Labor-related liabilities: direct contractor and subcontractor.

Senator Cortese's labor standards legislation extends direct contractor liability for worker compensation while creating new mechanisms to ensure healthcare coverage and prevailing wages in California's construction industry. The bill modifies existing law by requiring contractors to assume responsibility for subcontractor wage obligations through 2026, after which broader liability provisions take effect.

For contracts initiated before 2026, direct contractors must monitor subcontractor wage payments and take corrective action if violations occur. The legislation mandates that contractors review payroll records, retain funds when necessary, and obtain signed affidavits confirming proper compensation before issuing final payments. Joint labor-management committees gain standing to pursue claims for unpaid wages and benefits.

Starting in 2026, the bill expands contractor obligations to include all labor-related indebtedness while establishing a new system for healthcare contributions. Contractors can limit liability for fringe benefits by implementing joint payment procedures with trust funds and benefit programs. The measure preserves existing wage claim enforcement through the Labor Commissioner while adding provisions for civil actions by workers and labor organizations.

The legislation also strengthens labor standards for housing developments, particularly those seeking streamlined approval. Projects with 50 or more units must participate in approved apprenticeship programs and provide healthcare expenditures equivalent to platinum-level coverage. Monthly compliance reporting requirements and specific penalties for violations aim to ensure consistent enforcement of these new standards.