Wage and Benefit Liability for Minnesota Construction Contractors

A recent addition to Minnesota wage protection laws impacts construction contractors and their relationship with subcontractors.  Contractors are now responsible for any failure of their subcontractors who fail to pay their employees earned wages and benefits.  In addition, contractors can also be responsible for penalties and other damages incurred due to the subcontractor’s failure to pay earned wages and benefits.

Not all is lost, as a contractor who is forced to pay subcontractor employees can seek recovery of what it paid in wages, benefits, penalties, and liquidated damages from the defaulting subcontractor.  A contractor also has the right to request the subcontractor’s payroll records to know the status of payment of wages and benefits. Within fifteen days of a contractor’s request, the subcontractor (along with any of its subcontractors) must provide the contractor with its payroll records for all workers providing labor within the scope of the contract.  Along with this, the contractor may also request certain information, including the names of all subcontractors, employees, and independent contractors of the subcontractor on the project, and the anticipated start date and timeframe for completion of the work.

There are some exclusions and exceptions to this wage and benefit responsibility, mostly regarding liability of property owners, collective bargaining agreements, and prevailing wage rates for government projects.  However, if you are a Minnesota construction contractor, these wage and benefit responsibilities more than likely apply to your business.

Minnesota contractors and subcontractors alike will want to have their contracts reviewed by an attorney to ensure they are compliant with the wage law.  The attorneys at Smith Jadin Johnson, PLLC are experienced in providing general counsel to residential and commercial construction contractors.  If you would like to discuss the impacts of the wage law, or any other business-related issues, please contact our office for a consultation.