(a) (1) For contracts entered into on or after January 1, 2026, a direct contractor making or taking a contract in the state for the erection, construction, alteration, or repair of a building, structure, or other private work, shall assume, and is liable for, any indebtedness for the performance of labor, including that described in subdivision (b) of Section 8024 of the Civil Code, incurred by a subcontractor at any tier acting under, by, or for the direct contractor included in the subject of the contract between the direct contractor and the owner. The direct contractorâs liability under this section shall be limited to payments for labor required by the subcontractorâs agreement with the laborer or the subcontractorâs collective bargaining agreement with the labor organization representing the laborer. (2) Subject to paragraph (3), the direct contractorâs liability under this section shall extend to any indebtedness for labor described in paragraph (1), penalties or liquidated damages, and interest owed by the subcontractor on account of the performance of the labor. (3) The direct contractorâs liability under this section shall extend to penalties and liquidated damages only as follows: If a worker employed by a subcontractor on a private construction project is not paid the wage, fringe or other benefit payment or contribution owed by the subcontractor on account of the workerâs performance of labor on that project, the direct contractor of the project is not liable for any associated penalties or liquidated damages under paragraph (2) unless the direct contractor had knowledge of the subcontractorâs failure to pay the specified wage, fringe or other benefit payment or contribution, or the direct contractor fails to comply with all of the following requirements: (A) The contractor shall monitor the payment by the subcontractor of wage, fringe or other benefit payment or contribution to the employees or the labor trust fund, by periodic review of the subcontractorâs payroll records which, at a minimum, contain the information set forth in subdivision (a) of Section 226, and which are payroll records as contemplated by Section 1174. (B) Upon becoming aware of the failure of the subcontractor to pay the wage, fringe or other benefit payment or contribution to the employees or the labor trust fund, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the private construction project. (C) Prior to making final payment to the subcontractor for work performed on the private construction project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the wage, fringe or other benefit payment or contribution due to the employees or the labor trust fund for all work performed on the private construction project. (4) The Division of Labor Standards Enforcement shall notify the contractor and subcontractor on a private works project within 15 days of the receipt by the Division of Labor Standards Enforcement of a complaint of the failure of a subcontractor on that private works project to pay the specified wage, fringe, or other benefit due to workers. (5) A direct contractor or any other person shall not evade, or commit any act that negates, the requirements of this section. This section does not prohibit a direct contractor or subcontractor at any tier from establishing by contract or enforcing any otherwise lawful remedies against a subcontractor it hires for liability created by any indebtedness for labor described in this subdivision by that subcontractor or by a subcontractor at any tier working under that subcontractor, including liability for associated penalties and liquidated damages. (b) (1) (A) The Labor Commissioner may enforce against a direct contractor the liability created by subdivision (a) p
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