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News & Press: Legislative Issues

California Labor Commissioner Issues First Citations Against A General Contractor

Friday, July 14, 2017   (0 Comments)
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California Labor Commissioner Issues First Citations Against A General Contractor For Wage Violations By A Subcontractor, For $249,879; Under AB 1897, Passed In 2014

 

finesAB 1897 took effect January 1, 2015; and holds the party who hires labor services from another party to share all civil legal responsibility and civil liability for the payment of wages; and securing workers' compensation coverage. AB 1897 created a new section in the California Labor Code, 2810.3.

 

In this first case, General Contractor Deacon Corporation hired a subcontractor for framing and drywall work, Champion Constructions, Inc. The project was the Cambria Hotel in El Segundo. Forty-seven workers of Champion were not paid for some overtime hours, waiting time penalties, and rest period premiums. Some of those workers were unpaid for several weeks for all work. The Labor Commissioner issued citations against both the General Contractor and Subcontractor, per AB 1897. Deacon appealed, but lost their appeal on May 16, 2017. Deacon is jointly responsible under the citations for penalties and interest on the unpaid wages.

 

There are some who thought AB 1897 would not apply to construction relationships between a Prime/General Contractor and Subcontractors, but it clearly does, now being upheld by the appeals process.

 

Prime/General Contractors, Developers operating as General Contractors, Owners who hire contractors directly; and Subcontractors who hire sub-subcontractors need to review the qualification processes of those they hire. A low bid could wind up costing large amounts in wages, fines, and penalties!

 

Contact CALPASC Director of Risk Management Bruce Wick, if you have any questions on AB 1897 at (909) 793-9932 or bwick@calpasc.org.

 

You can see a copy of the DIR Press Release on the Deacon/Champions case here:

http://www.dir.ca.gov/DIRNews/2017/2017-55.pdf

 

You can see a copy of AB 1897 HERE.


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