California has one of the largest state public works budgets in the nation. To get a picture of how much is actually spent in the Golden State, you can look at the Los Angeles County Public Works’ Fiscal Year 2021-22 Final Adopted Budget which was $3.7 billion. The other side of this is compliance, which California is also leading the pack on with a pledge of $30 million more toward public works enforcement in 2022 alone.
While these numbers illustrate that there is a lot of money to be made on government contracts, it also shows the potential risk. After all, the state’s Labor Enforcement Task Force (LETF) said they were stepping up inspections of public works construction sites focusing on:
- Workers’ comp coverage
- Prevailing wage laws
- Skilled and trained workforce requirements
- Health and safety requirements
- State apprenticeship standards
Staying out of hot water with labor law enforcement comes down to fully understanding the laws and keeping up with all of the requirements. This is easier said than done, so we wanted to go over some of the most frequently asked questions about public works in California.
Most frequently asked questions about public works in California
The state’s labor code defines public works as the construction, alteration, demolition, installation, maintenance or repair work done under contract and paid for in whole or part out of public state funds. This includes required pre and post-construction activities related to a project. The following questions cover some common areas of confusion regarding these requirements for contractors in California.
1. What projects fall under prevailing wage requirements in California?
Prevailing wage requirements apply to public works projects valued over $1,000. If a contractor has a portion of the contract that is under this amount, they still must follow all prevailing wage requirements.
2. What does it mean to be a public works contractor under California law?
Every contractor that either bids on a project that requires the payment of prevailing wages or enters into a contract to work on such a project is considered a public works contractor. This means you must be registered as a public works contractor to bid on or work on any eligible project. This includes those acting as subcontractors, sole proprietors and brokers performing work on eligible projects.
3. Who has to register with the Department of Industrial Relations (DIR) as a public works contractor?
You must register with the DIR to bid on or enter into a public works contract. So if you want to start bidding, want to be the prime contractor or want to be a subcontractor on a public works contract you must register with the DIR.
To be a public works contractor in California you must meet the following requirements:
– You must have workers’ compensation coverage and only use subcontractors that are registered public works contractors.
– You must have a Contractors State License Board license if required for your trade.
– You cannot have delinquent unpaid wage or penalty assessments to employees or enforcement agencies.
– You cannot be currently debarred at the federal or state level.
Additionally, if you are found in violation of the registration requirement you are ineligible to register. There is an exception allowed for those facing their first violation of the registration requirement in a 12-month period. In this situation, you can become eligible by paying an additional penalty of $2,000 along with the registration fee.
If you let your registration lapse but are otherwise in good standing, you have a 90-grace period to register and pay a $400 fee.
4. How do you register as a public works contractor in California?
As long as you are qualified, you can register or renew your registration for one, two, or three fiscal years at a time. Fiscal years run from July 1-June 30th. The fee to register is $400 for one year, $800 for two years or $1,200 for three years. You can start the registration process here.
5. Do contractors that only work on federal public works contracts have to register in California?
You do not have to register with the DIR if you only work on federal contracts, even if that work is within the state of California. You would have to register if you work on federally funded or assisted projects that are overseen by California awarding bodies. Essentially, if a contract is fully or partially funded by state funds and falls under state prevailing wage law, you must register with the DIR.
6. Are there any exceptions to the registration requirements?
There are a few exceptions, for instance in some circumstances contractors may submit bids on joint-venture contracts without registering as long as they are registered when the contract is awarded. There are some small project exemptions as well, but to be safe you should contact the DIR with your questions regarding exceptions.
7. When are apprentices required?
Apprentices are required on public works projects of $30,000 and more, even if your part of the contract is lower than this amount. There are a of couple exceptions, for instance, you do not have to use an apprentice if you are a sole proprietor and will do all of the work without any assistance. There are also some crafts or trades that do not require the use of apprentices. You can learn more about apprenticeship requirements here.
8. What is the apprentice ratio on qualifying public works projects?
When apprentices are required, you must have one hour of apprentice work for every five hours worked by a journeyman.
9. When are certified payroll reports required?
All contractors and subcontractors that work on public works projects in California must submit certified payroll reports to the Labor Commissioner. There are a few exceptions to this rule, including the following:
- Small projects may be exempt if they do not exceed $25,000 for new construction, alteration, installation, demolition or repair and $15,000 for maintenance.
- Projects under some labor agreements may also be exempt.
- Projects governed by legacy labor compliance programs do not have to submit certified payroll reports. These legacy programs include:
– California Department of Transportation (Caltrans)
– City of Los Angeles
– Los Angeles Unified School District
– County of Sacramento
10. Do you have to submit certified payroll records to the DIR if you are already required to submit them to a union, prime contractor or other official body?
No matter where else you have to submit them, you must still submit certified payroll records to the DIR. So if you’re required to submit certified payroll reports to the awarding body and union, you still have to submit them to the DIR.
11. How often do certified payroll reports have to be submitted?
You must submit certified payroll reports monthly and they must be submitted within a month after the end of the payroll period. The DIR suggests that weekly submission is the best practice.
12. Under AB 219, if a driver makes deliveries to some non–public works projects and some public works projects, what pay rate should they be paid?
There are no exceptions for paying non-prevailing wage rates if a driver makes stops at both public works and non-public works projects. So if a driver makes multiple stops that include a public works project, the entire delivery and return trip must be paid at the prevailing wage rate.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.