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MD Latest State to Enact Contractor Wage Law

Thursday, August 2, 2018

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The state of Maryland is following California’s and Oregon’s lead as the latest state to pass legislation that holds general contractors accountable for wages unpaid by subcontractors.

What Happened

Earlier this year, Assembly Bill 1701 amended Section 218.7 of the California Labor Code, making it so that general contractors on private construction projects “assume and are liable for any debt” of any tier of a subcontractor’s unpaid wages, fringe benefits or other contributions.

© iStock.com / Micha? Chodyra

The state of Maryland is following California’s and Oregon’s lead as the latest state to pass legislation that holds general contractors accountable for wages unpaid by subcontractors.

The legislation also permits the Commissioner of Labor to file a suit on behalf of the unpaid employee and allows labor unions to sue as well. There is a one-year statute of limitations.

At the same time, the California law allows the general contractor to inspect subcontractors’ payroll records with the ability to withhold payment if records aren’t released.

About a month after California's law was passed, Oregon passed House Bill 4154B, which stated that a general contractor would have to pay for a delinquent subcontractor under conditions that:

  • A claim has been filed with the Oregon Bureau of Labor and Industries for wages, overtime pay or benefits;
  • The claim was investigated and found valid;
  • The wages cannot be collected from the subcontractor; and
  • The general contractor has not already fully paid the subcontractor whatever is owed under that specific project.

Recent Changes

Maryland passed a similar law this past spring called the Maryland’s General Contractor Liability for Unpaid Wages Act, which takes effect Oct. 1. Also aimed at private projects and attached to any tier of subcontractor, the Maryland law, though, does give the employee the right to take private action against the general contractor if the employee isn’t paid within two weeks.

Unlike California, Maryland is not giving general contractors the right to audit subcontractors, but it provides general contractors with a right of indemnity, which can be enforced though contracts.

   

Tagged categories: Laws and litigation; Lawsuits; Regulations

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