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Thank you…
C.A.S.H. is indebted to, and grateful for, the following individuals, who spent countless hours and expended tremendous effort to provide the C.A.S.H. membership with this Handbook:
RENEE ANDERSON, Capital Program Management, Inc. MARK BARTOS, CSS Architecture
STEPHANIE GONOS, Capital Program Management, Inc. PHILIP HENDERSON, Miller Brown & Dannis
SIMA SALEK, Orbach & Huff LLP
PAULA SCHAEFER, Bowie Arneson Wiles & Giannone CARINA VERANO, Orbach & Huff LLP
C.A.S.H. would also like to thank Steve Hartsell of School and College Legal Services of California and William Savidge of the West Contra Costa Unified School District for their input and support in
developing the Handbook. With gratitude,
Eric J. Hall Thomas G. Duffy
C.A.S.H. Labor Compliance Programs: Recommended Practices
October 2003
ABOUT THE HANDBOOK
The information contained in this handbook was prepared by the C.A.S.H. Labor Compliance Program Recommended Practices Handbook Subcommittee and does not constitute legal advice. School district personnel should consult with their legal counsel for advice on specific legal issues and the application of law to their districts.
This handbook is, by nature, a “fluid” document. C.A.S.H. will revise and update this handbook as school districts in the State have further experience administering labor compliance programs. When using this handbook, school districts should check the C.A.S.H. website for updates.
C.A.S.H. invites comments to this handbook. Please e-mail any comments, questions, or suggestions to [email protected].
1130 K Street, Suite 210 Sacramento, California 95814
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RACTICESTABLE OF CONTENTS
Preface...1
Section I: Introduction ...3
Section II: Prevailing Wage and Labor Compliance Programs...6
A. Exemptions ...6
B. Projects and Personnel Subject to Prevailing Wage Law ... 7-8 Section III: Planning and Assessment Prior to LCP Adoption and Implementation...9
A. General Considerations in Assessing District Needs... 9-12 B. Adoption and Administration of an LCP ... 12-15 Section IV: Adoption and Initiation of an LCP ...16
A. Draft and Adopt a Resolution ...16
B. Complete DIR Application for Initial Approval... 17-18 C. Legal and Contractual Issues in TPA Selection... 18-22 D. Changes and Amendments to an LCP ...22
E. DIR Approval of District LCP... 22-23 Section V: Basic Elements of a Labor Compliance Program ...24
A. Establishing an LCP Office/Labor Compliance Officer... 24-26 B. LCP Information in Bid Invitation and Contract Documents... 26-28 C. Pre-Bid, Pre-job Conference and Pre-qualification ... 28-30 D. Contractor’s Responsibilities Pursuant to the LCP... 30-32 E. CPR Reviews, Site Visits, CPR Audits, LCP Investigations... 32-34 F. Enforcement of Prevailing Wage Requirements/Withhold Contract Payments ... 34-47 Section VI: Miscellaneous/Current Issues...48
A. California Public Records Act ... 48-50 B. Current Legal Issues ... 51-52 APPENDIX Appendix 1: DIR Opinion Letter (December 4, 1997) ...1
Appendix 2: Flowchart of Labor Compliance Program Development and Approval Process...4
Appendix 3: Sample Governing Board LCP Resolution ...5
Appendix 4: DIR Application Form – Initial Approval...9
Appendix 5: Sample RFP for Third Party Administrators...12
Appendix 6: Pre-Job Conference Checklist...20
Appendix 7: DLSE Form A-1-131 ...23
Appendix 8: DAS Form 140 ...25
Appendix 9: DAS Form 13 ...26
Appendix 10: A Basic Guide to Construction Site Protocol and Guideline for Interviewing Workers ....27
Appendix 11: Site Visitation Interview Form...29
Appendix 12: Audit Record Form ...30
Appendix 13: Withholding of Contract Payments Flowchart...31
Appendix 14: Notice of Withholding of Contract Payments...32
Appendix 15: Optional General Conditions for Construction Contracts Relating to the Timely Submission of Certified Payroll Reports and the Withholding of Contract Payments ...35
Appendix 16: Printing and Organizing Wage Determinations and Other Information ...37
Appendix 17: Public Wage Request Form...39
Appendix 18: How to Read a Wage Determination ...40
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Preface
School districts across California are building and modernizing their facilities at an
unprecedented pace since the passage of Proposition 47 in November 2002. The Governor and a bipartisan coalition in the Legislature committed the state to the largest school construction bonds in the nation’s history by passing AB 16. As a part of the negotiation to pass AB 16, which placed Proposition 47 on the 2002 ballot and the subsequent bond on the 2004 ballot, the Legislature approved AB 1506. This statute became operative on November 5, 2002 and placed the responsibility for the compliance and monitoring of prevailing wage law upon districts using school construction and modernization funds from Proposition 47 for projects with Notices to Proceed issued on or after April 1, 2003.
