Under the amendments, the WFA now also holds a general contractor responsible when its subcontractor commits a violation.

Recent amendments to Delaware’s Workplace Fraud Act (WFA) broaden the scope of penalties general contractors in construction may incur in connection with worker misclassification. The amendments, which Delaware Governor Matthew Meyer initially vetoed in August 2025, were the subject of a veto override vote by the General Assembly in late January 2026. Under the newly amended statute, general contractors are liable not only for their own misclassification of workers, but also for any misclassification by their subcontractors.

The WFA

The WFA prohibits employers in the construction services industry from misclassifying workers as independent contractors when in fact an employer-employee relationship exists. The overarching purpose of this prohibition is to prevent employers from avoiding obligations associated with employees, such as income tax withholding, unemployment insurance, compliance with wage laws and workers’ compensation.

Penalties under the WFA can include monetary amounts up to $20,000, wage restitution to employees and, for repeat violators, “debarment,” meaning that the violating contractor will not be allowed to bid on, be awarded or receive any public contract for a three-year period. Each instance of misclassification is a separate violation, subject to applicable penalties.

The Amendments

Under the amendments, the WFA now also holds a general contractor responsible when its subcontractor commits a violation. The amendments further provide that a general contractor is jointly and severally liable for penalties resulting from the acts of subcontractors. A general contractor is not, however, subject to debarment for a subcontractor’s violation.

What Employers Need to Know

The newly amended WFA creates potential landmines for general contractors in Delaware, making them responsible when their subcontractors’ worker classifications do not comply with the WFA. The penalties for noncompliance are significant and can result in substantial liability where a subcontractor’s misclassification affects multiple workers.

To avoid concerns about joint employer liability, many general contractors take a hands-off approach to their subcontractors’ classification determinations. Now, Delaware general contractors are well advised to reconsider this approach. There are steps general contractors can take to mitigate the joint employer risk when monitoring their subcontractors’ classification designations. Further, general contractors may consider addressing this risk in their agreements with subcontractors.

For More Information

If you have any questions about this Alert, please contact Jonathan A. Segal, Adam Brown, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.