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Compliance Monitoring Unit (CMU)
Frequently asked questions
Topics on this page include:
Frequently Asked Questions on Filing Certified Payroll Records with the Compliance Monitoring Unit
Q1: What is the Compliance Monitoring Unit (CMU)?
A: The Compliance Monitoring Unit or "CMU" is a new component within the Department of Industrial Relations (DIR), Division of Labor Standards Enforcement (DLSE), Public Works Unit that was created to monitor and enforce prevailing wage requirements on certain public works projects.
Q2: Why was the Compliance Monitoring Unit (CMU) Created?
A: The use of Labor Compliance Programs (LCPs) that was required for bond-funded and other types of prevailing wage projects over the past decade came to be viewed as a flawed enforcement model. In 2009, legislation known as SBX2-9 was adopted to require the DIR to monitor and enforce prevailing wage compliance on all state bond-funded projects and other projects for which a LCP previously had been required. To carry out this function, DLSE has been tasked with monitoring applicable public works projects from the beginning to completion through the Public Works Compliance Monitoring Unit (CMU).
The CMU originally was supposed to begin operating after implementing regulations were adopted in 2010. However, due to legal concerns over the consistency of SBX2-9 with bond requirements, the regulations and the CMU were suspended pending the adoption of statutory amendments. The necessary statutory amendments were then enacted through the adoption of AB 436 (Stats. 2011, ch. 378), DIR modified its regulations to conform to the new legislation. The statutory and regulatory amendments became effective, and the CMU finally began operating on January 1, 2012.
Q3. How does the CMU differ from an LCP?
A: The CMU will perform many of the same functions that LCPs perform, with the exception that the CMU will not conduct pre-job conferences (although DIR will make a "model" pre-job conference available for others to use). Unlike LCPs, who work for the awarding body, the CMU is an independent representative of the State that is strictly focused on enforcing labor compliance. As part of the Division of Labor Standards Enforcement, the CMU also has all of the enforcement authority, resources, and expertise of the Labor Commissioner.
Q4. How much does the CMU charge for its services?
A: The CMU (and other parts of DIR involved in the enforcement of prevailing wage requirements) are entitled to reimbursement of the reasonable and directly related costs of monitoring and enforcing compliance on specific projects. DIR has developed a rate structure formula that has been approved by the Director of Finance. Under this formula, DIR will charge for the actual costs of monitoring and enforcing compliance on a project (which may vary according to the type of personnel used and expenses incurred). However, the total that DIR may charge for a given project is limited by statute to one-quarter of one percent of the state bond funding provided for a bond-funded project, or one-quarter of one percent of the total project costs if it is not a bond-funded project. These maximum charges are substantially less than what was being paid for the LCPs required for school construction projects funded by Propositions 47 and 55.
Q5. What kinds of projects require use of the CMU?
A: The CMU is required for the following types of public works projects: (1) any project that is funded in whole or in part by any state bond, with the exception of Proposition 84 (natural resources) bonds; (2) any project built pursuant to certain design-build or other statutory authorizations that include a CMU requirement; and (3) any project built by an awarding body that has chosen to use the CMU for all of its projects. A complete list of statutes with CMU requirements is available on DIR's website at http://www.dir.ca.gov/lcp/StatutesRequiringLCPs.pdf.
Q6. Are there exceptions or alternatives to using the CMU?
A: Yes. There are several exceptions and alternatives.
- The CMU is not required on any project that has already been started or for which the public works contract was awarded prior to January 1, 2012. Those projects will be subject to the pre-2012 monitoring and enforcement requirements, whether it is a requirement to use an approved LCP or no specific monitoring requirement at all, for the life of the project.
- The CMU is not required and may not be used on any project that is funded by Proposition 84 (Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006). Those projects instead must use an approved LCP.
- The CMU is not required for any project covered by a project labor agreement (specifically, a collective bargaining agreement that binds all of the contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages).
- The CMU will not be required for an awarding body that has requested and received approval to continue operating its own previously approved LCP to monitor and enforce compliance, provided that the awarding body does not contract with a third party to operate its LCP.
Please also note that the CMU is not required for projects that do not fall into one of the categories listed in the answer to the previous question. For example, the CMU is not required for projects that use only local funds and do not use design-build or one or other specific statutory authorizations that include a CMU requirement.
Q7. How will DIR determine which projects are subject to the old rules and which ones are subject to the new rules? If the awarding body has more than one prime contract for an ongoing project, will it be required to switch over to using the CMU for contracts awarded after January 1, 2012?