AB 1506 requires districts to assume a proactive role in monitoring prevailing wage
requirements by initiating and enforcing a Labor Compliance Program (“LCP”). New district responsibilities include establishing a Labor Compliance Office, monitoring prevailing wage payments, taking cognizance of apprenticeship program compliance, and taking enforcement actions such as withholding contract payments in the event of violations. For most districts in the state these new responsibilities will require additional staff and/or consultant resources. District LCPs must be in place for all construction projects funded by Prop. 47 or the 2004 Bond and must be approved by the Department of Industrial Relations (“DIR”). The requirement of DIR approval of district LCPs adds another layer in the process of building or modernizing schools with state funds. Even after DIR approval of a district’s LCP, the law requires ongoing reporting and provides for penalties, including denial and potential loss of state funding, for districts that fail to meet the requirements of the law.
The stakes are high, and for most school facilities administrators, the terrain is foreign. Labor law, especially enforcement issues, is a potential minefield of conflicting interpretations with substantial economic and legal consequences to any misstep. This Handbook is intended to be a primer for district staff and the project team as they prepare to meet the challenge of labor compliance for state-funded school construction projects.
The C.A.S.H. Labor Compliance Programs: Recommended Practices Handbook was compiled by an astute group of the state’s most active labor compliance attorneys and a committed group of LCP practitioners, including experienced school district staff and third party administrators. The Handbook is meant to be used by districts in conjunction with C.A.S.H.’s Department of Industrial Relations (DIR) -approved Labor Compliance Program, or with any of a variety of DIR-approved programs developed by districts, county offices or education, attorneys and third party administrators. C.A.S.H.’s goal is to provide districts and practitioners with a solid resource to ensure that its members meet the increasingly complex challenges of school
new regulations and interpretations are implemented, C.A.S.H. will update this Handbook as often as possible, and provide annotated sections where new legislation or interpretations may change district requirements.
This Handbook explains all phases of a district LCP and provides insights into staffing issues, impact on district programs, and tips for approval, administration, and monitoring. Section I of this handbook provides a background about LCPs and the underlying legislation; Section II identifies public works projects that require LCPs and those that don’t; Section III considers pros and cons of adoption and administration of an LCP; Section IV addresses the adoption and initiation of an LCP; Section V reviews the basic elements of an LCP; Section VI considers current issues. The Handbook Appendix includes key LCP Forms, a sample LCP Board Resolution, and a template RFP for LCP third party administrators.
Please note: While C.A.S.H. encourages districts to use this Handbook as a guide and a
resource, the information provided in the Handbook does not constitute legal advice. In general, the Handbook attempts to distinguish between what is required by law and what is recommended as practice whether or not it is statutorily or regulatorily required. C.A.S.H. encourages
districts to seek legal counsel for review and approval of any specific action districts may take during approval, implementation, and enforcement proceedings related to the districts’ LCPs.
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Section I - Introduction
A. Analysis of AB 1506 and Labor Code §1771.5.
Proposition 47, approved by voters in November 2002 and codified as Labor Code Section 1771.7, requires Districts to initiate and enforce, or contract with a third party to initiate and enforce, a Labor Compliance Program (“LCP” or “Program”). The
legislation requires an LCP for K-12 school districts, community college districts, and the campuses of the California State University and the University of California systems for public works projects financed with funds from the Kindergarten – University Public Education Facilities Bond Act of 2002 or 2004 (“Prop. 47” and “2004 Bond”
respectively, and collectively, “Bond Funds”). This Handbook is intended to assist K-12 school districts, community college districts, and county offices of education in
administration of their Programs, and uses the term “District” to refer to the educational organizations. The specified components of an LCP are found in Labor Code §1771.5, which was passed by the Legislature prior to voter-approval of Proposition 47.
The statutory requirements of an LCP are:
1. All bid invitations and public works contracts shall contain appropriate language concerning the requirements of this chapter.
2. A prejob conference shall be held by the District to which the contractor and subcontractors are invited to discuss federal and state labor law requirements applicable to the contract.
3. Project contractors and subcontractors shall maintain and furnish, at a designated time, a certified copy of each weekly payroll containing a statement of
compliance signed under penalty of perjury.
4. The awarding body shall review, and, if appropriate, audit payroll records to verify compliance with this chapter.
5. The awarding body shall withhold contract payments when payroll records are delinquent or inadequate.
6. The awarding body shall withhold contract payments equal to the amount of underpayment and applicable penalties when, after investigation, it is established that underpayment has occurred.
In adopting AB 1506, the Legislature signaled that ensuring the payment of the prevailing wage on public works projects was a legislative priority. Prevailing wage has been
California law for public works projects since the 1930s; however, enforcement of prevailing wage laws has historically been by the Department of Industrial Relations ("DIR"). That role now has been shifted to school districts and public higher education institutions.
DIR retains the statutory authority to define the method to determine the general prevailing rate of per diem wages. The general prevailing rate of per diem wages, generally referred to as "prevailing wages," is determined by review of collective bargaining agreements, federal rates and contracts, and rates in the nearby labor market area, or wage survey data. Prevailing wages include the basic hourly rate being paid to a majority or the greatest number of workers engaged in a particular craft, classification, or type of work within the locality.
