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What Is California Labor Code §2810 (Labor-Contract Due Diligence)?
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By Eman Yazdchi, Esq. · Certified Specialist in Workers' Compensation Law, State Bar of California Board of Legal Specialization · Cal Bar #285231
(a) A person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, port drayage motor carrier, or warehouse contractor, if the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.
What does California Labor Code §2810 actually require?
Section 2810 bars a hiring entity from entering a labor contract it knows lacks funds to cover wages, workers' comp, and statutory labor-law costs.
Section 2810 is the rule that a general contractor or hiring entity cannot enter a labor contract it knows lacks funds to cover wages, workers' compensation premiums, and labor-law costs, exposing the upstream party to joint liability when the subcontractor defaults. Workers who go unpaid or uninsured have a direct claim against the hiring entity. Certified Specialist Eman Yazdchi (California Board of Legal Specialization, State Bar of California) pursues section 2810 claims.
California Labor Code §2810 bars a California person or entity from entering a construction, farm-labor, garment, janitorial, security-guard, port-drayage, or warehouse labor contract when it knows or should know the contract lacks funds sufficient for the contractor to comply with wage, workers' compensation, and other labor-law obligations. The §2810 California rule pushes responsibility upstream, a general contractor cannot turn a blind eye to a subcontractor's underfunded bid and disclaim responsibility when wages go unpaid or injured workers are denied coverage.
Which California industries are covered by §2810?
Covered industries include construction, farm labor, garment, janitorial, security guard, port drayage, and warehouse, the highest-risk misclassification sectors in California.
California Labor Code §2810 covers seven specific California industries: construction, farm labor, garment, janitorial, security guard, port drayage (trucking from port terminals), and warehouse. These industries were chosen by the legislature because of historical patterns of subcontracted labor and wage / comp violations. A §2810 California claim arises when an upstream entity enters a labor contract knowing, or where it should have known, the contract's funding cannot cover the subcontractor's wage and comp obligations.
How does §2810 connect to California workers' comp under §3700?
The section 2810 claim travels to the Labor Commissioner or civil court alongside any workers' comp claim the uninsured subcontractor worker has.
Under California Labor Code §3700, every California employer must carry workers' compensation insurance. Under California Labor Code §2810, the upstream California hiring entity has a due-diligence duty when entering a labor contract in a covered industry. When a §2810 contract is underfunded such that the subcontractor cannot carry §3700 comp insurance, the §2810 violation exposes the upstream entity to civil liability. If a worker is injured and the subcontractor is uninsured, California Labor Code §3706 also opens civil court against the uninsured contractor.
What does a California §2810 claim actually look like?
A section 2810 case study looks like a general contractor hiring a framing sub that fails to carry workers' comp, the GC faces joint liability.
A California §2810 claim typically arises after a worker is injured on a job covered by a labor contract, a construction subcontract, a farm labor contract, a janitorial contract, a port-drayage agreement, and the immediate employer turns out to be uninsured for workers' compensation under California Labor Code §3700 or unable to pay wages. The injured California worker (or unpaid worker) can sue the upstream contracting entity under §2810 when the contract was facially underfunded and the upstream entity knew or should have known.
How does §2810 connect to California §2775 misclassification?
Section 2810 interacts with the section 2775 ABC-test misclassification rule that converts independent contractors into employees for coverage purposes.
Under California Labor Code §2810 and California Labor Code §2775, the California labor-contract due-diligence rule and the ABC test work together against upstream entities that use chains of subcontractors and "1099" labels to avoid responsibility for worker safety and comp coverage. A general contractor that subcontracts through a labor middleman who labels workers "1099 contractors", when §2775 ABC would classify them as employees, can face §2810 California liability plus §2775 misclassification liability.
The California Division of Labor Standards Enforcement (DLSE) 2024 enforcement report recovered more than $50 million in stolen wages from unlicensed contractors in construction, agriculture, and garment, the same cohort California Labor Code §2810 reaches. The CHSWC 2024 report estimates approximately 27% of California construction workers operate under contractors that are under-insured or unlicensed for workers' comp purposes. More context: the California workers' comp pillar and the uninsured-employer civil action under California Labor Code §3706 at the §3706 explainer.
Related on yazdchilaw.com: California workers' compensation lawyer pillar · California Labor Code §5400.30 explained · California Labor Code §3700.6 explained · what to do if you can't go back to work after a workers' comp injury.
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Tap to call →Frequently Asked Questions
What does California Labor Code §2810 actually require?
California Labor Code §2810 bars a California person or entity from entering a construction, farm-labor, garment, janitorial, security-guard, port-drayage, or warehouse labor contract when it knows or should know the contract lacks funds sufficient for the contractor to comply with wage, workers' compensation, and other labor-law obligations. The California §2810 rule pushes responsibility upstream, a general contractor cannot turn a blind eye to a subcontractor's underfunded bid and then disclaim responsibility when injured workers are denied comp coverage or wages go unpaid.
Which California industries does §2810 actually cover?
California Labor Code §2810 covers seven specific California industries: construction, farm labor, garment, janitorial, security guard, port drayage (trucking from port terminals), and warehouse. These California industries were chosen by the legislature because of historical patterns of subcontracted labor and wage / comp violations. A §2810 California claim arises when an upstream entity enters a labor contract knowing, or in circumstances where it should have known, the contract's funding cannot cover the subcontractor's wage and workers' compensation obligations under California law.
How does California §2810 connect to workers' comp under §3700?
Under California Labor Code §3700, every California employer must carry workers' compensation insurance. Under California Labor Code §2810, the upstream California hiring entity has a due-diligence duty when entering a labor contract in a covered industry. When a §2810 contract is underfunded such that the subcontractor cannot carry §3700 comp insurance, the §2810 violation exposes the upstream entity to civil liability. If a California worker is then injured and the subcontractor is uninsured, California Labor Code §3706 opens civil court against the uninsured contractor and §2810 against the upstream actor.
What does a California §2810 claim actually look like in practice?
A California §2810 claim typically arises after a worker is injured on a job covered by a labor contract, a construction subcontract, a farm-labor contract, a janitorial contract, a port-drayage agreement, and the immediate California employer turns out to be uninsured for workers' compensation under California Labor Code §3700 or unable to pay wages owed. The injured California worker (or unpaid worker) can sue the upstream contracting entity under §2810 when the contract was facially underfunded for §2810 compliance and the upstream entity knew or should have known.
How does California §2810 connect to §2775 misclassification?
Under California Labor Code §2810 and California Labor Code §2775, the California labor-contract due-diligence rule and the ABC test work together against upstream entities that use chains of subcontractors and "1099" labels to avoid responsibility for worker safety and comp coverage. A California general contractor that subcontracts work through a labor middleman who in turn labels workers "1099 contractors", when the §2775 ABC test would classify them as employees, can face §2810 liability for the upstream contract plus §2775 misclassification liability for the underlying employment relationship.
Last reviewed by Eman Yazdchi, Esq., June 2026.
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