The California Labor Code requires that workers employed by contractors or subcontractors in the execution of a public works contract must be paid the State-determined prevailing wage rate. All contractors and subcontractors are responsible for ascertaining and complying with all current general prevailing wage rates for crafts and any rate changes that occur during the life of the contract. Failure to pay the correct prevailing wage rates can have numerous causes. The following are common mistakes contractors tend to make:
Using the incorrect wage determination
Not understanding the double asterisk (**) rule
Not applying Predetermined Increases
Ignoring the footnotes in the wage determination
Not utilizing the Important Notices issued by the Department of Industrial Relations (DIR) and Advice Letters
Failure to submit Certified Payroll Reports
Misclassification of workers
Not following Apprenticeship Requirements
To avoid these mistakes work closely with the LCP administrator and awarding body to review what requirements must be met to comply with each of the areas listed above.
APPENDIX A – Terms and Definitions
Awarding body Owner of project, body awarding contract CAC California Apprenticeship Council
CCR California Code of Regulations CFR Code of Federal Regulations CPR Certified payroll record
DAS Division of Apprenticeship Standards DIR Department of Industrial Relations
DLSE Division of Labor Standards Enforcement DLSR Division of Labor Statistics & Research
DSA Department of State Architect
FBS Fringe benefit statement
IOR Inspector of Record, DSA assigned building inspector JATC Joint apprenticeship training committee
LCP Labor compliance program
LEA Local education agency
PW Public works or prevailing wage, depending on context PWD Prevailing wage division
T&M Time & material
TLCM The Labor Compliance Managers
APPENDIX B
–Relevant Websites
The current prevailing wage rates are available on the Internet, or from LCM. For specific information about prevailing wage requirements you can visit the websites listed below:
Prevailing Wage Rates http://www.dir.ca.gov/DLSR/PWD
Apprentice Schedules http://www.dir.ca.gov/das/das.html
Apprenticeship
Programs, Requirements
& Forms
http://www.dir.ca.gov/apprenticeship.html Public Works
Interactive Databases
Forms
Contractors State License
Status http://www2.cslb.ca.gov/CSLB_LIBRARY/license+request.asp
APPENDIX C
–DIR Determinations
The appropriate Prevailing Wage Determinations for use in the course of an audit are determined by the first of the two bid advertisement dates for the contract/project. Bid advertisement dates from
February 22 to August 21 call for the determination that is listed as “yyyy-01” (yyyy stands for the year for example 2008-01). Dates from August 22 to February 21 call for the “yyyy-02” determination.
DIR Website to verify Prevailing Wage Rates for Journeymen:
http://www.dir.ca.gov/dlsr/PWD/
DIR Website to verify Prevailing Wage Rates for Apprentices:
http://www.dir.ca.gov/das/das.html
DIR Website to verify Apprentices are properly registered with DAS:
http://www.dir.ca.gov/DAS/appcertpw/AppCertSearch.asp
DIR Website to verify Electricians are certified by DAS:
http://www.dir.ca.gov/das/ElectricalTrade.htm
Links to download reference material:
Statewide:
http://www.dir.ca.gov/dlsr/PWD/Determinations%5CStatewide%5CStatewide.pdf
Northern California:
http://www.dir.ca.gov/dlsr/PWD/Determinations/Northern/Northern.pdf San Francisco (example):
http://www.dir.ca.gov/dlsr/PWD/sfr.xls
APPENDIX D – LCP Forms & Handouts
The following pages will show the forms listed below:
Pre-Construction Checklist of Labor Law Requirements 49
Public Works Contract Award - DAS Form140 51
Request for Dispatch of an Apprentice - DAS Form142 52
Training Funds Contribution Form – CAC-2 53
Apprentice Agreement (front and back side) 54
Fringe Benefit Statement (Statement of Employer Payments) 56
Statement of Compliance 57
Certified Payroll Record (DIR Form A1-131) 58
Notice to Construction Employees (posted on project site) 59
Request for Approval of Forfeiture Amount 60
Notice of Withholding of Contract Payments (language for when needed) 63
⚊ Notice of Right to Obtain Review Formal Hearing (language for when needed) 64
⚊ Opportunity for Settlement Meeting (language for when needed) 65
Notice of Opportunity to Review Evidence Pursuant to Labor Code Section 1742(b) 67
Request to Review Evidence (language for when needed) 69
Notice of Transmittal (language for when needed) 70
Pre-Construction Checklist of Labor Law Requirements
The federal and state labor law requirements applicable to the contract are composed of but not limited to the following items:
(1) The contractor's duty to pay prevailing wages under Labor Code Section 1770 et seq., should the project exceed the exemption amounts;
