Updates to Prevailing Wage Laws

Feb 2018 08 | Posted by liz.smith

By Mark R. Velasquez, Esq.

Senate Bill 96 was signed into law on June 27, 2017 and became effective immediately.  The bill makes some changes to prevailing wage including the following:

•   The subcontractor list form submitted by bidders for public works contracts must now include the DIR registration number for each listed subcontractor;

•   Public entities now have up to 30 days, instead of five days, to notify the DIR following award of a public works contract;

•   Public entities that fail to comply with certain prevailing wage requirements are subject to penalties up to $10,000 and potential loss of state funding for a year; and

•   Construction contracts under $25,000 and maintenance contracts under $15,000 are now exempt from some prevailing wage requirements, including DIR registration and DIR notification of award.

As a reminder, in 2014 Senate Bill 854 made it a requirement that public entities notify the DIR within five days of award of a public works contract by completing the DIR’s PWC-100 form online at https://www.dir.ca.gov/pwc100ext/.  SB 96 increased this reporting requirement to 30 days.  However, the notification of award must be provided no later “than the first day in which a contractor has workers employed upon the public work.” That means if work begins 10 days after a contract is awarded, a public entity must notify the DIR of the contract award no later than 10 days after the award. The city cannot wait the full 30 days.

SB 96 also requires that the awarding agency’s notification to DIR to include a list of all subcontractors and the DIR registration numbers for the contractor and its subcontractors.  This can be a problem for public works projects that are not subject to bidding requirements, and therefore do not require a subcontractor list form pursuant to California Public Contract Code Section 4104. As such, the contractor should be required to provide the name and DIR registration number for each subcontractor prior to awarding a contract.  Then, confirm the DIR registration numbers on the DIR website at https://efiling.dir.ca.gov/PWCR/Search before awarding the contract.

SB96 now allows for penalties against the public entity, not just the contractor, for failing to comply with the DIR award notification requirements; or permitting an unregistered contractor or subcontractor to work on a project.

Exemptions for Small Contracts: Public works contracts of $25,000 or less for construction, alteration, demolition, installation or repair work and contracts of $15,000 or less for maintenance work are now exempt from:

•   DIR registration requirements for contractors or subcontractors performing the work;

•   Requirements for electronic submission of monthly payroll records to the DIR; and

•   Requirements for DIR notification following award of the contract.16

However, for contracts over $1,000, contractors or subcontractors are still required to pay prevailing wages and otherwise comply with work hours and overtime requirements. In addition, contractors and subcontractors working on these small projects must still maintain certified payroll records for at least three years following completion of the work.

Finally, a city must now withhold final payment due to a contractor until at least 30 days following submission of all of the information required for award notification, including subcontractor information. This requirement is most likely to affect very small projects that are completed in less than a month.