AGC is opposing legislation that would make private owners, general contractors and upstream subs liable for any unpaid wages and benefits of lower tier subs.
HB 2191 was recently heard in the House Labor and Commerce Committee.
“Workers must be paid—fully,” testified AGC Chief Lobbyist Jerry VanderWood. “The concern is not whether unpaid wages are a problem—they are—but whether HB 2191 responds proportionally and effectively. To address a small fraction of problem projects, every project will face higher costs and increased risk. We’ve seen this play out in Oregon, which recently passed a similar law. Legal guidance there now advises contractors to require certified payrolls, extensive financial records and additional payment bonds from subs. These are significant burdens, particularly for small and emerging firms. The guidance encourages contractors to work with large, established firms or to self-perform work—shrinking opportunities for small, emerging businesses.”
Key elements of the bill:
· Liability is extended to certain property owners when a direct contractor or subcontractor on a construction project fails to pay an employee’s wages or benefits and to direct contractors when a subcontractor fails to pay. Property owners and direct contractors are jointly and severally liable for a subcontractor’s failure to pay. Property that is used as the owner’s principal residence, or to real property consisting of five or fewer residential or commercial units on a single tract are exempt.
· Upper tier subcontractors can also be sued, but subcontractors are not jointly and severally liable.
· This extended liability does not apply to state, local, or tribal governments. It also does not apply when a construction project takes place on property that is the property owner’s principal residence or on property with five or fewer residential or commercial units on a single tract.
· Personal liability is established for officers, directors, and managers of a company when that company is liable for a direct contractor’s or subcontractor’s failure to pay wages or benefits, regardless of willfulness.
AGC Board member Patrick Hughues (Hughes Group) also testified in opposition to the bill, which is sponsored by Rep. Julio Cortes (D-38). For more information, contact AGC Chief Lobbyist Jerry VanderWood.