Assembly Bill 1701 Research Paper

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Assembly Bill 1701/Labor Code 218.7 – What you need to know? The State of California has passed a number of new laws in recent years but none has been so widely discussed by the construction industry as Assembly Bill 1701 (Labor Code 218.7). This new law extends lability to a general contractor on a private construction project for unpaid wages, fringe, and other benefits owed to a subcontractor’s employees. This is regardless of the tier of the subcontractor or if the subcontractor has already been paid or not. Basically, this gives a subcontractor’s employees the right to make a claim against the general contractor for unpaid wages, fringe or other benefits. Before discussing possible protections there are a few key component of the law …show more content…

How to Protect Your Company When new and potentially unfavorable laws are enacted, there is usually an immediate scramble to avoid the negative impacts it may bring. However, as a general contractor, claims cannot be fully avoided. Thus, much like insurance, the best practice is to implement procedures that reduce the possibility of a claim. Drafting a favorable contract is a good first line of defense. This includes but is not limited to: • Including language that shifts the liability created by the new law back to the subcontractor. For example, the general contract should include language affirming that every subcontractor is accountable for full and timely payment of their workers and all sub-tier subcontractor’s workers; • Requiring subcontractors (all tiers) to provide time cards and wage statements monthly with their pay applications. If the subcontractor fails to provide this information, they do not get …show more content…

The performance bond protects the general contractor (obligee on a subcontract bond) from losses in the event that the subcontractor fails to perform the contract. The payment bond guarantees that the subcontractor will pay their workers, subcontractors, and materials suppliers and that the project will be a lien free project. Requiring performance and payments bonds from your subcontractors transfers the risk of a subcontractor’s non-performance and non-payment to the surety

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