Labor-related liabilities: direct contractor and subcontractor.

Senator Cortese's construction labor legislation redefines contractor liability for worker wages and benefits through a two-phase implementation approach. For contracts entered before 2026, direct contractors must assume responsibility for wage-related debts owed by their subcontractors to workers. Starting in 2026, this liability expands to include all labor-related indebtedness, though contractors can avoid benefit contribution liability by making payments via joint checks.

The bill establishes specific monitoring requirements, mandating that contractors review subcontractor payroll records and obtain signed affidavits confirming wage and benefit payments before issuing final compensation. The Labor Commissioner gains authority to enforce these provisions through civil wage assessments, while joint labor-management committees receive standing to pursue legal action against non-compliant contractors.

For housing developments with 50 or more units, contractors must participate in approved apprenticeship programs and provide health care expenditures equivalent to a Covered California Platinum plan. Monthly compliance reports become public record, with penalties of up to $10,000 per month for reporting failures and $200 daily per worker for standards violations.

The legislation broadens the definition of "direct contractor" to include those contracting with any entity engaging contractors on an owner's behalf, not just property owners themselves. This expansion aims to address complex construction arrangements while maintaining consistent labor standards across project structures.

These provisions remain in effect until January 1, 2036, creating a decade-long framework for enhanced wage and benefit protections in California's construction industry. The bill preserves existing owner payment obligations while adding new mechanisms for ensuring worker compensation reaches its intended recipients.