New Legislation on Public Works Contractor Labor Compliance Registration Program

SB 854 (Chapter 28, Statutes of 2014) was signed into law and became effective immediately on June 20, 2014. SB 854 establishes a new public works contractor registration program. These changes are at Labor Code sections 1725.5 – 1776.

All contractors and subcontractors intending to be qualified to bid or be listed in a bid, or perform work on public works projects are now being required to register, and renew their registration annually, online with the Department of Industrial Relations (“DIR”). Registration began on July 1, 2014. (Labor Code section 1725.5(a)(1).) All contractors and subcontractors submitting bids or being listed as a subcontractor on a bid must be registered by March 1, 2015, and only registered contractors and subcontractors will be able to work on contracts awarded on or after April 1, 2015. (Labor Code section 1725.5(e).) The DIR will have a list of registered contractors and subcontractors on its website. (Labor Code section 1771.1(e).) Until the March 1, 2015 bid deadline, and the April 1, 2015 award deadline, districts can continue to accept bids from, and award contracts to, contractors and subcontractors who have not registered under this program.

For school districts and community college districts, the new registration program will mean that the DIR will no longer charge the awarding body for services provided after June 20, 2014 for prevailing wage compliance monitoring and enforcement by the DIR’s Compliance Monitoring Unit (“CMU”). The fees to fund compliance monitoring and enforcement, determine prevailing wage and public works project coverage, and hear appeals will now be paid by the contractors and subcontractors. Contractors will have to pay a $300 registration fee, and an annual renewal fee by July 1 of each year. (Labor Code section 1725.5(a)(1).)

Starting with new contracts awarded on or after April 1, 2015, and for all projects as of January 1, 2016, labor compliance information during a project will be submitted by contractors directly to DIR. (Labor Code section 1771.4(a)(3), (c)(2).)

Existing labor compliance programs remain in effect as to projects funded in whole or in part under Propositions 47 or 55 and awarded before January 1, 2012. (Labor Code section 1771.7(a)(1), (f).) It appears that existing labor compliance programs and requirements remain in effect for other projects currently in progress or to be awarded before April 1, 2015.

An awarding body (district) will be required to electronically submit a PWC-100 contract award notice to DIR within five days of awarding a contract on all projects, subject to SB 854. (Labor Code section 1773.3.)

Starting January 1, 2015, the invitation to bid and the contract documents must specify that the project will be subject to compliance monitoring and enforcement by the DIR. (Labor Code section 1771.4(a)(1), (c)(1).) The awarding body must post, or require the prime contractor to post, specified job site notices. (Labor Code section 1771.4(a)(2).) The invitation to bid and contract documents must specify that all contractors and subcontractors must be registered in accordance with Labor Code section 1725.5, and that no bid can be accepted or contract awarded without proof of the contractor or subcontractor’s current registration. (Labor Code section 1771.1(b).)

The DIR registration will require that the contractor provide evidence of (i) worker’s compensation coverage; (ii) contractor’s license; (iii) no current debarment under the Labor Code or other federal or state law; and (iv) no delinquent liability to an employee or the state for back wages or related damages, interest, fines or penalties pursuant to a final judgment, order, or other determination by a federal, state or local agency or a court, unless the matter is on appeal and has been bonded around. (Labor Code section 1725.5(a)(2).)

Inadvertent listing of an unregistered subcontractor by a prime contractor in a bid can be corrected by the subcontractor being registered prior to or within 24 hours after bid opening, or by substituting out the subcontractor with the consent of the district pursuant to Public Contract Code section 4107. If neither of these occurs, a competing bidder may file a bid protest on the issue, and the district may deem the bid nonresponsive. (Labor Code section 1771.1(c,d).)

Where an awarding body has had a labor compliance program in effect continuously since December 31, 2011, or has a project labor agreement in effect on a project, the DIR “may” exempt a public works project from SB 854. This appears to be on a project by project basis. (Labor Code section 1771.4(b).)

If you have questions or need further information on changes in public works project labor compliance, please contact this office.

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