Gov. Carney signs wage theft and other labor protection bills into law

Posted by National Alliance for Fair Contracting on

Delaware Public Media | By Paul Kiefer
Published October 10, 2022

Gov. John Carney signed a bill into law on Friday defining wage theft as a crime and setting financial penalties for violators.

The new wage theft law is one of the most detailed in the country, targeting an array of strategies used by employers to avoid paying taxes or underpay workers. Its sponsor, State Sen. Jack Walsh (D-Christiana/Newark), says wage theft, including misclassifying workers as part-time or contractors, is widespread and often leaves workers without access to key benefits.

“Having them work off-the-clock, paying them under the table – which presents problems down the road because they can’t access worker’s compensation or unemployment,” he said. “Basically, they’re misclassifying people, 1099-ing them, when they’re actual employees and should be treated as such.”

Delaware’s Department of Labor is responsible for investigating wage theft allegations and can refer cases to the Department of Justice for prosecution.

The law also sets financial penalties, including fines between $20,000 and $50,000 for retaliating against employees who report wage theft.

Carney also signed a bill into law on Friday that holds employers liable for damages if they do not provide a paycheck within one pay period after an employee is laid off or discharged, or after the employee resigns or quits.

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Are General Contractors Liable For Their Subcontractors’ Actions Or Inactions?

Posted by National Alliance for Fair Contracting on

JD Supra
June 26, 2019

A general contractor in Southern California found itself on the hook for its subcontractor’s failure to pay wages to its workers, even though the general contractor had no knowledge of it. The case illustrates an important reminder for general contractors. The general contractor was fined close to $600,000 under a 2017 California law, A.B. 1701, which holds general contractors liable for their subcontractor’s failure to pay wages owed to workers.

Holding a general contractor responsible is not new or limited to state law. Under most federal employment laws, a general contractor could be found to be a joint employer with its subcontractor, or a temporary staffing agency, when certain conditions are met. In determining if the general contractor is jointly employing workers with its subcontractors, courts will look at the level of control exercised by the general contractor over these workers, as well as intermingling of operations, common ownership, supervision of work, pooling of employees, sharing of clients or customers, and agreements between the companies.

Unexpected and significant consequences for a general contractor may result from its subcontractor’s noncompliance with the law. For example, under the Fair Labor Standards Act, a general contractor found to be a joint employer could be liable for a subcontractor’s failing to pay wages or overtime and misclassifying a worker as exempt or as an independent contractor, among other things.

In addition, more and more courts are looking at whether general contractors should be held accountable for a subcontractor’s alleged harassing or discriminatory conduct under Title VII of the Civil Rights Act.

State and federal agencies and workers may go after a general contractor for joint-employment liability when the subcontractor cannot cover the liability on its own or it is no longer operating, and the general contractor has deeper pockets.

Accordingly, to reduce risk, general contractors should consider carefully who they choose to do business with and take steps to ensure that their business partners are compliant with federal and state laws.

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Amendments To Colorado Wage Act Increase Employers’ Exposure To Criminal And Civil Personal Liability (CO)

Posted by National Alliance for Fair Contracting on

JD Supra
June 11, 2019

The Legislature was busy this year, passing a variety of bills that will affect Colorado employers. House Bill 19-1267, entitled Penalties for Failure to Pay Wages, amends the Colorado Wage Act in ways that could be significant for all employers with operations in the state. The amendment, which was signed into law this month by Gov. Jared Polis (D), will take effect on January 1, 2020, and will apply to any offenses committed on or after that date.

The Legislative declaration accompanying the amendment says that the Legislature’s purpose is to provide more protection for victims of human trafficking because “[p]ersons who commit the crime of human trafficking often commit other crimes such as wage theft, tax evasion, and workers’ compensation fraud.”

