Experienced Real Estate And Business Attorney

General Contractors Now Liable for Sub Contractors’s failure to pay Subs’ employees! Labor Code 218.7

On Behalf of | Apr 24, 2018 | Construction, Employment |

New Labor Code Section 218.17 (AB 1701) makes a general contractor jointly liable for the unpaid wages, fringe benefits, or other benefit payments or contributions of a subcontractor (at any tier).

Labor Code 218.7 provides “down-the-chain protection” to a sub-contractor’s employees if they are  misclassified as as independent contractors or not paid. The bill applies even if the general contractor has paid the sub!!!!  Labor Code 218.7 does not apply to public projects.

To quote the bill’s author, Tony Thurmond:

“This measure incentivizes the use of responsible subcontractors and helps to ensure the economic vitality of the construction industry and its role in the creation of good paying middle class jobs.”

To the GC, this means you are screwed.  To the Property owner/Developer this means your construction costs will increase and small contractors will go out of business.  To Employment lawyers they will file more lawsuits.  To the Labor Board, they will hear more cases, etc.