Governor Signs Leyva Bill Strengthening State Enforcement of Wage Theft Violations in California

SB 727 Empowers Authorities To More Easily Cite Bad Actors in Construction Industry

Monday, September 27, 2021

SACRAMENTO – Earlier today, Governor Gavin Newsom signed Senate Bill 727, a measure authored and championed by Senator Connie M. Leyva (D-Chino) to provide necessary enforcement tools to more effectively deter continued wage theft in the underground construction economy.

With the implementation of AB 1701 (Thurmond) in 2018, a direct contractor is already jointly liable for unpaid wages, benefit payments or contributions owed to a worker or labor trust fund by a subcontractor.  Senate Bill 727 extends the direct contractor liability to include penalties and liquidated damages for unpaid wages, including fringe benefits or contributions to labor trust funds. The measure also establishes a mechanism for direct contractors to avoid liability for penalties and liquidated damages by showing that the underlying violation has been fully abated.

“Governor Newsom’s signature of SB 727 will further empower authorities to go after the bad actors in the construction industry, since they hurt both workers and the responsible contractors that play by the rules and make sure that their workers are paid on time,” Senator Leyva said.  “It is long overdue that we treat wage theft in the construction industry similar to how we already do in other industries.  All California workers deserve to be promptly and correctly paid for their hard work, so I thank the Legislature and Governor for again standing with workers by protecting them from wage theft.”

Unscrupulous contractors that do not play by the rules have an illegal and unfair advantage over honest contractors and undermine wages and working conditions throughout the industry.  Unfortunately, since there is minimal cost to a general contractor willing to risk being caught, current law fails to serve as sufficient deterrence to continued cheating. Some opportunistic contractors—operating in the underground economy with dishonest subcontractors—would unfortunately keep conducting business as usual without the enhanced enforcement tools that SB 727 provides.

Supported by the California Conference of Carpenters, Carpenters / Contractors Cooperation, Los Angeles County Young Democrats, Northern California Carpenters Regional Council, Southwest Regional Council of Carpenters, State Building and Construction Trades Council of California, Senate Bill 727 will take effect on January 1, 2022.