Public Works Reforms (SB 854) - Important Information for Awarding Bodies

The public works reforms brought about by Senate Bill 854 (Stat. 2014, chapter 28) made several changes to the laws governing how the Department of Industrial Relations (DIR) monitors compliance with prevailing wage requirements on public works projects. Some of these changes modify the responsibilities of awarding bodies, including by eliminating the obligation to pay DIR for compliance monitoring on state bond-funded projects. Some of SB 854's changes went into effect immediately (because the bill was adopted as an urgency measure), but others will be phased in as outlined below.

The awarding body (AB) is still responsible for administering its project and ensuring that public funds are used appropriately. As partners with DIR’s Public Works Enforcement team, ABs must also ensure that all public works contractors are in compliance with all labor laws.

Some aspects of the reforms went into effect immediately, while others were phased in.

• Duty to notify DIR when awarding a contract for a public works project, using the online PWC-100 form. This requirement, found in Labor Code Section 1773.3, now applies to all public works projects. Previously it applied to projects subject either to apprenticeship or DIR compliance monitoring requirements.
• Elimination of the obligation to pay DIR for compliance monitoring on state bond-funded projects and other projects that required use of DIR's Compliance Monitoring Unit (CMU). As of June 20, 2014 (the effective date of the public works reforms), DIR continues to monitor compliance on these projects but does not charge awarding bodies for any services provided. The alternative of using a DIR-approved Labor Compliance Program (LCP) or a project labor agreement in lieu of the CMU on one of these projects was also eliminated. However, for ongoing projects that were using one of the alternatives, monitoring should continue until the project is completed.

I. PUBLIC WORKS CONTRACTOR REGISTRATION PROGRAM

• All contractors and subcontractors who bid or work on a public works project must register and pay an annual fee to DIR. The phase-in timetable is as follows:

• Once the registration requirement becomes mandatory (March 1, 2015 for bids and April 1, 2015 for projects awarded), an awarding body may not accept a bid or enter into a contract for public work with an unregistered contractor.
  • DIR maintains an up-to-date listing of registered contractors.
  • A CSLB license is not required in order to register
  • Additional exceptions and protections are included in the registration laws to limit bid challenges, allow some violations to be cured through payment of penalty fees, and allow unregistered contractors to be replaced with registered ones.

  II. NOTICE REQUIREMENTS

  • January 1, 2015: The call for bids and contract documents must include the following information:
    • No contractor or subcontractor may be listed on a bid proposal for a public works project (submitted on or after March 1, 2015) unless registered with the Department of Industrial Relations pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a)].
    • No contractor or subcontractor may be awarded a contract for public work on a public works project (awarded on or after April 1, 2015) unless registered with the Department of Industrial Relations pursuant to Labor Code section 1725.5.
    • This project is subject to compliance monitoring and enforcement by the Department of Industrial Relations.

    III. FURNISHING OF ELECTRONIC CERTIFIED PAYROLL RECORDS TO LABOR COMMISSIONER

    • All contractors and subcontractors must furnish electronic certified payroll records directly to the Labor Commissioner (aka Division of Labor Standards Enforcement). The phase-in timetable for this requirement is as follows:

    June 20, 2014: Any project that was being monitored by the CMU/Labor Commissioner prior to the adoption of SB 854 will continue to be monitored by the Labor Commissioner afterward; and the contractors on those projects must continue to furnish certified payroll records to the Labor Commissioner until the project is complete.

    April 1, 2015: For all new projects awarded on or after this date, the contractors and subcontractors must furnish electronic certified payroll records to the Labor Commissioner.

    January 1, 2016: As of this date, all contractors (except those listed as Exemptions just below) must furnish electronic certified payroll records to the Labor Commissioner in our eCPR data system.

    Exemptions: As of April 1, 2015, and even after January 1, 2016, the following projects are exempt from the requirement to have contractors and subcontractors furnish certified payroll records (CPRs) to the Labor Commissioner:

    Any projects monitored and enforced by the following legacy LCPs:

    • California Department of Transportation (Caltrans)
    • City of Los Angeles
    • Los Angeles Unified School District
    • County of Sacramento

    Projects covered by qualifying project labor agreements, at the Labor Commissioner’s discretion.

    These new requirements will apply to all public works that are subject to the prevailing wage requirements of the Labor Code, without regard to funding source.

    Ongoing projects that were subject to Labor Compliance Program (LCP) or Compliance Monitoring Unit (CMU) requirements prior to the adoption of SB 854 :

    Older projects (contract for public work was awarded prior to January 1, 2012): The LCP requirements and alternatives that applied to projects funded by Propositions 47, 55, or 84 and to certain design-build projects remain in effect. These monitoring and compliance requirements must continue to be observed through the end of the project, even if the Labor Commissioner starts monitoring the project pursuant to SB 854.

    More recent projects (contract for public work was awarded on or after January 1, 2012): All requirements for state bond-funded projects and other design-build and specially authorized projects to use the CMU or a specified alternative have been repealed. However, it is important to note the following:

    • Any project that was being monitored by the CMU/Labor Commissioner prior to the adoption of SB 854 will continue to be monitored by the Labor Commissioner after; and the contractors on those projects must continue to furnish certified payroll records to the Labor Commissioner until the project is complete.
    • Bond funding agencies (such as the State Allocation Board) may still require that awarding bodies demonstrate past compliance with DIR requirements in order to qualify for retroactive funding. In particular, awarding bodies may need to show that they notified DIR of the project using the PWC-100.
    • The LCP requirement for past, present, and future projects funded by Proposition 84 (Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006) remains in effect. This LCP requirement must continue to be observed, even if the Labor Commissioner also monitors the project pursuant to SB 854.

    All awarding bodies continue to share responsibility to monitor and enforce compliance on public works and should review the Labor Commissioner's precautionary notice (www.dir.ca.gov/DLSE/PrecautionaryLegalNoticetoAwardingBodies.html).

    Questions about this notice may be sent to publicworks@dir.ca.gov

    For additional information about public works requirements, please visit the DIR website.