(2) The contractor's duty to employ registered apprentices on the public works project under Labor Code Section 1777.5;
(3) The penalties for failure to pay prevailing wages (for non-exempt projects) and employ
apprentices including forfeitures and debarment under Labor Code Sections 1775 and 1777.7;
(4) The requirement to keep and submit copies upon request of certified payroll records under Labor Code Section 1776, and penalties for failure to do so under Labor Code Section 1776(g);
(5) The prohibition against employment discrimination under Labor Code Section 1777.6; the Government Code, and Title VII of the Civil Rights Act of 1964;
(6) The prohibition against accepting or extracting kickback from employee wages under Labor Code Section 1778;
(7) The prohibition against accepting fees for registering any person for public work under Labor Code Section 1779; or for filling work orders on public works under Labor Code Section 1780;
(8) The requirement to list all subcontractors under Public Contracts Code Section 4104;
(9) The requirement to be properly licensed and to require all subcontractors to be properly licensed and the penalty for employing workers while unlicensed under Labor Code Section 1021 and under the California Contractors License Law, found at Business and Professions Code Section 7000 et seq;
(10) The prohibition against unfair competition under Business and Professions Code Section 17200-17208;
(11) The requirement that the contractor be properly insured for Workers Compensation under Labor Code Section 1861;
(12) The requirement that the contractor abide by the Occupational, Safety and Health laws and regulations that apply to the particular construction project;
(13) The federal prohibition against hiring undocumented workers, and the requirement to secure proof of eligibility/citizenship from all workers.
(14) The requirement to provide itemized wage statements to employees under Labor Code Section 226.
Certification:
I acknowledge that I have been informed and am aware of the foregoing requirements and that I am authorized to make this certification on behalf of [name of subcontractor].
Date Name of person signing and company signing and company
Front
Back
Fringe Benefit Statement
Statement of Compliance
http://www.dir.ca.gov/dlse/publicWorksPayrollInstructions.htm
NOTICE TO CONSTRUCTION EMPLOYEES
Please call Lin Robertson at (408) 516-7238 if you have questions about the prevailing wages you should be receiving for this Public Works project. The wages are posted next to this announcement.
ANUNCIO PARA LOS TRABAJADORES DE CONSTRUCCION
Llama Lin Robertson a (408) 516-7238 si tiene preguntas sobre el pago que necesita recibir para este proyecto de Obras Publicas. Los sueldos son sobre el anuncio a lado de esta información.
通 告
建筑員工請注意
你們在 份政府建筑項目中應得主要的工资,已被張貼在 個通告旁邊, 如有任何問題,請電 (408) 516-7238 與 Lin Robertson 女士 聯絡.
LABOR COMPLIANCE PROGRAM
REQUEST FOR APPROVAL OF FORFEITURE AMOUNT Awarding body or 3rd Party Administrator:
Name:
Notice of Recordation by County Recorder Funds in Retention
Contractor Information
Name & address of General Contractor
General description of scope of work of the entire project
Name & address of Subcontractor or Affected Contractor
General description of scope of work for the Subcontractor or affected contractor LCP Investigation and Findings
Has Final Approval been granted? Yes ( ) No ( )
Date of Notice of Withholding Contract Payments ___________________
Wages assessed $______________ Training $______________________
1775 Penalties assessed $________ 1813 Penalties $_________________
1776 Penalties assessed $________
TOTAL NOTICE OF WITHHOLDING CONTRACT PAYMENTS $____________
Brief Statement of Issues
Report of Audit including supporting documents showing the wage underpayment issues that have been identified at this point in your investigation. Include an Audit Spreadsheet showing the calculations of the wages found due, dates that you have discussed the issues with the employer, the employer’s response, and an analysis of all the factually based evidence that support your
conclusion.1
Report of Investigation stating each penalty related issues that have been identified at this point in your investigation. Include an audit spreadsheet showing that calculates the 1775 and 1813
penalties assessed, description of the opportunities you have given to the contractor to address the criteria listed below, the employer’s response to each issue, and an analysis of all the factually based evidence that the employer has submitted to refute your conclusion.2
Please explain the reason of Labor Code 1775 penalty recommendations:
State whether the Labor Code Section 1775 penalties are based upon either:
Whether the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake.
