CA bill leaves general contractors on the hook for subcontractors' employee wage obligations

December 6, 2017Article
Construction Dive

One of the keys to a financially successful construction project is being able to identify potential sources of risk and either eliminating them or mitigating their impact through control measures. Beginning Jan. 1, California general contractors will have to figure out how to deal with yet another potential risk —  an insolvent or a negligent subcontracting firm that doesn't pay its employees.

Karina Sterman, a partner in the litigation and employment law departments of Los Angeles law firm Greenberg Glusker, said one way to approach payment under the new law would be to pay subcontractors separately for labor and materials. That would allow subcontractors to receive payment for materials spent on the job; however, when it comes to labor, she said, direct contractors would likely "pay you after you've paid [your employees]."

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