New Wage Law Exposes Primes to Increased Liability

Ally D'Ovidio

Starting October 1 2018, general contractors will face increased exposure when performing any work in Maryland because of a new law. The law makes general contractors responsible for any wages its subcontractors fail to pay its employees during a project. To avoid steep penalties, your company should keep these important changes in mind:

  • Violators of the law are subject to steep penalties, including three times the amount of the actual damages awarded.
  • General contractors should review their processes around selecting and hiring subcontractors.
  • General contractors bear the responsibility for subcontractors if they have a direct contractual relationship with them.
  • General contractors should work with their surety agents to ensure adequate bonding coverage considering the new provisions.
  • Subcontractors are required to repay a general contractor any fees that result from a violation they are responsible for, except in situations where prompt payment terms in the original contract were violated.
  • Subcontractors are not required to provide their general contractor with employee information, making it incredibly hard for general contractors to know their risk.
  • Both general contractors and subcontractors should keep detailed employee records in a safe place in case legal action is brought against them.

For more information please contact Mike Henderson or call 410-821-0351 ext. 123