Prior to AB 1506, Districts have been required to:
1. Obtain the prevailing wage rates from DIR and specify them in the bid or contract documents, or make the rates available to bidders; (Labor Code §§1773, 1773.2.) 2. State in contract documents that if the contractor fails to pay prevailing wages that
the contractor is liable to DIR for penalties and wage shortages; (Labor Code §1775.)
3. Take cognizance of prevailing wage law violations related to the District’s project and, if necessary, report suspected violations to the Labor Commissioner; (Labor Code §1726,)
4. Provide copies of certified payroll reports upon request by the public or public agency and redact specific information from those records where appropriate. (Labor Code §1776.)
B. After AB 1506: New Responsibilities and New Obligations for Districts.
1. Obtain Initial Approval of the District’s LCP from DIR prior to executing construction contracts that will be funded with Prop. 47 or 2004 Bond funds; 2. Require payment of applicable prevailing wages, adhering to apprenticeship
requirements, and meeting certified payroll requirements. The District’s bid invitations and public works contracts must contain appropriate language about the requirements of the public works chapter of Labor Code, §§1720-1861; 3. In an effort to inform contractors and subcontractors, Districts must communicate
prevailing wage information, including holding a pre-job conference to notify the contractors of these requirements;
4. During the term of a public works contract, Districts must review and, where necessary, audit materials submitted by contractors and subcontractors in order to ensure compliance with the Prevailing Wage Law;
5. If it is determined that a violation has occurred, the District must begin
enforcement action to enforce the Prevailing Wage Law and provisions of this Program, including, but not limited to, withholding contract payments under specific arrangements when payroll records are delinquent or inadequate; 6. Prepare and submit an annual report to DIR on the District’s LCP activities; 7. Establish a Labor Compliance Program Office (LCP Office) with one or more
Labor Compliance Officer(s) (“LCO”) to administer the Program;
8. After eleven months of operating its Initially-Approved LCP, the District must apply for Final Approval of its LCP from the DIR.
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Section II - Prevailing Wages and Labor Compliance Programs
A. Projects Subject to Prevailing Wage Law and Requiring a Labor Compliance Program 1. Source of funds.
Districts that receive an apportionment from the funding provided in the
Kindergarten – University Public Education Facilities Bond Act of 2002 or 2004 (“Prop. 47” or “2004 Bond”) must initiate and enforce a Labor Compliance Program (“LCP”) as a condition of receiving funds. (Labor Code §1771.7.) Any District that chooses to use funds derived from either Prop. 47 or the 2004 Bond for a public works project must set up its LCP pursuant to Labor Code §1771.5(b). Districts must only implement one LCP to cover all of its Prop. 47-funded projects.
For those Districts that are not required to initiate or enforce an LCP, the contractor on the public works project is still obligated to pay prevailing wage. Exemptions.
Districts are exempt from paying prevailing wage on any public works project of one thousand dollars ($1,000) or less. (Labor Code §1771.)
Special Exemption for Districts with District-Wide Labor Compliance Programs. Districts implement and enforce an LCP only for its Prop. 47-funded projects. They are not required to utilize their LCPs on non-Prop. 47-funded projects. However, a District may choose to utilize an LCP on all of its public works projects, regardless of whether or not they are funded by Prop. 47.
When a District elects to initiate and enforce an LCP district-wide for every public works project under the authority of the District, the District establishes what is commonly referred to as a “district-wide labor compliance program.” When a district-wide labor compliance program is in place, the District is not required to pay prevailing wage for public work projects of twenty-five thousand dollars ($25,000) or less involving construction work, or for any public works project of fifteen thousand dollars ($15,000) or less involving alteration, demolition, repair or maintenance. (Labor Code §1771.5(a).)
The benefit to creating a district-wide LCP is that the $1,000 threshold exemption for all construction rises to $25,000 for new construction and $15,000 for
alteration, demolition, maintenance or repair work.
Note, however, if the amount of the contract subject to §1771.5(a) is changed, and as a result, exceeds the $25,000 and $15,000 limits, respectively, then the District must pay prevailing wage for work performed over these applicable limits. (8 CCR §16433(c).)
There are also potential disadvantages to creating a wide LCP. A district-wide LCP applies to all District public works projects, including non-Prop. 47 and non-2004 Bond-funded projects, as well as deferred maintenance projects. As a result, the District will extend its enforcement responsibilities of the prevailing wage laws to every public works project.
Thus, the District should examine the number of all of its public works contracting under $25,000 and the number of Prop. 47 and 2004 State Bond funded projects in light of its overall number of projects to decide whether it is advantageous to create a district-wide LCP. A District must make its election between a project-based LCP and a district-wide LCP in its application for DIR approval of the Program. If a District decides to change its decision at a later date, the District must submit a new LCP application for DIR approval. 2. Types of projects requiring an LCP.
a. New Construction and Modernization:
All construction funded in part by Prop. 47 or the 2004 Bond require Districts to establish and enforce an LCP. This applies to public works projects where the construction phase of the project commenced on or after April 1, 2003, as signified by the date of the Notice to Proceed. b. Deferred Maintenance projects included in Modernization projects:
Public works projects conducted solely within the OPSC Deferred
Maintenance guidelines do not require an LCP. However, when Deferred Maintenance projects are part of a Modernization project, while they could be separated out, the ensuing complication for the contractors and Labor Compliance Officer suggest that it would be simpler and more appropriate for the entire project to come under the LCP.