Wage theft

On the surface, the amendment seems to apply only to the criminal provisions of the Wage Act. The current version of the Wage Act provides that certain violations can be prosecuted as unclassified misdemeanors, including “willful refusal to pay wages, falsely denying the amount or validity of a wage claim with intent to underpay or to annoy, harass, oppress, hinder, delay, or defraud an employee, and intentional failure to pay minimum wage.” Intentional refusal to pay wages owed is currently punishable by a fine of up to $300, up to 30 days in prison, or both. Intentional failure to pay the minimum wage is punishable by a fine ranging from $100 to $500, or imprisonment ranging from 30 days to one year, or both.

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Individual liability for unpaid wages

The amendment also changes the definition of “employer,” which will affect all other components of the Wage Act, including the civil provisions.

In 2003, the Colorado Supreme Court ruled that officers and agents of a company were not personally liable for unpaid wages. In Leonard v. McMorris, the Court applied the definition of “employer” in Section 8-4-101(6) of the Wage Act and found that the Legislature did not intend to force officers and agents to act as sureties in the event that payroll was not met.

The new amendment specifically says that Leonard “does not provide sufficient protections for workers and their families.” Although it is not completely clear, it appears that the Legislature intends to overrule Leonardand that the case should no longer be relied upon as good law.

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In Illinois, GCs could be on the hook for subs’ unpaid wages (IL)

Posted by National Alliance for Fair Contracting on

AUTHOR – Kim Slowey
PUBLISHED – April 2, 2019

Dive Brief:

  • The Illinois House of Representatives this month passed an amendment to the state’s Wage Payment and Collection Act that could make general contractors responsible for the wages of their subcontractors’ employees. The state Senate will now take up the bill.
  • The liability for a subcontractor’s unpaid wages would lie with the direct contractor – the company in contract with the owner – even if the direct contractor has paid the subcontractor in full.
  • The law as proposed would also apply to lower-tier subcontractors and cover fringe and benefit payments owed to third parties on behalf of employees. Just as in most other civil actions, the direct contractor’s property could be seized in order to raise the money necessary to pay back wages and benefits.

Dive Insight:

In addition to wages and benefits, the direct contractor would be responsible for interest on those payments, but not fines and penalties. The proposed regulation would give direct contractors the right to examine the records of subcontractors and lower-tier subcontractors in the course of the project to ensure that they are paying their employees.

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Such legislation can give state officials extra teeth in pursuing payment for those workers left in the lurch by unscrupulous contractors. In California, where GC’s liability for subs’ unpaid wages was enacted for contracts signed on or after Jan. 1, 2018, officials have been aggressive in addressing wage theft violations.

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Using ‘subs of subs,’ contractors able to evade liability in construction worker deaths (TN)

Posted by National Alliance for Fair Contracting on

Mike Reicher, USA TODAY NETWORK – Tennessee
Published 10:00 p.m. CT May 5, 2018

After his brother died falling off the roof of a North Nashville home under construction, Hermenegildo Dominguez heard nothing from the roofing subcontractor. He heard nothing from the general contractor. Nothing from an insurance company.

Typically, workers’ compensation would have covered $10,000 of funeral expenses, but Alfonso Dominguez, 60, was essentially off the books. It would cost $15,000 to fly his body to his hometown of Vera Cruz, Mexico, and bury him.

Only after the Spanish-language news site Nashville Noticias posted about the June 2017 accident on Facebook did Hermenegildo Dominguez get a response. But it wasn’t from the construction companies. Other immigrants throughout Nashville sent him donations.

Today, Dominguez, who cleans construction sites in Nashville, is less concerned about compensation: “What I really want is to get justice,” he said.

Alfonso Dominguez’s death shows how some construction companies can evade liability for accidents, especially in a booming city like Nashville. A labor shortage has led to a fracturing of work sites, where subcontractors can’t complete projects with their normal crews, so they hire small “subs of subs” below them. Workers at the bottom are sent onto scaffolding and roofs without safety equipment or training, or the assurance their families will be taken care of if they fall.

More construction workers died in the Nashville metro area in 2016 and 2017 compared with any two-year stretch in the previous three decades. Most of the 16 deaths were from falls without any harnesses or other protection.

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