SB 727: Labor-related liabilities: direct contractor.

Existing law requires, for contracts entered into on or after January 1, 2018, a direct contractor, as defined, making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other private work, to assume, and be liable for, any debt owed to a wage claimant or third party on the wage claimants behalf, incurred by a subcontractor at any tier acting under, by, or for the direct contractor for the wage claimants performance of labor included in the subject of the original contract.

Existing law limits the direct contractors liability under those provisions to extend only to any unpaid wage, fringe or other benefit payment or contribution, including interest owed and provides that liability does not extend to penalties or liquidated damages.

This bill would extend, for contracts entered into on or after January 1, 2022, the direct contractors liability to penalties, liquidated damages, and interest owed by the subcontractor on account of the performance of the labor, except as provided.

Existing law authorizes the Labor Commissioner to enforce against a direct contractor the liability for unpaid wages pursuant to specified provisions, or through a civil action, and limits the direct contractors liability to unpaid wages, including any interest owed.

This bill would require the Labor Commissioner to notify, as specified, the direct contractor and subcontractor at any tier on a private works project at least 30 days prior to taking certain actions for the failure of a subcontractor on that private works project to pay the specified wage, fringe, or other benefit due to workers. The bill would remove, for contracts entered into on or after January 1, 2022, the limitation of liability.

Existing law requires, prior to commencement of an action against a direct contractor, a joint labor-management cooperation committee to provide the direct contractor and subcontractor that employed the wage claimant with at least 30 days notice, as provided.

This bill would, for contracts entered into on or after January 1, 2022, require the notice to include the project name and name of the employer and provide that any liquidated damages awarded by the Labor Commissioner or the court shall be payable to the aggrieved employee. The bill would make conforming changes.