3. Project workers. Covered Employees
Under Labor Code §1771, all workers who perform work on a public works project are required to be paid the prevailing wage. Each individual, laborer, craftperson, apprentice or journeyman working on a public works project is
subject to payment of prevailing wage, including any owner-operator employed by a contractor. Sole owners and partners who work on a public works project must also be paid the prevailing wage for the appropriate classification of work. (See Appendix 1: DIR Opinion Letter, December 4, 1997.)
District Employees
Prevailing wage laws do not extend to District employees. Labor Code §1771 specifically exempts work carried out by the District with its own work forces. Be aware, however, that certain limitations exist with respect to the use of District employees on public works projects. (See Public Contract Code §20114.)
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Section III - Planning and Assessment Prior to LCP Adoption and
Implementation
A. General Considerations in Assessing District Needs.
The District, as the awarding body of public works projects, must recognize its new responsibilities, which include the following: The District must stay abreast of changes in law relative to prevailing wage; the District must track the costs of complying with the requirements of AB 1506; the District must enforce labor compliance in accordance with the Labor Code; and the District should determine the amount of resources as needed beyond those required that the District is willing to expend.
It is recommended that each District adopt, not necessarily draft, its own LCP. A District that has adopted its own Program will avoid potential problems associated with having ongoing construction without the required Program enforcement activities. This could arise when a District has contracted with a TPA to enforce the TPA’s Program and the District decides to terminate the TPA’s contract. The District would be forced to quickly execute a new contract with a new TPA with a DIR-approved LCP or adopt its own LCP. If the District has its own LCP to begin with, it would only require hiring another firm to carry out its functions. Currently, a District is required to certify on the Application for Funding and Fund Release Authorization forms, SAB Forms 50-04 and 50-05
respectively, that it has complied with the applicable Labor Code sections. Districts are cautioned to consider the possible loss of funds as a result of an SAB audit if a
determination is made that the District has not complied with the LCP requirements. 1. Number and Size of construction projects.
Having decided that an LCP is necessary, the District needs to evaluate its ability to initiate, administer, and enforce an LCP. One consideration is the number and size of construction projects that fall under AB 1506. The District needs to assess the amount of work required to complete all the necessary and required steps in the LCP process. Determining factors include the number of workers on the job(s) and project timelines.
2. Timeline of the construction projects.
If construction projects are starting immediately, the District will likely need to contract out the LCP work to knowledgeable consultants who do not need training. If there is lead time before construction starts, the District can hire or transfer internal staff to this assignment and train them. One recommended
approach would be to hire at least one very knowledgeable person to supervise the training and subsequent work of staff.
Projects with a short timeline (such as 2-month summer projects) create more of a problem than long-term projects since construction is nearly complete while the Program may be in its infancy. Then it is time to finalize the project, including compliance with the LCP.
Long term projects (12 – 24 months) are less intense, allowing time for set-up and better monitoring and management.
3. Staffing available.
Once the District determines the number and qualifications of staff needed to complete the requirements, the District needs to evaluate internal resources to determine if there is sufficient District staff to implement the Program. The qualification requirements of such employees include those with good accounting backgrounds and a familiarity with construction processes and terminology. 4. Managing the Labor Compliance Program.
In addition to considering the availability of staff to do the work, the District will need to decide who will be responsible for administering the program: the District itself, a third party administrator (TPA), a combination of the two, or a Joint Powers Authority (JPA) or consortium of districts. The options include:
a. District assumes role of Labor Compliance Officer and oversees its own staff;
b. District assumes role of Labor Compliance Officer and oversees specific services of its own staff and/or one or more outside contractors;
c. District hires TPA to provide entire labor compliance program and services, reporting only the key District personnel; or
d. District becomes a member of a JPA or consortium of districts. 5. Liability Issues.
When analyzing the type of program administration to utilize for the LCP, a District should keep in mind various liability issues as they relate to each type of administration.
The following are examples of potential liability issues:
Workers who claim a District or its TPA did not notify a worker of underpayment;
Workers who claim a District or its TPA failed to adhere to privacy laws; General Contractors or Subcontractors seeking redress for frivolous or
invalid claims made by the District or its TPA regarding correctness of CPRs or apprenticeship requirements;
Claims by workers, unions, labor groups, activist organizations or other members of the public that the District or its TPA is not properly carrying out its duties.
Prior to selecting a TPA, the District must consider the possible indemnity and liability issues that may arise as a result of contracting with a TPA. The same type of potential liability analysis that a District does when it contracts with an architect, an engineer, or a construction manager should be performed prior to contracting with a TPA. This should be taken into account by a District when determining if it should utilize its own employees or contract with a TPA.