A: The statutes, as amended by AB 436, refer to "contracts for public works projects." DIR interprets this as meaning a prime construction contract for the entire project. Where an awarding body is using more than one prime contract or building a project in phases, this language becomes more difficult to apply, but DIR believes that the intent is to have only one set of rules apply to a discrete project and for those rules to be determined based on the date of the first contract for construction of that project. For projects with multiple phases, DIR anticipates that it will look at those phases in the same manner as the Division of the State Architect (DSA) and bond funding agencies, i.e. anything that is treated as a separate project for purposes of DSA and funding approval will also be treated as a separate project by DIR for purposes of determining whether or not the CMU requirements apply. In any event, awarding bodies will not be required to switch over to the CMU for multi-prime construction contracts on projects that were already underway prior to January 1, 2012.
Q8. What are the requirements for using an approved LCP instead of the CMU?
A: The awarding body's LCP must have been previously approved by DIR under 8 CCR 16425, 16426, or 16427; it must monitor and enforce compliance either on all projects under the awarding body's authority or on all projects that otherwise would be subject to CMU requirements; it cannot use a third party contract consultant to conduct all or part of its LCP work; and the awarding body must have requested and received approval from DIR to continue operating its LCP in lieu of using the CMU.
Q9. Are there any circumstances under which an awarding body may use outside volunteers or consultants to assist with its LCP without violating the prohibition against contracting with a third party to operate its LCP?
A: A LCP may still use outside volunteers and consultants without violating this prohibition under the following circumstances: (1) for legal representation or other licensed professional services that are not available on the awarding body's own staff; (2) for augmentation of employed staff performing monitoring and review tasks, provided the consultant staff or volunteers work under the direct supervision and control of employed LCP staff; (3) to review program operations or assist on a purely advisory basis; or (4) for any project that would not require use of the CMU or an LCP under state law.
Q10. Will an awarding body that uses its own LCP in lieu of the CMU be able to obtain additional funding support for its LCP?
A: An awarding body that receives approval to continue operating its own LCP in lieu of the CMU obviously will not be charged CMU fees. The latest legislation, AB 436, includes a specific acknowledgment that prevailing wage compliance monitoring and enforcement, whether through an approved LCP or another method, is a necessary and prudent oversight activity and that bond proceeds may be used to pay the reasonable costs of such oversight that are directly related to the construction being funded by those proceeds. Whether and how an awarding body may recover these costs is not addressed in the legislation, nor is it something over which DIR has any regulatory authority or control. Awarding bodies must instead look at the bonds and the requirements of bond funding agencies to determine whether, how, and to what extent they can obtain additional funding support for LCP costs.
Q11. What are the LCP requirements for projects funded by Proposition 84?
A: Public Resources Code section 75075 requires an awarding body to initiate and enforce or contract with a third party to initiate and enforce an LCP for any public works project that receives funding from Proposition 84 (Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006). This requirement takes precedence over any other law that would require use of the CMU. In other words, if a project receives funding from both Proposition 84 and another state bond, the awarding body will be required to comply with Proposition 84's LCP requirement instead of the CMU requirement associated with the other bond.
An awarding body that is subject to this requirement must have its LCP approved by DIR pursuant to 8 CCR 16425, but that LCP may be operated through a consultant contract with a third party administrator. When applying for approval, the awarding body needs to specify how its LCP will be staffed (in house or through outside entity plus the identity and qualifications of key personnel), and the application will be approved or denied on that basis.
Q12. What is the significance of DIR no longer approving third party LCPs?
A: DIR's only regulatory authority and interest with respect to LCPs is in whether an awarding body has adopted and will enforce a LCP in accordance with the requirements of Labor Code §1771.5 and the LCP regulations at 8 CCR §§16421 - 16439. Accordingly, when DIR approves a LCP, it is certifying that an awarding body has a LCP that meets these requirements, regardless of whether the awarding body is using in house staff or outside consultants to operate its LCP. For projects that require an LCP under pre-SXB2-9/CMU law and for projects funded through Proposition 84, DIR will continue to approve LCPs that rely in whole or in part on outside staff or entities to operate the program. However, DIR will confer its approval on the awarding body itself rather than the outside entity.
Any awarding body that does not now have an approved LCP but needs one in order to meet the LCP requirement for Proposition 84 or some other statute, must submit an application in its own name (pursuant to DIR's regulations at 8 CCR 16424 and 16425), while specifying in that application who will staff the program and what enforcement manual will be used. The awarding body should prepare and submit its application far enough in advance so that DIR can evaluate and approve the LCP before the awarding body is required to certify to any funding agency that it has complied with a LCP requirement.
Q1: What is an Awarding Body?
A: An 'awarding body' or 'body awarding the contract' means department, board, authority, officer or agent awarding a contract for public work. In most cases the awarding body is a unit of state or local government, such as a city, county, school district, water district, special district, or a state agency. However, in some cases the body awarding the contract may be a private entity that uses public funds for a public works construction project.
Q2: When do awarding bodies have to notify DIR of a subject project?
