I am asking you to OPPOSE S. 2766. Under this bill, the employees of a subcontractor or lower tiered subcontractors would be able to pursue an action against a general contractor even when there is no direct privity of contract, when the general contractor had no say in the hiring of the subcontractor, when the general contractor has no means to monitor compliance, and even in situations when a general contractor would have no idea a particular subcontractor was working on the construction project. There is a significant cost as a consequence of making the general contractor jointly and severally liable. The general contractor is placed in the position of having to potentially pay twice on the contract. General contractors will have to use payment bonds or letters of credit, which will be difficult for many subcontractors to obtain. This bill particularly squeezes small independent homebuilders and remodelers. Construction workers deserved to be paid for their work. However, there are significant cost consequences across the construction industry in this bill.

Construction workers deserved to be paid for their work. However, S.2766 would lead to significant cost consequences across the construction industry, with the most negative impact on independent and small builders and remodelers. There is a significant cost as a consequence of making the general contractor jointly and severally liable. The general contractor is placed in the position of having to potentially pay twice on the contract, even when there is no direct privity of contract, when the general contractor had no say in the hiring of the subcontractor, when the general contractor has no means to monitor compliance, and even in situations when a general contractor would have no idea a particular subcontractor was working on the construction project. Small and independent contractors are the least likely to have the financial resources to pay twice. The ability to cover defaults of subcontractors as a guarantor is going to require the industry to move from a small business model to a larger size and scale to the detriment of the survival of small homebuilders and remodelers. We urge you to oppose the bill, slow down the rush to passage, and craft a solution to prevent wage theft without sticking small and independent contractors with someone else’s bill.