Public employees are protected from claims of negligence for errors made in the normal course of their duties. Employees acting within the scope of employment are protected from liability to the extent indicated in Government Code §815 et
seq. A District is not liable for the act or omission of an independent contractor if
it would not be liable for the act or omission if the act or omission had been that of an employee of the District. (47 Ops. Cal. Atty. Gen. 163 (1966).)
Therefore, the fact that a TPA is performing specified services, as compared to an employee performing those same services, does not increase potential liability to a District. However, a District is liable for injury caused by a tortious act or
omission of an independent contractor to the same extent that it would be liable if the District were a private person. Thus, if the TPA commits a tortious act, or omits something that later causes someone harm, the District may be held liable. In this situation, the District would expect indemnification by the TPA.
This provision should be evaluated by the District Board and Superintendent with legal counsel and the risk manager when determining if it should operate its own LCP or if it should hire a TPA.
6. Conflict of interest issues. a. TPA
Whether a District decides to hire a TPA, administer its Program with its own staff or utilize the services of a JPA/consortium, the potential for real or apparent conflicts of interest should be analyzed and measures should be put in place to minimize this risk. Special attention should be paid to potential conflicts of interest if the TPA is providing additional
the LCP, such as construction management assistance.
If choosing to hire a TPA or TPA staff for specific services, questions covering conflict of interest issues should be included in the RFP. b. District staff
A District should investigate in advance conflicts of interest that its
employees may have with work performed just as it would require a check on employees of consultants. A District should have a strong commitment to the employees chosen to provide LCP services and strive to eliminate internal political pressures to influence staff decisions regarding LCP administration. The District’s employees must be able to function objectively and independently of any influence from others regarding decisions about any administrative function in support of the LCP. a. Consortium Staff
The same conflicts of interest considerations should be reviewed for the staff working under the auspices of a Joint Powers Authority (JPA), County Office of Education or other type of LCP involving a consortia of districts.
b. DSA Project Inspectors
DSA Project Inspectors should NOT be used as field representatives for an LCP. An LCR/LCO should be verifying information about workers’ status/classifications, hours worked, apprentices on site, paycheck processes, investigation of kick-back claims, and conduct onsite interviews as part of an investigation. A State-mandated IOR is
responsible for verifying that the construction meets all requirements of the DSA-approved construction plans and specifications. It is highly inappropriate and a clear conflict of interest for the individual checking quality and correctness of construction work also to be verifying that labor laws are being followed. Such a relationship will potentially lead to
serious claims by general contractors, subcontractors and laborers against the IOR and District. This relationship is to be avoided.
B. Adoption and Administration of an LCP.
There are various ways in which a District can choose to set up and administer its LCP. A District should consider the pros and cons of each method. These pros and cons should be discussed with the District’s Superintendent, legal counsel, and risk manager,
construction program administrator, and architect in order to tailor an administrative process that works best for the District’s specific needs. The following are some factors a District should consider in adopting an LCP.
This part is separated into two components: Program adoption, which consists of the LCP document preparation and approval, and the Program implementation, which consists of establishing the administration of the Program.
1. Pros and cons of each method of Program adoption. a. Prepare and adopt District’s own LCP.
This model envisions the District hiring a lawyer or a consultant to write an LCP specifically for the District. The resulting document belongs to the District.
An advantage of preparing an LCP tailored to the District is the
knowledge gained in doing so. In addition, the Program will reflect the District’s particular manner of implementation. The District’s Program will stay in place throughout the term of the project(s), regardless of who administers the Program.
The disadvantage is the length of time it takes to prepare and obtain approval for a Program.
b. District adopts an already-approved LCP.
This model has two subsets: the District selects an already approved LCP, such as the C.A.S.H. Model LCP or one from another District, a JPA or consortia, or any other program approved by the DIR, or the District adopts the LCP of the TPA.
The fastest and easiest approach to accomplish Step One (having an approved LCP) is for the District to select an LCP from the list on the DIR website and adopt it for its own Program. There are many approved programs available at this time, making it unnecessary for Districts to “reinvent the wheel.” The DIR website lists all DIR-approved programs; however, not all are available to download. If a District accepts the program “as is” then it only needs to submit the DIR application form and reference the approved Program to be used. If a District likes an approved model Program but wants to change any portion of it, the District must submit it as a new document for review and approval. The document should be accompanied by a cover letter explaining that the District is using a DIR-approved program and enumerating the specific changes to the Program for purposes of the District. Providing such documentation may expedite DIR approval of the Program for the District. If the
Program belongs to a TPA, the District should modify the LCP to meet its own needs and adopt it, thus, ensuring that the District has its own
The advantage to this approach is the time saved in moving to the next step: staffing the need. There is an additional advantage in the savings in dollars by adopting a work completed (and free) versus hiring a consultant to write up a new Program just for the District.
