National Roofing Legal Resource Center

Contract provision addresses monitoring a subcontractor's wage payment practices

Sometimes roofing contractors retain subcontractors to perform work on government construction projects that may be subject to the federal Davis-Bacon Act or "little Davis-Bacon" state laws. Under these laws, a roofing contractor may be responsible for ensuring laborers and mechanics of its subcontractors aren't paid less than the prevailing wage rates and fringe benefits as set forth under applicable labor standards rules. The state of California also extended this responsibility to private sector contractors with the enactment of California Labor Code Section 218.7. The law, which applies to all construction contracts for private work entered into on or after Jan. 1, 2018, makes a roofing contractor performing private work in the state jointly liable if a subcontractor fails to pay the wages or fringe benefits owed to, or on behalf of, its workers.

A roofing contractor who hires a subcontractor should use a provision, like the one below, in its subcontract. This will ensure the roofing contractor can monitor its subcontractors' wage payment practices regarding projects subject to state or federal prevailing wage laws, such as the Davis-Bacon Act or California Labor Code Section 218.7. This shifts the risk and costs of nonpayment or incorrect payment of wages back to the subcontractor.

Monitoring subcontractor's wage payment practices: Roofing Contractor has the right to receive and examine payroll records of Subcontractor when Roofing Contractor may potentially be liable for Subcontractor's failure to pay wages or fringe benefits owed to its workers, such as under the Davis-Bacon Act or similar state statutes. In situations where Roofing Contractor may have such liability, Subcontractor shall furnish to Roofing Contractor on a weekly basis its payroll records for the project accompanied by a Statement of Compliance certifying compliance with applicable labor laws, codes, and regulations signed by an authorized officer or employee of the Subcontractor who supervises the payment of wages. Payroll records shall include: each employee's name; his or her work classification/position; the hours worked during the week; his or her rate of pay; the gross amount earned; the amounts and types of any deductions; and the net amount paid to employee. Upon request, Subcontractor must make their own copy of the payrolls and other basic records available for review or copying by Roofing Contractor. The Subcontractor and its employees' financial data is to be kept confidential and made known only to those people necessary to ascertain compliance with applicable labor laws. Subcontractor shall indemnify and hold harmless Roofing Contractor from and against any and all demands, claims, suits, causes of action, damages, losses, penalties, and/or expenses, including attorney's fees, arising out of or resulting from Subcontractor's failure to pay wages or fringe benefits owed to or on behalf of its workers.


1/29/2018



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