Starting January 1, 2027, Connecticut General Contractors Will Answer for Their Subcontractors’ Unpaid Wages, by Andrea Strain, Esq., 10-26-2026

* This is the third in a series of articles that will address Connecticut employer’s obligations related to recently enacted laws. 

As contractors finalize bids and subcontract forms for the 2027 building season, a new Connecticut law should be on the review list. For private construction contracts entered into on or after January 1, 2027, a general contractor will be jointly and severally liable for any unpaid wages owed to a subcontractor’s employees for work within the scope of the contract. Public Act 26-12, Sections 55 and 56, creates that liability, gives subcontractor employees a direct right to sue the contractor under Connecticut’s wage payment statute, and makes contract provisions that waive the liability unenforceable.

Who is covered

The act defines a “contractor” as any business entity, including a construction manager, general or prime contractor or joint venture, that has a direct contractual relationship with the owner. A “subcontractor” is any entity without a direct contract with the owner that works within the scope of the construction contract, at any tier. The liability therefore runs from the top of the project to employees of subcontractors several tiers down.

A covered “construction contract” is any contract or subcontract entered into on or after January 1, 2027 for construction, renovation or rehabilitation in Connecticut, including associated improvements to real property. Two categories are excluded:

• public works and other contracts with a state, federal or other governmental agency or department, which remain subject to the prevailing wage framework; and
• home improvement contracts for an owner-occupied residence or a one- or two-family dwelling, unless the contract is for construction of more than fifteen one- or two-family dwellings at one project site.

How a claim works

When a subcontractor fails to pay an employee wages for labor within the scope of a covered contract, the employee, or a union representing the employee, may sue the subcontractor, the contractor or both under Conn. Gen. Stat. § 31-72, as amended by Public Act 26-12, Section 56. Section 31-72 provides for twice the unpaid wages, plus costs and reasonable attorney’s fees, unless the employer shows a good faith belief that the underpayment complied with the law, in which case recovery is limited to the wages owed, with costs and fees.

Before suing a contractor, whether alone or jointly with the subcontractor, the employee must give the contractor at least thirty days’ notice describing the general nature of the alleged violation. No notice is required if the employee previously notified the contractor of the same violation or of a prior violation by the same subcontractor. Notice does not limit the contractor’s liability, and the action may later be amended to add other employees of the same subcontractor.

What contracts can and cannot do

A contractor may still include a remedy in its subcontract for liability caused by a subcontractor’s failure to pay wages, including a provision allowing that liability to be paid from retainage. For contracts entered into or renewed on or after January 1, 2027, however, such a provision may not diminish the employee’s right to sue under § 31-72 or waive or release the contractor’s liability. Any provision that purports to do so is unenforceable. In practice, the contractor’s protection lies in shifting the cost back to the subcontractor, not in avoiding the claim.

Practical implications

Because the contractor’s liability depends on how its subcontractors handle payroll, the most effective protection is careful subcontractor selection, contract terms that shift the cost back to the subcontractor, and documentation of wage payment throughout the project. Contractors should also confirm with their broker how wage claims are treated under their insurance program.

What contractors should do now

• Revise 2027 subcontract forms to require certified payroll or wage-payment certifications with each payment application, and give the contractor the right to audit payroll records at every tier.
• Add indemnification and defense obligations for wage claims, and provide for withholding or using retainage to satisfy unpaid wages.
• Require subcontractors to flow the same terms down to their own subcontractors.
• Strengthen subcontractor prequalification to address payroll practices, prior wage claims and financial capacity, and consider payment bonds from higher-risk subcontractors.
• Designate a person to receive and act on employee wage notices, and calendar the thirty-day notice period whenever one arrives.

Review insurance coverage for wage claims with your broker before the new contracts are signed.

To read a preview of the laws in a previous roundup, click here.

Author: Andrea Strain, Westchester and Connecticut Of Counsel