A District Board of Education should adopt the LCP chosen as its own even if it is administered by a JPA or TPA.
2. Pros and cons of each method of administration.
Once a Program is approved, the District will have to implement and enforce it. The administration of the Program should be considered by the District at the same time it is determining which approach to adopt. Following are three options for administration and their pros and cons.
a. Hire a Third Party to administer.
The advantages of hiring third party administrators (TPA) include: getting knowledgeable staff, filling a need quickly, tracking LCP administration costs easily, potentially bringing greater objectivity and professionalism to the job, and the ability to release the TPA as soon as the project is done. The disadvantages include: a lack of qualified TPAs, the costliness of hiring work to be done, some TPA’s minimal understanding of District management systems, verification of the TPA’s qualifications and history with DIR, and potential vulnerability of District if the TPA goes out of business and is unable to perform all services as required or is fired. b. Administer with District staff.
The advantages of having District staff administer the Program include: overall cost savings and the ability to direct internal staff’s work and assignments. Software has been developed to assist District staff in complying with the LCP.
The disadvantages of having District staff administer the Program include: lack of experience, lack of knowledge of construction processes, need for training, and specialized work for short-term assignment (one or two projects).
It should be noted that other concerns exist, which may or may not be disadvantages. It will be necessary to segregate and track costs for administering the LCP from other work being done by the same District staff. An additional concern involves a potential loss of objectivity as staff might be subject to internal political pressures while carrying out their LCP responsibilities. It is exceedingly important that the
Superintendent and his/her staff fully support the actions and directions of the LCO so that he/she will be able to enforce the law effectively.
c. District administers Program, uses its own staff for some functions and hires outside contractors for specific services.
The advantages of having the District staff assume the responsibility of the LCO and hiring outside contractors to provide specific services include: the District maintains control of the Program and control over sensitive decisions while having the services taken care of by knowledgeable staff; the District harnesses the skills, knowledge and experience of its own staff and TPA staff; the District can fire the TPA staff without losing the program; the TPA staff can train District staff.
The disadvantages include the District assuming greater responsibility and liability for the Program, potential bureaucratic confusion in job
responsibilities, and difficulty in segregating and tracking costs relative to the administration of the LCP.
d. District becomes a member of a JPA or consortia of districts formed into a collaborative for purposes of administering an LCP. This approach may promote cost savings and the development of expertise at the county or regional level.
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Section IV - Adoption and Initiation of an LCP
A. Draft and Adopt a Resolution.
The District’s Governing Board must, as part of the statutory requirements, adopt an LCP. The adoption is one of a number of possible items to include in the required resolution. Minimally, the Resolution should contain the following points:
1. Acknowledgement of intent to use Prop. 47 or 2004 Bond funds, which requires adoption of an LCP;
2. Intent to adopt an LCP that complies with Labor Code §1771.7 and other laws, which will be submitted to DIR for approval;
3. Authorization for the District Superintendent or designee to implement the LCP, which may require one or more of the following procedures:
a. Submittal of the Adopted LCP to DIR for Initial Approval;
b. Completion of SAB Forms 50-04 and 50-05, including certification that the District has or will initiate and enforce an LCP;
c. Request for authorization to proceed with a Request for Proposal for services for enforcement of the District’s LCP; or
d. Request for authorization to execute an Agreement with the selected company; or
e. Designation of the District employees who will enforce the LCP and specifically designating the District’s Labor Compliance Officer (“LCO”). 4. Intention to require preparation of the Annual Report and return it to the Board as
well as submit it to DIR;
5. Submittal of the Initially-Approved LCP to DIR for Final Approval after eleven months of operation.
See Appendix 2 for a Flowchart of an LCP Development and Approval Process and Appendix 3 for a Sample Governing Board LCP Resolution.
B. Complete DIR Application for Initial Approval.
1. Mandatory DIR Application Form for Initial Approval.
After adoption by the District’s board, the mandatory DIR Application Form must be completed and submitted to DIR. This Form is required whether the District adopts a DIR-approved Program or drafts its own Program. It is also required whether the District will be enforcing the LCP with a TPA, its own staff, or a combination of the two methods.
