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Contractor Compliance with Labor Laws

Hiring contractors has always been risky. Effective January 1, 2004, it got riskier. Starting then, if you engage a contractor for construction, farm labor, garment, janitorial or security guard services, you may be liable for damages to that contractor’s employees if you know (or should know) that the contract is not adequate to allow the contractor to comply with all laws governing the labor to be provided. Collective bargaining agreements or contracts for services to be performed on your own residence are excluded from these rules.

The contractor’s injured employees can sue you for the actual damages that the employee incurs if such laws are not complied with, plus attorney’s fees.

There is a way to create a rebuttable statutory presumption in your favor, though it is very difficult to do so. To take advantage of the presumption, there must be a written agreement, consisting of a single document, with extensive provisions including the employer identification number of the contractor, the workers’ compensation insurance policy number, the name, address, and telephone number of that insurance carrier, the vehicle identification numbers of any vehicles owned by the contractor and used for worker transportation together with the vehicle liability insurance policy number, and the name address, and telephone number of the carrier, the address used to house workers, and the total number of independent contractors that will be utilized along with their state contractor license numbers and other identification numbers. Failing to request the information constitutes knowledge of the information for purposes of this labor code provision. You must keep a copy of this agreement on file for four years.

It seems clear that this law could be used against property owners if contractors they hire do not have worker’s compensation insurance and if its employees are injured, or if the contractor doesn’t pay correct wages or overtime to all workers. Certainly, it will become more important to work with financially capable contractors who carry the records of their insurance and meet their other labor obligations. And certainly, all agreements with contractors should include the requisite provisions.

Please do not hesitate to contact me if you have any questions or if I may be of any further service. Thank you for your continuing courtesy. I remain

Very truly yours,

Robert Jay Grossman