General Contractor Responsible for All Employees’ Wages in California and Now Maryland
August 2, 2018
Responsibility for all employees’ wages falls onto the general contractor in California and now in Maryland, paving the way for a new system of paying workers in these two states. The state law in California has been active since Jan. 1, and Maryland will begin to practice this law in October, but with a few more stipulations.
In California, general contractors are responsible for just the wages of their workers. In Maryland, general contractors are responsible for not only wages, but also benefits and interest. They may also pay up to three times the amount owed to a worker plus attorney’s fees if nonpayment is not related to a legitimate dispute.
If general contractors have to pay future wage claims, it is likely the price of bonds will go up, according to a recent Construction Dive article. General contractors can require their subcontractors to provide their own payment bonds for each job in order to minimize the risk of paying the subcontractor’s employees. This could mean several bonds may be necessary for one job, in addition to putting subcontractors in an awkward position if they are on unstable financial ground.
This new law is active in California and Maryland, and it is unclear if other states will adopt a similar model. Meanwhile, Oregon passed a wage protection law earlier this year that creates a liability for the general contractor if the subcontractor has not been paid in full.
—Christie Citranglo, editorial associate