SB-597 • 2026

Labor-related liabilities: direct contractor and subcontractor.

Housing Labor

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Cortese
Last action: 2025-10-13
Official status: Chaptered by Secretary of State. Chapter 774, Statutes of 2025.
Effective date: Not listed

Plain English Breakdown

The candidate explanation included a claim about labor-management committees suing for non-payment of health care costs, which is not directly supported by the official source material. The bill text does mention granting standing to sue but does not specify the exact conditions under which this can occur.

Direct Contractor and Subcontractor Labor Liabilities

This law changes how direct contractors are responsible for debts related to labor when they work on building or repairing structures in California, starting from January 1, 2026.

What This Bill Does

Requires direct contractors who make contracts after January 1, 2026, to be responsible for any money owed because of the work done by subcontractors.
Limits this responsibility if the contractor pays fringe benefits like health care through joint checks with the subcontractor.
Expands the definition of a 'direct contractor' to include anyone who hires contractors or subcontractors on behalf of an owner.

Who It Names or Affects

Direct contractors and subcontractors working on building, construction, alteration, or repair projects in California.
Labor-management cooperation committees that can now sue if certain health care payments are not made.

Terms To Know

direct contractor: A company that has a direct contract with the owner of a project to build, construct, alter, or repair buildings and structures.
subcontractor: A company hired by a direct contractor to do part of the work on a construction project.

Limits and Unknowns

The bill does not specify what happens if a direct contractor fails to pay debts after January 1, 2026.
It is unclear how this law will affect existing contracts made before January 1, 2026.

Bill History

2025-10-13 California Legislative Information
Chaptered by Secretary of State. Chapter 774, Statutes of 2025.
2025-10-13 California Legislative Information
Approved by the Governor.
2025-09-17 California Legislative Information
Enrolled and presented to the Governor at 2 p.m.
2025-09-09 California Legislative Information
Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2743.) Ordered to engrossing and enrolling.
2025-09-08 California Legislative Information
In Senate. Concurrence in Assembly amendments pending.
2025-09-08 California Legislative Information
Read third time. Passed. (Ayes 79. Noes 0. Page 3007.) Ordered to the Senate.
2025-09-03 California Legislative Information
Read second time. Ordered to third reading.
2025-09-02 California Legislative Information
Read second time and amended. Ordered to second reading.
2025-08-29 California Legislative Information
From committee: Do pass as amended. (Ayes 11. Noes 0.) (August 29).
2025-08-20 California Legislative Information
August 20 set for first hearing. Placed on APPR. suspense file.
2025-07-16 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 12. Noes 0.) (July 15). Re-referred to Com. on APPR.
2025-07-10 California Legislative Information
From committee with author's amendments. Read second time and amended. Re-referred to Com. on JUD.
2025-07-10 California Legislative Information
From committee: Do pass and re-refer to Com. on JUD. with recommendation: To consent calendar. (Ayes 7. Noes 0.) (July 9). Re-referred to Com. on JUD.
2025-06-27 California Legislative Information
From committee with author's amendments. Read second time and amended. Re-referred to Com. on L. & E.
2025-06-05 California Legislative Information
Referred to Coms. on L. & E. and JUD.
2025-05-29 California Legislative Information
In Assembly. Read first time. Held at Desk.
2025-05-29 California Legislative Information
Read third time. Passed. (Ayes 38. Noes 0. Page 1327.) Ordered to the Assembly.
2025-05-27 California Legislative Information
Ordered to special consent calendar.
2025-05-23 California Legislative Information
Read second time. Ordered to third reading.
2025-05-23 California Legislative Information
From committee: Do pass. (Ayes 6. Noes 0. Page 1206.) (May 23).
2025-05-16 California Legislative Information
Set for hearing May 23.
2025-05-05 California Legislative Information
May 5 hearing: Placed on APPR. suspense file.
2025-04-25 California Legislative Information
Set for hearing May 5.
2025-04-23 California Legislative Information
From committee: Do pass and re-refer to Com. on APPR. with recommendation: To consent calendar. (Ayes 13. Noes 0. Page 836.) (April 22). Re-referred to Com. on APPR.
2025-04-09 California Legislative Information
Set for hearing April 22.
2025-04-09 California Legislative Information
From committee: Do pass and re-refer to Com. on JUD. (Ayes 5. Noes 0. Page 739.) (April 9). Re-referred to Com. on JUD.
2025-03-28 California Legislative Information
From committee with author's amendments. Read second time and amended. Re-referred to Com. on L., P.E. & R.
2025-03-26 California Legislative Information
Set for hearing April 9.
2025-03-05 California Legislative Information
Referred to Coms. on L., P.E. & R. and JUD.
2025-02-21 California Legislative Information
From printer. May be acted upon on or after March 23.
2025-02-20 California Legislative Information
Introduced. Read first time. To Com. on RLS. for assignment. To print.

Official Summary Text

SB 597, Cortese.
Labor-related liabilities: direct contractor and subcontractor.
Existing law requires, for contracts entered into on or after January 1, 2022, 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, to assume, and be liable for, any debt owed to a wage claimant or third party on the wage claimant’s behalf, incurred by a subcontractor at any tier acting under, by, or for the direct contractor for the wage claimant’s performance of labor included in the subject of the contract between the direct contractor and the owner. Existing law defines “direct contractor” for this purpose to mean a contractor that has a direct contractual relationship with an owner.
This bill would apply the above-described provision to contracts entered into on or after January 1, 2022, and before January 1, 2026. The bill would
instead require, 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, to assume, and be liable for, any indebtedness for the performance of labor, as specified. The bill would prohibit a direct contractor from being held liable for the indebtedness with respect to fringe or other benefit contributions if they make contribution payments by joint check, as specified. The bill would define “direct contractor” for this purpose to mean a contractor that has a direct contractual relationship with an owner or any other person or entity engaging contractors or subcontractors, as specified, on behalf of the owner.
Existing law provides for a streamlined, ministerial approval process or use by right
for certain housing developments that meet specified requirements. Existing law requires these developments to meet specified labor standards, including, among other things, making health care expenditures for each employee, as specified. Existing law grants a joint labor-management cooperation committee standing to sue a construction contractor pursuant to the above-described liability provision for failure to make those health care expenditures.
This bill would additionally grant a joint labor-management cooperation committee standing to sue pursuant to the liability provision added by this bill.

Current Bill Text

Read the full stored bill text

Download Bill PDF