, the GC can be liable for civil and criminal penalties. It also gives employees the right to sue their employer, whereas before, they could only file a claim with the Virginia Department of Labor and Industry. The law was recently amended to narrow the scope of responsibility, in that general contractors are no longer liable for any entity that does not provide labor to the project, for example a materials delivery service.

All this underscores the importance of checking these types of laws in any state where you do business to understand your responsibilities and potential liabilities.


Check out last week's news article, Animals on the Jobsite.


Sources

T-MLaw.com

ConstructionDive.com

VBA.org

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