Chapter 8. Office of the Director
Subchapter 4. Awarding Body Labor Compliance Programs
Article 5. Enforcement

§16435. Withholding Contract Payments When Payroll Records are Delinquent or Inadequate or When, After Investigation, It Is Established that Underpayment Has Occurred.

(a) “Withhold” means to cease payments by the Awarding Body, or others who pay on its behalf, or agents, to the general contractor. Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section 1729.

(b) “Contracts.” Except as otherwise provided by agreement, only contracts under a single master contract, including a Design-Build contract, or contracts entered into as stages of a single project, may be the subject of withholding.

(c) “Delinquent payroll records” means those not submitted on the date set in the contract.

(d) “Inadequate payroll records” are any one of the following:

(1) A record lacking the information required by Labor Code Section 1776;

(2) A record which contains the required information but not certified, or certified by someone not an agent of the contractor or subcontractor;

(3) A record remaining uncorrected for one payroll period, after the Labor Compliance Program has given the contractor or subcontractor notice of inaccuracies detected by audit or record review. Provided, however, that prompt correction will stop any duty to withhold if such inaccuracies do not amount to 1 percent of the entire Certified Weekly Payroll in dollar value and do not affect more than half the persons listed as workers employed on that Certified Weekly Payroll, as defined in Labor Code Section 1776 and Title 8 CCR Section 16401.

(e) “Amount equal to the underpayment” is the total of the following determined by payroll review, audit, or admission of contractor or subcontractor:

(1) The difference between amounts paid workers and the correct General Prevailing Rate of Per Diem Wages, as defined in Labor Code Section 1773, and determined to be the prevailing rate due workers in such craft, classification or trade in which they were employed and the amounts paid;

(2) The difference between amounts paid on behalf of workers and the correct amounts of Employer Payments, as defined in Labor Code Section 1773.1 and determined to be part of the prevailing rate costs of contractors due for employment of workers in such craft, classification or trade in which they were employed and the amounts paid;

(3) Estimated amounts of “illegal taking of wages”;

(4) Amounts of apprenticeship training contributions paid to neither the program sponsor's training trust nor the California Apprenticeship Council;

(5) Estimated penalties under Labor Code Sections 1775, 1776, and 1813.

NOTE

Authority cited: Section 1773.5, Labor Code. Reference: Sections 1729, 1771.5, 1773, 1773.1, 1775, 1776, 1777.5, 1778, 1813 and 1815, Labor Code.

HISTORY

1. New section filed 2-20-92; operative 3-23-92 (Register 92, No. 13).

2. Amendment of section heading, section and Note filed 10-19-2004; operative 11-18-2004 (Register 2004, No. 43).