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New Defense to Joint Liability Available to Contractors
By Kelly J. Bundy, R. Webb Moore, Courtney Moates Paulk, Nathaniel L. Story, Jaime B. Wisegarver on 04.19.2021
Posted in Contracts, Fair Labor Standards Act, FLSA, Lien Waivers
New Defense to Joint Liability Available to Contractors
By now most contractors are aware of the impact of Virginia Code 11-4.6. Enacted in 2020, general contractors are liable if their subcontractors fail to properly pay their employees. The General Assembly modified this statute last month and general contractors should be aware of this revision. 
 
The statute, as modified, provides that a general contractor may provide a “certification” as evidence that they did not know, and had no reason to know, that their subcontractors were not properly paying employees. The general contractor must obtain this written certification from their subcontractor. The certification must be signed by the subcontractor, under oath, and state that the subcontractor and its sub-subs, paid all of their employees all wages due for work performed on the project. 
 
General contractors should review this new statute and update their subcontracts and lien waivers accordingly. While the new provision applies expressly to general contractors, if subcontractors are brought into a lawsuit or proceeding under a theory of joint liability, they should have room to argue that this new provision protects them too. Thus, subcontractors should consider reviewing and updating their subcontracts and lien waivers as a result of this new legislation.
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