AN ACT CLARIFYING PENSION OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS.

By law, contractors on public construction projects must submit to the contracting agency certified payrolls that indicate the contractor or subcontractor paid workers the correct wages and benefits under the prevailing wage law. This bill permits a general contractor on such a project to, in good faith, rely on the certification of a subcontractor as an affirmative defense to legal action the labor commissioner brings to collect unpaid benefits on behalf of an employee of the subcontractor. A contractor can rely on this certification only if it requires the subcontractor to provide:

1. a payment bond on the project or

2. sufficient verification from the pension and benefit fund administrator of the relevant fund that the amount of payment or contributions required to be paid on behalf of each worker to any employee welfare fund has been paid.

The bill establishes the same mechanism and requirements for a subcontractor to rely in good faith on the certification of a lower tier subcontractor as an affirmative defense to legal action the commissioner brings to collect unpaid benefits on behalf of an employee of the lower tier subcontractor.

Under prevailing wage law, employers must make a contribution on behalf of employees to an employee welfare fund (to provide retirement, disability, health care, and other benefits, or some combination of these). If there is no such benefit fund, the employer must increase wages by the amount that would otherwise go into the fund.

The bill permits any contractor, that the Labor Department (DOL) required to make a payment to a subcontractor's employees because the subcontractor failed to pay them their wages or benefits, to sue the subcontractor in Superior Court to recover the actual damages sustained by making the payment, together with costs and a reasonable attorney's fee. The bill also permits this cause of action by a subcontractor seeking actual damages regarding a lower tier subcontractor's failure to pay its employees wages or benefits.

The bill adds this cause of action to the existing prevailing wage law and appears to create it separately as a new section. Although the causes of action are the same, there appear to be differences in where the suit is filed and in potential remedies (see COMMENT). .

The prevailing wages cause of action does not specify in which Superior Court the suit may be filed, and it permits the contractor to seek “actual damages sustained” by making such payment to DOL plus costs and reasonable attorney's fees. The other provision specifies that the action may be brought in the Superior Court judicial district where the failure to pay wages occurred and limits the remedy to no more than the payment required by DOL plus, at the court's discretion, costs and reasonable attorney's fees.

It appears that “actual damages” allowed in the prevailing wage provision might be greater than the amount the contractor paid to DOL, but this is not clear.

*Senate Amendment “A” (1) allows a contractor to sue to recover damages due to a subcontractor failing to pay wages or benefits on a public construction project and (2) makes conforming and clarifying changes.

The legal impact of Section 4 is unclear in certain respects. It is unclear whether (1) Section 4 of the bill creates a separate cause of action from that provided in Section 1, lines 178 to 185; (2) the Section 4 cause of action applies to contractors and subcontractors or just contractors; (3) the last sentence in Section 4 is meant only to limit damages sought under Section 4 or also meant to limit the damages under Section 1, lines 178 to 185; and (4) the section makes the correct reference to a payment pursuant to subsection (h) of Section 31-53, when that subsection does not require payments.

The state prevailing wage law applies to all state and municipal construction projects if the project price is $ 400,000 or more for new construction or $ 100,000 for remodeling, refurbishing, rehabilitation, alteration, or repair. The state establishes the prevailing wage rates for the job titles related to the construction.

Yea

Nay

(03/12/2009)

Yea

Nay

(04/27/2009)

Yea

Nay

(05/13/2009)