As you know—in a move dramatically expanding wage liability for most construction contracts created or modified on or after January 4, 2022—the New York State legislature amended the Labor Law last year to hold a general contractor jointly and severally liable for wages that its subcontractors fail to pay to their employees and independent contractors. The legislature also added a new section to New York's General Business Law, which now allows general contractors to audit a subcontractor's payroll records, and to withhold payments owed to the subcontractor if records are not provided.
Imagine that General Construction Company contracts with Steel Sub Corporation to complete the steel work required for a commercial space in midtown Manhattan. What should General Construction do to avoid shouldering liability for wage and hour claims if Steel Sub does not make proper payments to its employees? What should Steel Sub be forced to do as part of the project to mitigate any risk to General Construction?
This article examines the audit rights of general contractors and provides some best practices to reduce their exposure to liability for a subcontractor's improper wage practices.
Under the new law, general contractors are permitted to request certified wage and hour records from their subcontractors. Those records must contain sufficient information for the general contractor to determine whether the...
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