News Release: AGC MA Fights Onerous ''Wage Theft Bill'' at State House10/27/2015

AGC MA Fights Onerous "Wage Theft Bill" at State House10/27/2015
Makes GC's Vicariously Liable for Wage & Benefit Violations of Lower tier Subs & Suppliers

Tuesday, October 27, 2015
Section: Labor Relations News

Two identical bills – Senate 966 and House 1748 – “An Act to Prevent Wage theft and Promote Employer Responsibility” (House No. 1748 /Senate No. 966), designed to make GC’s and subcontractors vicariously liable for wage and benefit violations of lower tier subs and suppliers are at risk of moving at the State House.

Onerous Language:

Under the proposed statute, a “lead company” such as a general contractor becomes jointly and severally liable for an extensive list of any violations of a “labor contractor” (anyone who supplies labor or services directly or indirectly to the lead company) for a plethora of employment laws including, but not limited to, prevailing wage requirements, overtime rules, workers compensation coverage, independent contractor classifications, and nonpayment of wages.  Under current law a contractor is only liable for violations committed with respect to its own employees.

The bill would broadly expand general contractors’ legal exposure for a wide range of violations which might be alleged against the scores of subcontractors and suppliers involved in a given project.

Beacon Hill Support:

The bills, already endorsed by 107 Beacon Hill lawmakers, are intended to stem a perceived increase in wage and hour and employment law violations that labor groups and worker rights activists claim are rampant in the workplace. The Legislature appears very sympathetic to these arguments.

Unintended Consequences:

Although the bill addresses all industries, a main focus is the construction industry. The bill does not distinguish between commercial and residential construction and does not recognize the unique and legitimate role subcontracting has in the construction industry.

The bill is extremely problematic. AGC interprets its language to assume that ALL of its members are potentially responsible for payment of all penalties by the malfeasance of other firms.  As one construction industry representative noted: “It effectively makes everyone from project owners on down jointly and severally responsible for the wage violations of any companies in the tiers below and imposes severe punitive damages. It is vicarious liability at is worst.”

Onerous Provisions:

The proposed law is believed to be without precedence in the United States. In addition to monetary penalties, the bill also allows for the issuance of stop work orders if there is administrative determination that “…any person or entity is employing and employee” in violation of myriad labor laws.  Ostensibly a general contractor could have to pay the wages of all workers on the project for the first ten days during the stop work order.  

AGC Joins Employer Industry Coalition to Oppose

At its October 14 meeting, the AGC Board discussed the details of the bill and need for strong opposition. AGC is currently working with a coalition of allied construction industry employer associations to discredit the arguments behind the bill and develop a cohesive response that details language inconsistencies, confusing definitions, and a host of other potential undesirable and inequitable consequences. Other major business trade groups are also opposing the legislation.

Representing AGC on the coalition is Labor Relations Director Brian O’Donnell and Labor Counsel Jim Grosso and Miranda Jones.