a. If the District has adopted an LCP that is DIR-approved, the Application Form is completed as follows:
i. List the District information as requested and the Primary contact persons at the District;
ii. Question A1 and A2: List the primary contact persons for the District’s Program. The primary contact person may, or may not, be the District’s designated LCO, depending upon the
administrative method chosen by the District. The relevant experience of the contact person should be included here, such as construction management, contract management experience, or payroll experience. Currently, in some situations, DIR has approved programs, which will be enforced by District staff with limited experience. This has primarily been where the District intends small construction projects. However, Districts should be advised that in the future, DIR will be more stringent in its review of acceptable experience for District staff;
iii. Question B: List all other staff who will be involved in the LCP functions: If the District will utilize additional employees, they should be named here. If the District intends to contract with a TPA, the name of the TPA and its relevant experience should be included here;
iv. Question C: State the number of public works projects administered annually by the District;
v. Question D: State whether the District is joining in with any other awarding body in the initiation and enforcement of this LCP. Note that this question is asking for an explanation of the relationship between the awarding bodies and their joint efforts to enforce an LCP. A District that is contracting with a TPA is not considered to be part of a joint or cooperative venture;
vi. Question E: State the District’s experience, if any, of taking cognizance of (i.e., becoming aware and taking action upon) an
apparent Labor Code violation in its public works contracts during the past five years. The District should include any instances in which it has made DIR aware of possible Labor Code violations during the previous five years;
vii. Question F: Identify the District’s attorney or law firm that will be available for legal support during the enforcement of its LCP. The District must include the name of its attorney or law firm that will be available for assistance in the LCP administration;
viii. Question G: Where the District has adopted an already-approved LCP, it should state that it has and the name under which the DIR has approved the LCP. For instance, if the District has adopted the C.A.S.H. Model LCP, it should state that here, likewise with the name of the entity that received approval from the DIR, for example, the TPA name. For these situations, the District is not required to submit a copy of the Program document if it has not made any changes to the Program;
ix. Question H: The District should include a paragraph from the LCP that explains the process by which the District will inform the DIR of willful violations of the Labor Code.
2. Completing the DIR Application Form when the District has drafted its own LCP Program.
The Application Form is completed in the same manner with the exception of Question G, where it should be stated that the District’s LCP Program is included. See Appendix 4 for a Sample DIR Application Form.
C. Legal and Contractual Issues in TPA Selection.
If a District chooses to use a TPA, it should address issues of a selection process, indemnity, insurance, and payment methods as described below. The District will have other considerations as well, which it should discuss with its legal counsel. This list is not intended to be inclusive, only a starting point.
1. Competitive Selection Process for TPA Services.
Although TPA services are not designated as a professional service pursuant to Government Code §4525, it is recommended that Districts consider the
requirements of Government Code §4526, which describes a District’s responsibility for selecting professional services.
a. Government Code §4526 requires that various professional services be procured via a process that shows the selection was based on
“demonstrated competence and qualifications.” This is satisfied by the issuance of an RFP that requires responding professionals to include a statement of experience and qualifications, a listing of previously completed projects, and other information helpful in making a determination as to the relative qualifications of the firm.
b. It is sufficient for the District to request information as to the fees proposed by the responding professionals. After that, the District may evaluate the proposals that it has received and, if desired, negotiate with the responding firms as to the amount of fees to be paid and other terms of the proposed contract.
c. The competitive process does not require a District to select and to execute a contract based on the proposal with the lowest fee.
See Appendix 5 for a Sample RFP. 2. Indemnity Clause.
If choosing to hire a TPA, an indemnification clause should be included in the TPA’s contract. The clause included in the TPA’s contract should be reviewed by the District’s legal counsel and risk manager. A sample Indemnity clause is provided below:
The TPA agrees to defend, protect, and hold harmless the District and its governing boards and each member thereof, its officers, agents, and employees from any and all claims, liabilities, expenses or damages of any kind, including attorneys’ fees, damage to property, for injury or death of any person, or, for interference with use of property, arising out of or in any way connected with the negligent acts, errors or omissions, or willful misconduct by the TPA, its agents, officers, employees, consultants hired by the TPA for this Agreement. The sole exception to the TPA’s responsibility to defend, protect, and hold harmless the District is where a claim, liability, expense or damage occurs due to the willful misconduct, sole, or active negligence of the District. This hold harmless clause shall apply to all liability regardless of whether any insurance policies are available. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the TPA.
3. Insurance Requirements.
If choosing to hire a TPA, the District should require the TPA to carry insurance to protect the District, such as:
a. Errors and Omissions Insurance
Recommended limits of coverage should be discussed with the District’s risk manager and legal counsel. Please refer to the sample RFP in Appendix 5 for more detailed discussion of recommended insurance requirements.
4. Payment methods. a. TPA
TPA payment procedures and the fees to be paid by the District should be clearly described in the District’s contract with the TPA. The following chart represents various methods that may be considered for payment with a TPA. Presently there is no “track record” for Districts to follow. The following methods could be combined and there may be additional methods available to Districts. It is anticipated that after a period of LCP operation, there will be more examples of fee structures.
Payment Methods Chart
Fee Type Description Advantage Disadvantage
Fixed A lump sum fee Simplicity District may pay more than necessary; fee structure is inflexible. Fixed Fee based on percentage of Construction Contract
A lump sum fee, percentage of contract The percentage may be representative of the complexity of LCP.
Larger projects may actually be simpler, and require less compliance effort. Percentage may not correlate to Project size.
Hourly TPA is paid an
hourly rate District pays only for work performed.
TPA has an incentive to work additional hours. Hourly with a
not-to-exceed maximum amount
TPA works at an hourly rate, with a not-to-exceed amount
May result in less expense to the District.
Maximum may be reached before Project is completed; contract must be renegotiated unless specified in the
conditions for overruns. Per item A rate per CPR/
investigation / audit/week
Sliding scales for number of items may reduce costs.
