Bill could make homebuilders pay twice for work
California is grappling with a housing crisis. We are only building half the housing that experts say is needed annually to keep pace, and the resulting supply-demand imbalance is skyrocketing home prices and rents.
Unsustainably high housing costs are making it much harder for small business owners to attract and retain employees. Yet the Legislature keeps pursuing legislation that makes it more expensive and more difficult to build homes in California.
The latest legislation that will further depress housing supply is AB 1701. It will open a Pandora’s box of lawsuits against new housing projects because of the actions of unscrupulous subcontractors.
AB 1701 creates a new legal scheme in which an innocent party would be responsible for the actions of subcontractors who have been paid for their work, but then fail to pay their employees
When general contractors start a housing project, they often hire subcontractors to do specialized work such as framing and electrical. If any of these subcontractors are bad actors and do not subsequently pay their employees, AB 1701 holds the general contractor liable for the wages, forcing the contractor to pay twice for the same labor performed.
Rather than compelling subcontractors to pay their employees, AB 1701 is a “get out of jail free” measure for them and a shakedown on innocent parties who have played by the rules.
What do you think will happen to housing prices if lawmakers open up new opportunities to sue homebuilders for harm they didn’t cause?
Of course workers deserve to be paid for the work performed, but increased litigation in the homebuilding industry is not the solution. It will depress housing supply.
This is yet another example of the Legislature trying to fix a problem that doesn’t exist. To date, there is no evidence that AB 1701 is needed by workers to secure payments in the private residential construction industry.
But the sponsors of the bill, the California Conference of Carpenters, and related interests hold a great deal of sway in the Legislature, so the bill is sailing through without regard to the consequences for home prices and production.
Fewer than one-third of our 39 million Californians can afford the state’s median priced home of $496,620. This crisis widely affects our economy and our environment. It contributes to our highest-in-the-nation poverty rate, eliminates the path to wealth creation for the middle class and forces families to live farther away from jobs in urban areas, increasing commute times and greenhouse gas emissions.
AB 1701 is the latest in a long line of proposals introduced this session that make it more expensive to own or rent a home in California.
Instead of focusing on policies like this, the Legislature should focus on policies that accelerate the pace of adding market rate homes, as research has shown this is the only meaningful path to bringing down prices.
AB 1701 would only take us further away from achieving housing affordability in this state.
Unsustainably high housing costs are making it much harder for small business owners to attract and retain employees. Yet the Legislature keeps pursuing legislation that makes it more expensive and more difficult to build homes in California.