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tax laws, regarding compliance with such laws. These are powerful risk shifting laws which has led to an outcry for remedies to fix ultimate responsibility on the culpable subcontractor and reimburse the payor. The problem is that the culpable subcontractor will, in all likelihood, be unable to pay the debt or the fine assessed, otherwise there would be no liability to shift. In this way, the State has now made guarantors out of contractors for all those below them in the chain of contract.

So, what can contractors do to protect themselves from their subcontractor’s (presumably) unknown behavior? Well, the ultimate answer remains unknown at this point in time, but here are our thoughts: First, every subcontract should have a properly drawn indemnification clause that imposes liability on the subcontractor for all losses on account of the subcontractor or it’s lower-tier subcontractors’ failure to obey the labor and tax laws, referenced above. Second, contractors should investigate the purchase of a stand-alone wage and our insurance policy, or if possible, a wage and hour extension coverage endorsement to their present employment practices liability policy (EPL). Finally, a contractor can contractually require the lower tiered subcontractors to provide certified payroll reports on a regular basis, thereby making the subcontractor swear to compliance with New Jersey’s wage and hour laws.

If you or someone you know has questions about New Jersey Wage and Hour laws, contact the attorneys at R.C. Shea and Associates. P.C. (732) 505-1212.