H. B. 4614
(By Delegate Jenkins)
[Introduced February 27, 1998; referred to the
Committee on the Judiciary.]
A BILL to amend and reenact section seven, article five, chapter
twenty-one of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to prime
contractors' liability for wages and benefits of the
employees of subcontractors; requiring certification from
the subcontractor to limit such liability; requiring
notification of failure to pay wages and fringe benefits by
subcontractors; and permitting termination of a subcontract
to continue liability of the primary contractor.
Be it enacted by the Legislature of West Virginia:
That section seven, article five, chapter twenty-one of the
code of West Virginia, one thousand nine hundred thirty-one, as
amended, be amended and reenacted to read as follows:
ARTICLE 5. WAGE PAYMENT AND COLLECTION.
§21-5-7. Prime contractor's responsibility for wages and
benefits.
(a) For the purposes of this article, the following applies:
(1) The term "primary contractor" means an employer who
subcontracts with other employees for the performance of any work
which the primary employer is obligated to perform. The term
"subcontractor" means an employer with whom the primary
contractor subcontracts.
(2) This section applies only to subcontractors with whom a
primary contractor has a contract for any work for a period
longer than thirty days, or for consecutive periods of work that
total more than thirty days.
(3) This section does not apply to a primary contractor in
relation to subcontractors: Provided, That a subcontractor can
become a primary contractor with regard to other employers with
whom it subcontracts.
(b) Whenever
any person, firm or corporation a primary
contractor shall contract contracts with
another a subcontractor
for the performance of any work which the
prime contracting
person has undertaken primary contractor is obligated, to perform
for another the
prime primary contractor shall become civilly
liable to employees
of the subcontractor engaged in the
performance of work under
such contract the subcontract for the payment of wages and fringe benefits, exclusive of liquidated
damages as provided in
subsection (e), section four of this
article, to the extent that the
employer of such employee
subcontractor fails to pay such wages and fringe benefits.
Provided, That such employees have exhausted all feasible
remedies contained in this article against such employer, but if
the prime contractor has failed to notify the commissioner as
required by section sixteen of this article, then the employee
shall not be required to exhaust any remedies against the
employer: Provided, however, That such employer shall become
civilly liable to such prime contractor for any sum of money paid
by him under this section
(c) A primary contractor is not liable for any unpaid wages
under subsection (b) of this section if it obtains from the
subcontractor, prior to the initial performance of any work by
the employees of the subcontractor, a certificate stating that
the subcontractor has paid all wages and fringe benefits due and
payable. To continue to avoid liability, the primary contractor
shall obtain from the subcontractor a new certificate on the
first day of each month until the end of the term of the
subcontract. The certificate shall be on a form prescribed by
the commissioner. Failure to obtain the certificate shall result
in the primary contractor being equally liable with the subcontractor for the payment of wages and fringe benefits as set
forth in subsection (b) of this section: Provided, That the
primary contractor is not liable for any period in which the
certificate was obtained: Provided, however, That the employees
to whom wages and fringe benefits are due are entitled to collect
only once for the amounts due them under the subcontract.
Where a subcontractor fails to provide a primary contractor
with a certificate upon request under the provisions of
subsection (c), subdivision (1) of this section, the primary
contractor has fourteen days to terminate the subcontract in
order to continue to avoid liability under subsection (b) of this
section. In the event the subcontract is not terminated, the
primary contractor is liable to the employees of the
subcontractor for wages and fringe benefits accrued during any
period in which the primary contractor failed to obtain a
certificate from the subcontractor.
(d) In the event of failure by the subcontractor to pay wages
and fringe benefits to its employees, the employees have sixty
days from the date on which the wages and fringe benefits were
due in which to notify the commissioner of the subcontractor's
failure to pay. When the commissioner receives notification
under subsection (d), subdivision (1) of this section of the
subcontractor's failure to pay wages and fringe benefits, the commissioner shall notify the primary contractor of the failure
within seven days after receiving the notification from the
employees. The commissioner shall notify the primary contractor
by mailing the notice by first class United States mail, postage
prepaid, and addressed to the primary contractor at the address
furnished to the commissioner by the primary contractor. The
mailing shall be considered good and sufficient notice to the
primary contractor of the subcontractor's failure to pay.
When the primary contractor receives notice from the
commissioner as set forth under this section, the primary
contractor has fourteen days to terminate the subcontract in
order to continue to avoid liability. In the event the
subcontract is not terminated, the primary contractor is liable
to the subcontractor's employees for wages and fringe benefits
accrued during any period in which the primary contractor failed
to obtain a certificate from the subcontractor.
(e) When a subcontractor fails to discharge its payment
obligations under this article, the failure shall be considered
good cause for a primary contractor to hold the subcontractor
responsible and to seek reimbursement or indemnification for any
amounts paid on behalf of the subcontractor in relation to unpaid
wages and fringe benefits, including, but not limited to,
reasonable attorneys' fees, and to terminate its subcontract with the subcontractor notwithstanding any provision in the
subcontract to the contrary.
(f) This section is applicable only to contracts entered into
or extended on or after the first day of July, one thousand nine
hundred ninety-nine. Subsections (c) through (e) of this section
are applicable only to those employees who have complied with the
notification provisions of section sixteen of this article.
NOTE: The purpose of this bill is to clearly delineate the
liability of subcontractor for the payment of wages and benefits.
It also establishes time lines for the filing of claims so that
resolution can be timely.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that
would be added.