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 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 damages regarding a lower tier subcontractor's failure to pay its employees wages or benefits.

*Senate Amendment “A” (1) allows a contractor to sue to recover damages from a subcontractor's failing to pay wages or benefits on a public construction project, (2) adds this cause of action to the existing prevailing wage law and appears to create it separately as a new section that has some differences, which could be potentially confusing, and (3) makes conforming and clarifying changes.

*House Amendment “A” removes the second cause of action created by Senate “A” and specifies the cause of action under the prevailing wage law is limited to damages sustained by making a payment required by the DOL, plus costs and reasonable attorney's fees.

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 or more for remodeling, refurbishing, rehabilitation, alteration, or repair. The state establishes the prevailing wage rates for the job titles related to the construction.

Yea

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(03/12/2009)

Yea

Nay

(04/27/2009)

Yea

Nay

(05/13/2009)