Labor-related liabilities: direct contractor and subcontractor.

Senator Cortese's construction labor liability legislation modifies how direct contractors are held accountable for unpaid wages and benefits on private projects in California, establishing distinct requirements for contracts before and after January 1, 2026.

For contracts through 2025, direct contractors remain liable for wage-related debts owed by their subcontractors, including unpaid wages, benefits, and associated penalties. Starting in 2026, the bill redefines contractor liability to specifically cover payments required by subcontractor agreements with laborers or collective bargaining agreements. The legislation introduces a joint check payment system that can limit contractor liability when specific notification and documentation requirements are met.

The measure maintains existing contractor obligations to monitor subcontractor payroll records, take corrective action upon discovering payment failures, and obtain signed affidavits before issuing final payments. It preserves enforcement authority for the Labor Commissioner while specifying that only certain entities - including third parties owed benefit payments and joint labor-management committees - may pursue civil actions to recover unpaid wages. Legal actions must be filed within one year of project completion or cessation of work.

The provisions exclude public works projects and employees of government entities. The bill expands the definition of direct contractors to include entities that engage contractors on behalf of property owners, while preserving existing timelines for payments between owners, contractors, and subcontractors.