A: Upon awarding the public works contract, the awarding body provides notice of the project to DIR using the PWC-100 form. This form is submitted electronically on DIR's website.
Q3: If an awarding body's governing board awarded a project prior to January 1 but anticipates receiving state bond funds after January 1, is that project subject to the new requirements?
A: No, the contract award date determines when the CMU is responsible for monitoring projects, not when the bond proceeds are received.
Q4: What does "projects awarded after January 1st" mean?
A: The applicability is determined by the statutory language of Labor Code section 1771.3(b) and all the other statutes prescribing the change over from LCP requirements to fee-based monitoring and enforcement by DIR. The fee and monitoring obligations apply to a "contract awarded" after the effective date; and we cannot change that statutory mandate by regulation or internal policy. In terms of the underlying logic, there obviously is no formal obligation to pay a fee or for DIR to conduct fee-based monitoring and enforcement until a construction contract is awarded; likewise there is no obligation to perform construction work or pay prevailing wages until the contract is awarded, even though prevailing rates are set as of the bid date.
Q5: How do I pay my fee?
A: Once actual work has been performed by the CMU or another part of DIR, you will receive a monthly invoice for the fee due for that work (subject to an overall limitation for any one project of 1/4 of 1% of state bond proceeds provided for that project or ¼ of 1% of total project costs for projects that do not receive state bond proceeds. Send the payment together with information identifying the project to:
Division of Labor Standards Enforcement
PO Box 78190
San Francisco, CA 94107
Q6: How do I notify DIR of a project subject to monitoring?
A: Complete and submit the PWC 100 form.
1. Why was MyLCM discontinued?
Answer: The system designed for use on CMU projects had numerous technical problems. Many contractors, awarding agencies, and CMU staff expressed concerns that it was not user-friendly and that contractors were spending a significant amount of time with each certified payroll records (CPR) submission. After the Department of Industrial (DIR) and Hill International were unable to resolve many of these issues, they agreed to end the contract effective April 1, 2013.
2. Should I continue to submit my certified payroll records (CPRs) to MyLCM?
Answer: Contractors should continue entering their CPRs into MyLCM through the month of February. By March 1, 2013, the PWC 100 will be enhanced to allow contractors to register into this new system and to submit CPRs using a portable document format (PDF) directly into our PWC 100 database.
3. Is there another company that the Department of Industrial Relations (DIR) will be using?
Answer: No, DIR will be using its internal PWC 100 on-line system to allow contractors to upload CPRs by PDF.
4. What is the PWC 100 application?
Answer: DIR launched the PWC 100 online application last year as a mechanism for awarding bodies to provide notice to DIR of a public works award. The application took the place of the DAS-13 paper form that was previously required to be submitted by these agencies. It requires that awarding bodies provide notice of all known contractors who will perform work on the project. Awarding agencies are required to provide the valid contractor’s state license or professional license number into the application.
5. How will the PWC 100 application impact contractors on projects that will not be completed by April 1?
Answer: Contractors should back up their certified payroll records previously submitted into the MyLCM service. Starting with the first CPR in March, contractors should register into the PWC 100 application and begin uploading CPRs by PDF.
6. Will training on the PWC 100 application be provided?
Answer: Yes, DIR will be hosting a series of webinars for the public. The webinars will cover registration and how to use the online application.
7. Can contractors submit their CPRs by mail?
Answer: Beginning in March, contractors should begin uploading their CPRs by PDF into the application. The online application is the preferred method for submitting CPRs, however in special circumstances exceptions can be made to provide the records by mail with prior approval.
8. Will it be easier to use the online application?
Answer: Yes, the PWC 100 online application will allow contractors to easily register, add subcontractors and submit electronic copies of CPRs via PDF. This will streamline the record submittal system for contractors and awarding bodies.
9. Will contractors or awarding bodies receive notice when records are submitted?
Answer: The Compliance Monitoring Unit (CMU) will only notify contractors or awarding bodies when underpayments or issues are encountered on the payroll records submitted via the online application. A manual audit review will take place within 30 days of the CPR submission date.
10. Do prime contractors need to back up their own CPRs and their subcontractors’ CPRs?
Answer: DIR is in the process of backing up all CPRs submitted into Hill International’s MyLCM. Contractors should back up their CPRs and subcontractors’ CPRs. MyLCM has an uploading feature that will allow contractors to obtain copies of their CPRs. Hill may have options to provide CPR back up DVDs for a fee.
11. Will monitoring fees still be incurred after March 1st, 2013?
Answer: Yes, monitoring fees are due for work performed by CMU staff. CMU will continue to monitor payroll records, perform audits and conduct field visits on a random basis. The fees are capped at ¼ of one percent of state construction bond funding or ¼ of one percent of total project costs on projects requiring monitoring that do not contain state construction bond funding.