September 30, 2010
The following Connecticut statutes impacting the construction industry become effective October 1, 2010:
Retainage
Under Public Act 10-148, the maximum allowable retainage that can be held on most private construction contracts and subcontracts has been reduced from 7.5% to 5%. The law applies to any construction contract or subcontract, except for those involving: (1) public works or buildings of the federal, state or municipal governments; (2) projects funded or insured by the Department of Housing and Urban Development; (3) contracts between an owner and a contractor for less than $25,000 and related subcontracts; and (4) buildings intended for residential occupancy containing four or fewer units.
Employee Misclassification
Public Act 10-12 involves misclassifying employees as independent contractors. Under prior law, employers who misrepresented the number of their employees or misclassified employees as independent contractors in order to defraud an insurance company to pay lower worker’s compensation premiums was guilty of a felony, subject to a stop work order, and liable for civil penalties of $300 per violation. The new law increases the penalty by specifying that each day of the violation is a separate offense. Public Act 10-12 also extends the law to include those employers who defraud the state as well as independent insurance companies.
Civil Action for Failure to Pay Prevailing Wages
Under Public Act 10-47, any contractor required by the Department of Labor to pay prevailing wages or benefits as a result of its subcontractor’s failure to pay such wages and benefits to its employees, may sue the subcontractor in superior court to recover the amount required to be paid, plus costs and reasonable attorneys’ fees.
Should you have any questions with regard to the above, please contact your attorney or an attorney in our Construction practice group.
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