Maryland Construction General Contractors Watch Out! You Are Soon to be Liable for Subcontractors’ Wage and Hour Violations
Beginning October 1, 2018, Maryland’s already stiff wage and hour penalties will be extended to cover construction general contractors whose subcontractors are found in violation of Maryland wage and hour laws, making the general contractor jointly and severally liable for all violations by both direct subcontractors and indirect, lower-tiered subcontractors. Any project that involves “construction services” in Maryland is an area of risk – meaning any “building, reconstructing, improving, enlarging, painting, altering, maintaining, and repairing” real property. At this time, it is not immediately clear whether a subcontractor employee who is totally disconnected from any “construction services” project may nevertheless sue a general contractor under the statute. Under this new law, while subcontractors are required to indemnify their general contractors for money owed as a result of subcontractor’s violation, collection by the general contractor will likely be a problem. There are a host of problems associated with this kind of liability, notably the inability of the general contractor (who now serves as the guarantor of the subcontractor’s wages) to defend any claim without access to records of the subcontractor. No doubt, this extension of liability to the general contractor will increase the cost of construction services to the property owner. General contractors will also need to determine whether or not their insurance carriers will cover this unknown liability, and if they will, to what extent. For more information and defensive strategies, please contact Weiss LLP.