Explain.
If so, the error was promptly and voluntarily corrected upon being brought to the attention of the contractor or subcontractor. Explain.
Whether the contractor or subcontractor has a prior record of failing to meet its prevailing wage obligations.
1 If the issue is misclassification be sure to include a detailed description of the work performed by each victim/witness and the basis for your determination that the work was misclassified.
2 Including all evidence of the awarding body’s contact with the prime contractor and/or the subcontractor relative to the obligation to pay the prevailing wage, and/or the prime contractor’s contacts with the subcontractor’s relative to the obligation to pay the prevailing wage, and/or the complaining witness’s contacts with the affected contractor relative to the obligation to pay the prevailing wage, and/or the DLSE’s contacts with the affected contractor relative to the obligation to pay the prevailing wage.
Disposition of the Case by the Labor Commissioner Approved:
Wages $_______________ Training $__________________
1775 Penalties $____________ 1813 Penalties_____________
1776 Penalties $____________
TOTAL $_________________
Approved as alternative (modified) penalty amount:
Wages $_______________ Training $__________________
1775 Penalties $____________1813 Penalties $_____________
1776 Penalties $____________
TOTAL $_________________
Rejected:
____________________________________ __________________
State Labor Commissioner Date
LCP Administrator
Contact Information Awarding Body Seal
Date: In Reply Refer to Case No.:
Notice of Withholding of Contract Payments
Awarding Body Work Performed in County of:
Project Name Project No.
Prime Contractor Subcontractor
After an investigation concerning the payment of wages to workers employed in the execution of the contract for the above-named public works project, the Labor Compliance Program for ________________________ (awarding body name) has determined that violations of the California Labor Code have been committed by the contractor and/or subcontractor identified above. In accordance with Labor Code sections 1771.5 and 1771.6, the Labor Compliance Program hereby issues this Notice of Withholding of Contract Payments.
The nature of the violations of the Labor Code and the basis for the assessment are as follows:
________________________________________________________________________________
The Labor Compliance Program has determined that the total amount of wages due was: (Verification of restitution pending).
The Labor Compliance Program has determined that the total amount of outstanding penalties due under Labor Code sections 1775 and 1813 is:
The Labor Compliance Program has determined that the amount of penalties assessed under Labor Code section 1776 is:
By:_________________________________
Notice of Right to Obtain Review - Formal Hearing
In accordance with Labor Code sections 1742 and 1771.6, an affected contractor or subcontractor may obtain review of this Notice of Withholding of Contract Payments by transmitting a written request to the office of the Labor Compliance Program that appears below within 60 days after service of the notice. To obtain a hearing, a written Request for Review must be transmitted to the following:
Labor Compliance Program Contact Information
A Request for Review either shall clearly identify the Notice of Withholding of Contract Payments from which review is sought, including the date of the notice, or it shall include a copy of the notice as an attachment, and shall also set forth the basis upon which the notice is being contested. In accordance with Labor Code section 1742, the contractor or subcontractor shall be provided an opportunity to review evidence to be utilized by the Labor Compliance Program at the hearing within 20 days of the Labor Compliance Program's receipt of the written Request for Review.
Failure by a contractor or subcontractor to submit a timely Request for Review will result in a final order which shall be binding on the contractor and subcontractor, and which shall also be binding, with respect to the amount due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. Labor Code section 1743.
In accordance with Labor Code section 1742(d), a certified copy of a final order may be filed by the Labor Commissioner in the office of the clerk of the superior court in any county in which the affected contractor or subcontractor has property or has or had a place of business. The clerk, immediately upon the filing, shall enter judgment for the State against the person assessed in the amount shown on the certified order.
Opportunity for Settlement Meeting
In accordance with Labor Code Section 1742.1 (b), the Labor Compliance Program shall, upon receipt of a request from the affected contractor or subcontractor within 30 days following the service of this Notice of Withholding of Contract Payments, afford the contractor or subcontractor the opportunity to meet with the Labor Compliance Program's designee to attempt to settle a dispute regarding the notice. The settlement meeting may be held in person or by telephone and shall take place before the expiration of the 60-day period for seeking a hearing as set forth above under the heading Notice of Right to Obtain Review. No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, the settlement meeting is admissible or subject to discovery in any administrative or civil proceeding. No writing prepared for the purpose of, in the course of, or pursuant to, the settlement meeting, other than a final settlement agreement, is admissible or subject to discovery in any administrative or civil proceeding. This opportunity to timely request an informal settlement meeting is in addition to the right to obtain a formal hearing, and a settlement meeting may be requested even if a written Request for Review has already been made. Requesting a settlement meeting, however, does not extend the 60-day period during which a formal hearing may be requested.
