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Public Works Reforms (SB 854) Fact Sheet

Public works reforms (SB 854) were signed into law on June 20, 2014. The reforms made several significant changes to the administration and enforcement of prevailing wage requirements by the Department of Industrial Relations (DIR). Among other things, SB 854 established a public works contractor registration program to replace prior Compliance Monitoring Unit (CMU) and Labor Compliance Program (LCP) requirements for bond-funded and other specified public works projects. The fees collected through the program established by SB 854 are used to fund DIR’s public works activities.

Essentials of public works contractor registration program:

  • Contractors are subject to a registration and annual renewal fee set initially at $300.  The fee is non-refundable and applies to all contractors and subcontractors who intend to bid or perform work on public works projects (as defined under the Labor Code).
  • Contractors apply and pay the fee online and must meet minimum qualifications to be registered as eligible to bid and work on public works projects:
    • Must have workers’ compensation coverage for any employees and only use subcontractors who are registered public works contractors.
    • Must have Contractors State License Board license if applicable to trade.
    • Must not have any delinquent unpaid wage or penalty assessments owed to any employee or enforcement agency.
    • Must not be under federal or state debarment.
    • Must not be in prior violation of this registration requirement once it becomes effective.  However, for the first violation in a 12-month period, a contractor may still qualify for registration by paying an additional penalty. 
  • The registration fee is not related to any project.  It is more like a license that enables the registrant to bid on and perform public works.
  • DIR provides a searchable database of registered contractors and subcontractors on its website, so that awarding bodies and contractors can comply with the requirement to only use registered contractors and subcontractors.
  • Various protections are built in so that
    • A contractor won’t be in violation for working on a private job that is later determined to be public work;
    • The inadvertent listing of an unregistered subcontractor on a bid doesn’t  necessarily invalidate that bid;
    • A contract with an unregistered contractor or subcontractor is subject to cancellation but is not void as to past work;
    • An unregistered contractor or subcontractor can be replaced with one who is registered;
    • A contractor whose registration lapses will have a 90-day grace period within which to pay a late fee and renew.
  • Contractors and subcontractors register online.  The preferred method of payment is by credit card.
  • The requirement to list only registered contractors and subcontractors on bids became effective on March 1, 2015.  The requirement to only use registered contractors and subcontractors on public works projects applies to all projects awarded on or after April 1, 2015.

Essentials of Public Works Enforcement Fund:

All contractor registration fees go into the State Public Works Enforcement Fund and are used to fund the following items:

  • Administration of contractor registration requirement;
  • All DIR costs for administering and enforcing public works laws;
  • Labor Commissioner’s enforcement of other Labor Code violations on monitored public works projects.

DIR no longer charges awarding bodies for prevailing wage compliance monitoring and enforcement on legacy CMU projects. 

Related changes in DIR’s administration and enforcement of public works requirements

  • Requirements to use CMU or specified alternative (labor compliance program or project labor agreement) for state bond-funded and other specified projects were eliminated and replaced by requirements that apply to all public works projects (as defined under the Labor Code).
  • Awarding bodies are required to submit PWC-100 (contract award notice) for all public works projects.
  • Contractors and subcontractors on all public works projects are required to submit certified payroll records (CPRs) to the Labor Commissioner unless excused from this requirement.
    • CPRs are furnished to the Labor Commissioner online
    • This requirement phases in as follows:
      • Applied to public works projects that had been under CMU monitoring;
      • Applies to any new projects awarded on or after April 1, 2015;
      • May apply to other projects as determined by Labor Commissioner;
      • Applies to all public works projects, (except those listed under Exemptions just below), on and after January 1, 2016.
    • 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.
  • Requirements for awarding bodies to adopt and enforce a DIR-approved LCP are now limited to: (1) ongoing public works projects awarded prior to January 1, 2012, that were under a pre-existing LCP requirement (see the four legacy LCPs listed above) and (2) projects funded in whole or in part by Proposition 84.

April 2016