Assembly Bill 1701 (AB 1701) provides a “direct contractor” is liable for the wages, benefits and contributions (plus interest) owed by its subcontractor(s), even if the subcontractor has been paid for the work.  A “direct contractor” is defined to mean a contractor that has a direct contractual relationship with an owner; a “subcontractor” is defined as a contractor without a direct contractual relationship with an owner.  The law applies to all private construction contracts entered into on or after January 1, 2018.  

AB 1701 does not, however, provide wage claimants the right to bring an action against the direct contractor.  Instead, the Labor Commissioner and the Joint Labor-Management Cooperation Committee may bring a civil action against the direct contractor for unpaid wages on behalf of wage claimants, and a third party such as a labor union owed benefit payments or contributions on a wage claimant’s behalf can also bring a civil action against the direct contractor.  In actions brought by the Committee or authorized third parties, the prevailing plaintiff shall be awarded attorneys’ fees and costs.

Since this law can result in direct contractors paying twice for the same project, direct contractors will have to be more careful with whom they contract to perform services.  The law provides some assistance in this regard by allow direct contractors the ability to obtain subcontractors’ payroll records to determine if their subcontractors’ workers are being paid on a timely basis.  

This blog is presented under protest by the law firm of Ervin Cohen & Jessup LLP.  It is essentially the random thoughts and opinions of someone who lives in the trenches of the war that often is employment law–he/she may well be a little shell-shocked.  So if you are thinking “woohoo, I just landed some free legal advice that will fix all my problems!”, think again.  This is commentary, people, a sketchy overview of some current legal issue with a dose of humor, but commentary nonetheless; as if Dennis Miller were a lawyer…and still mildly amusing.  No legal advice here; you would have to pay real US currency for that (unless you are my mom, and even then there are limits).  But feel free to contact us with your questions and comments—who knows, we might even answer you.  And if you want to spread this stuff around, feel free to do so, but please keep it in its present form (‘cause you can’t mess with this kind of poetry).  Big news: Copyright 2017.  All rights reserved; yep, all of them. If you have any questions about this article, contact the writer directly, assuming he or she was brave enough to attach their name to it. 

If you have any questions regarding this blog or your life in general, contact Kelly O. Scott, Esq., commander in chief of this blog and Head Honcho (official legal title) of ECJ’s Employment Law Department.