A written request to meet with the Labor Compliance Program's designee to attempt to settle a dispute regarding this notice must be transmitted to:
Labor Compliance Program Contact Information
Liquidated Damages Labor Code Section 1742.1 requires the following:
(a) After 60 days following the service of a civil wage and penalty assessment under Section 1741 or a notice of withholding under subdivision (a) of Section 1771.6, the affected contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment or notice shall be liable for liquidated damages in an amount equal to the wages, or portion thereof, that still remain unpaid. If the assessment or notice subsequently is overturned or modified after administrative or judicial review, liquidated damages shall be payable only on the wages found to be due and unpaid.
Additionally, if the contractor or subcontractor demonstrates to the satisfaction of the director that he or she had substantial grounds for appealing the assessment or notice with respect to a portion of the unpaid wages covered by the assessment or notice, the
director may exercise his or her discretion to waive payment of the liquidated damages with respect to that portion of the unpaid wages. Any liquidated damages shall be distributed to the employee along with the unpaid wages. Section 203.5 shall not apply to claims for prevailing wages under this chapter.
(b) Notwithstanding subdivision (a), there shall be no liability for liquidated damages if the full amount of the assessment or notice, including penalties, has been deposited with the Department of Industrial Relations, within 60 days following service of the assessment or notice, for the department to hold in escrow pending administrative and judicial review. The department shall release such funds, plus any interest earned, at the conclusion of all administrative and judicial review to the persons and entities who are found to be entitled to such funds.
(c) The Labor Commissioner shall, upon receipt of a request from the affected contractor or subcontractor within 30 days following the service of a civil wage and penalty assessment under Section 1741, afford the contractor or subcontractor the opportunity to meet with
the Labor Commissioner or his or her designee to attempt to settle a dispute regarding the assessment without the need for formal proceedings. The awarding body shall, upon receipt of a request from the affected contractor or subcontractor within 30 days following the service of a notice of withholding under subdivision (a) of Section 1771.6, afford the contractor or subcontractor the opportunity to meet with the designee of the awarding body to attempt to settle a dispute regarding the notice without the need for formal proceedings. The settlement meeting may be held in person or by telephone and shall take place before the expiration of the 60-day period for seeking administrative review. No evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, the settlement meeting is admissible or subject to discovery in any administrative or civil proceeding. No writing prepared for the purpose of, in the course of, or pursuant to, the settlement meeting, other than a final settlement agreement, is admissible or subject to discovery in any administrative or civil proceeding. The assessment or notice shall advise the contractor or subcontractor of the opportunity to request a settlement meeting.
(d) This section shall become operative on January 1, 2007.
The Amount of Liquidated Damages Available Under this Notice is Distribution:
General Contractor and their bonding company Affected Contractor and their bonding company
Notice of Opportunity to Review Evidence Pursuant to Labor Code Section 1742(b)
Please be advised that this office has received your Request for Review, dated _____________, and pertaining to the Notice of Withholding of Contract Pay-ments issued by the Labor Compliance Program in Case No. _____________. In accordance with Labor Code section 1742(b), this notice provides you with an op-portunity to review evidence to be utilized by the Labor Compliance Program at the hearing on the Request for Review, and the procedures for reviewing such evidence. Rule 17224 of the Prevailing Wage Hearing Regulations provides as follows:
(a) Within ten (10) days following its receipt of a Request for Review, the Enfor-cing Agency shall also notify the affected contractor or subcontractor of its oppor-tunity and the procedures for reviewing evidence to be utilized by the Enforcing Agency at the hearing of the Request for Review.
(b) An Enforcing Agency shall be deemed to have provided the opportunity to re-view evidence required by this Rule if it (1) gives the affected contractor or sub-contractor the option at said party's own expense to either (i) obtain copies of all such evidence through a commercial copying service or (ii)
inspect and copy such evidence at the office of the Enforcing Agency during nor-mal business hours; or if (2) The Enforcing Agency at its own expense forwards copies of all such evidence to the affected contractor or subcontractor.
inspect and copy such evidence at the office of the Enforcing Agency during nor-mal business hours; or if (2) The Enforcing Agency at its own expense forwards copies of all such evidence to the affected contractor or subcontractor.