California direct contractors on private construction projects will be responsible for wages, fringe benefits and union contributions that are not paid by subcontractors and sub-tiers, according to a law that will go into effect Jan. 1, according to legal news source JD Supra.
The responsibility does not extend to penalties or liquidated damages that result when a subcontractor does not make such payments. The law will require direct contractors to monitor subcontractor payrolls and will allow contractors to withhold payment if the subcontractor does not provide payroll records.
Union representatives and employee advocates welcome the law to ensure employees are paid for work performed. The construction industry has warned the law could increase the cost of building in California, according to Construction Dive.
