New Wage Theft Liability Litigation
Very soon Governor Walz is expected to sign into law a new bill that greatly expands parties who may be held liable for wage theft. This new law will take effect on August 1, 2023.
A General Contractor will now assume the liability for wage theft violations of ANY subcontractor regardless of the tier that is acting under the General Contractor ("GC"). No privity (contractual relationship) is required to assume the liability.
The liability cannot be contracted out by an indemnification clause. There is no evading potential liability. If a GC is sued for wage theft violations, then the GC can be held liable without privity between ANY subcontractor.
Any employer who has committed a violation of wage theft may have to pay the employee(s) reasonable costs, disbursements, witness fees, and attorney's fees. This means that if an employer is found liable for wage theft, they will need to pay their own attorney's fees (and any associated costs within), the plaintiff's attorney's fees, along with any fines. The penalties include potential liquidated damages, felony charges, attorney's fees, and related expenses.
These are two exceptions in which this new legislation does not apply. However, there are other ways in which the exception scenarios may still be subject to investigation. The First Exception is for home improvements on single-family dwellings ("SFD") - owner-occupied. This does NOT apply to rental property or HOAs. The Second Exception is for new construction of an SFD OR an owner-occupied two-family dwelling (duplex). The new construction exception does NOT apply when it is the result of more than ten (10) dwellings at one project site annually.
If there are any questions about this new legislation, or any other law affecting your business, please give us a call at 651-330-9678.
We will be hosting an hour-long webinar diving deeper into this topic on June 7th at 12:00 PM CST. If you are interested in joining this event, please email Cindy@northstarlaw.com.