New Law Revamps Prevailing Wage Requirements and Labor Compliance Monitoring

August 2014

Senate Bill 854 (“SB 854”), as signed by Governor Brown, establishes a process to replace the Labor Compliance Program and Compliance Monitoring Unit for all public works projects.  SB 854 requires all contractors submitting bids on public works projects to be registered with the Department of Industrial Relations (“DIR”) for purposes of labor compliance.  With the new legislation, awarding bodies will no longer be charged by the DIR for labor compliance monitoring.  Instead, contractors and subcontractors will be required to pay an annual non-refundable fee, initially set at $300, and meet minimum qualifications such as having workers’ compensation insurance for employees, having an applicable Contractors State License Board license, and having no delinquent or unpaid wage or penalty assessments. 

While the online registration process became available on the DIR’s website starting July 1, 2014, contractor/subcontractor registration will be required for any bid proposal submitted to a public agency on or after March 1, 2015 and will apply to any public works contract entered into on or after April 1, 2015.  The likely intent of this delay is to allow sufficient time for contractors and subcontractors to register and for public agencies to revise their bid solicitations to include language conforming to the new requirements.   

SB 854 will also require contractors and subcontractors on all public works projects to submit certified payroll records to the Labor Commissioner, unless otherwise excused.  This requirement applies immediately to projects that are already under Compliance Monitoring Unit monitoring, and will apply to all new projects awarded on or after April 1, 2015.  All other public works projects, whether new or ongoing, will be subject to this requirement as of January 1, 2016.  (See Labor Code § 1771.4.)

Further, SB 854 now requires all K-12 and community college districts to notify the DIR within five days of awarding a contract on any public works project by submitting the form PWC-100.  The notice must specify the name of the contractor, any designated subcontractors, the bid and contract award dates, the contract amount, the estimated start and completion dates, job site location, and any other information requested by the DIR.  (See Labor Code § 1773.3.)  The new application for the PWC-100 can be accessed here.

Beginning January 1, 2015, K-12 and community college districts must include provisions in their invitations for bids and contract documents that (1) no contractor or subcontractor may be listed on a bid proposal for a public works project submitted on or after March 1, 2015 unless it has registered with the DIR; (2) no contractor or subcontractor may be awarded a contract on a public works project on or after April 1, 2015 unless it has registered with the DIR; and (3) the project is subject to compliance monitoring and enforcement by the DIR.  In anticipation of these deadlines, districts should become familiar with the new rules and establish processes and timelines for updating their bid documents. 

If you have any questions regarding this matter, please call one of our six offices.

F3 NewsFlash prepared by Kathleen A. McKee, Leslie A. Reed, Luke P. Boughen and John W. Norlin.

Kathy is a partner in the F3 San Diego office.
Leslie is an associate in the F3 San Diego office.
Luke is an associate in the F3 San Diego office.
John is Special Counsel in  the F3 San Diego office.

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