California is no stranger to labor laws and strong enforcement efforts, but they are serious about doing more this year. In January, the Labor Enforcement Task Force (LETF) announced a new initiative specifically aimed at publicly funded construction sites. Their focus is on enforcing labor laws, with special attention to the many laws and regulations that govern prevailing wage work. Additionally, they are going to take a closer look at workers’ compensation coverage to ensure construction companies are adequately covered.
Here’s what is happening
On January 26, LETF said they would be stepping up inspections of public works construction sites with a focus on the following areas:
- Workers’ comp coverage
- Prevailing wage laws
- Skilled and trained workforce requirements
- Health and safety requirements
- State apprenticeship standards
While California has a strong history of labor laws and enforcement, the timing of this push is not random. Funds to support the increase in public works enforcement comes from California’s Budget Act of 2022, which pours around $30 million dollars into the DIR for various areas of enforcement.
The initiative also comes after several new labor laws were signed into California law, including Assembly Bill No.1003. This bill was signed into law in September of 2021, and it makes intentional wage theft punishable as grand theft if it is over $950 for a single employee, or more than $2,340 for two or more employees within 12 consecutive months.
What is LETF?
The Department of Industrial Relations’ (DIR) Labor Enforcement Task Force (LETF) is actually a coalition of various enforcement agencies that work together. This includes the Division of Occupational Safety and Health (Cal/OSHA), the Labor Commissioner’s Office, the Contractors State Board and other enforcement partners.
Their stated goal is to fight the underground economy, which they define as businesses that operate in a way that gives them an unfair advantage by not obeying tax and labor laws. This includes everything from wage theft and licensing issues to illegal business practices.
The DIR says that public works contractors will not be negatively impacted by enforcement activity if they are complying with the laws. That doesn’t take into account, however, the potential disruption caused by an inspection.
What is a LETF inspection like?
A LETF inspection usually takes around an hour, during which a team of inspectors from various agencies will review your records and interview you and some of your employees. They will announce the visit when they arrive on site, and once the inspection is complete, they will have an exit conference. During the exit conference you’ll receive the results of the inspection, including any violations found and any citations issues.
Here are some things you should know and expect should your site be visited by an LETF inspection team:
- A LETF inspection can occur with or without a compliant.
- If a LETF inspection team shows up at your business, you are required to allow them access under California Labor Code, section 90.
- You are required to provide inspectors with the records they request as long as they request them during your normal business hours.
LETF inspection teams include a member from the Division of Occupational Safety and Health (DOSH). Before the inspection starts, they will ask for permission to look for health and safety issues. If serious, willful or repeat health and safety laws are found, they can issue citations as well.
If you refuse to let them conduct the inspection, or comply with requests for records and access, an inspection warrant may be granted.
Some of the records you may be asked to produce include, but are not limited to:
- Time and payroll records
- Proof of any applicable licenses
- Proof of workers’ comp insurance covered
- All required postings, both state and federal labor laws
The manager on site will be interviewed regarding various topics related to labor laws, health and safety practices, payroll practices, licenses and other relevant topics. Employees will also be interviewed at the discretion of the inspection team.
What can you do?
While there isn’t anything you can do to prevent an inspection, you can make it easier for your company to stay compliant.
Here are a few steps you can take to proactively stay ahead of compliance regulations and streamline your internal compliance processes.
1. Prioritize ongoing compliance education.
Stay up to date with laws and regulations by making education a priority for your team. The DIR has public works resources and also hold prevailing wage seminars. These are free and convenient since they are currently only offered online.
2. Understand and eliminate common errors
There are areas where mistakes are especially common, like tracking changes in work classifications and selecting wage determinations. If you eliminate these common errors first, there will be more time to deal with larger issues.
3. Create standard compliance processes.
Standardize all payroll and compliance related activities so that the same steps are repeated every payroll and reporting cycle. This will save time, but also helps reduce mistakes of omission.
4. Strengthen recordkeeping processes
Your records are the key to demonstrating compliance, and they also receive a good deal of scrutiny in an investigation. Make sure you understand your obligations and that your record keeping practices are up to standard.
5. Use software to stay compliant
Payroll and compliance software designed for construction companies can streamline your processes and help correct and avoid issues that lead to violations. Look for software that includes a full range of services, from time tracking through reporting, to further reduce manual processes and errors.
Additional resources for California contractors:
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.