Difficult to gauge
number of expected items per project Per OPSC Formula Sliding scale of percentage of construction costs Direct relationship to amount of grant. Fee structure is inflexible; percentages may not correlate to work required.
b. District Staff
If utilizing District staff for LCP administration, no special payment methods are needed, however, the District must track actual time spent by staff in administering the LCP in order to have proper documentation for the Office of Public School Construction (OPSC) project close-out. This also will help the District assess the cost of the Program versus the grant provided by the State to administer the Program. The information will be useful to the State in evaluating the adequacy of grant amounts provided by the State after the initial year of operation.
5. District’s Right to Terminate TPA Services.
It is recommended that Districts include a relatively short termination notice period in the TPA contract. As with any other professional services agreement, the District must consider what is an adequate period of time to notify a service provider that the District no longer wishes to contract for the services. Factors to consider are: the availability of a replacement TPA; the time needed to obtain required Board approval of a new contract; the possible impacts to the project if there is a disruption in LCP enforcement; the possible loss of state funds if replacement TPA services are not immediately obtained; and the possible additional costs due to the termination, including sources of the District’s share. The following is a sample of contract termination language, which allows the District to terminate the TPA services agreement with or without cause. Districts should confer with their legal counsel and risk managers to decide upon the number of days notice to provide. It is recommended that the notice period be no shorter than fifteen (15) days and no longer than thirty (30) days.
a. Termination of Agreement of TPA Services. The District in its discretion may suspend or terminate the TPA services under this Agreement following fifteen (15) [thirty (30)] days written notice to the TPA to terminate this Agreement.
b. Abandonment of the Project. The District has the absolute discretion to suspend or abandon all or any portion of the work on the Project and may do so upon written notice to the TPA. Upon notice of suspension or abandonment, the TPA shall discontinue any further action. If the entire work to be performed on the Project is abandoned, the parties shall each be relieved of the remaining executory obligations of the Agreement.
c. Compensation in the Event of Termination, Abandonment or Suspension. In the event the District in its discretion terminates, abandons or suspends the work or a portion thereof on the Project, there shall be due and payable to the TPA within thirty (30) days following such termination, abandonment or suspension,
compensation for the amount of services performed or provided by the TPA prior to the time of such termination, suspension or abandonment of this Agreement.
d. Delivery of Documents. Upon termination, abandonment or suspension, the TPA shall deliver to the District all documents, records, reports, notices, and matters completed by the TPA to which the District would have been entitled at the completion of the TPA’s services.
e. Procurement of Similar Services. In the event this Agreement is terminated in whole or in part, as provided in this Section, the District may procure, upon such terms and in such manner as it deems appropriate, services similar to those terminated.
D. Changes/Amendments to LCP.
Where a District’s primary contact person, second contact person, or LCO named on the DIR Application Form is no longer accurate, it is recommended that the District notify DIR by letter amending the appropriate information. It need not send in a new DIR Application form. Where the District is changing the TPA that will enforce the School District’s LCP, it is recommended that the District inform DIR by letter stating the name of the new TPA and the effective date of the change.
E. DIR Approval of District LCP: Initial Approval, Rejection, and Final Approval. 1. Initial Approval.
a. Within thirty (30) days of submittal of the LCP, the DIR will review the LCP for compliance with the appropriate Labor Code sections. Per 8 CCR §16426(b), the DIR must approve or reject the LCP within this time
frame. The DIR will contact the District’s primary contact person designated as such on the Application Form. The DIR may send a
rejection letter that will identify those areas of the LCP that do not comply with the Labor Code.
b. Upon receipt of a rejection letter, the District should immediately contact DIR to clarify the reasons for the rejection, make the necessary
corrections, and resubmit the LCP.
c. The District should also schedule the application for Final Approval. The DIR’s Initial Approval period automatically expires one year after it has been granted unless an extension is requested in writing and granted in writing by the Director at least thirty (30) days prior to the anniversary date of the Initial Approval, pursuant to 8 CCR §16426(c).
d. DIR’s Initial Approval will be based on the seven factors outlined in 8 CCR §16426.
2. Extended Initial Approval.
a. The DIR may extend the period of time for the Initial Approval for a period of up to 18 months, pursuant to 8 CCR §16426(c).
3. Final Approval.
a. After eleven months of continuous operation of its LCP, the District may apply to DIR for Final Approval of its LCP. The District bears the burden that it meets the criteria established in 8 CCR §16427(b), which are: (i) The awarding body has satisfactorily demonstrated its ability to
monitor compliance with the requirements of the Labor Code and the implementing regulations and has filed timely, complete, and accurate reports as required under the regulations; and
(ii) Within thirty (30) days of receipt of the District’s request for Final Approval, the DIR shall notify the District whether Final Approval has been granted and the effective date of the Final Approval. If the request is denied, the Director must indicate the reason for the denial and the status of the District’s LCP. (8 CCR §16427(c).) b. Upon Final Approval, the District may enter into an agreement with the
Labor Commissioner, which may provide for procedures and for securing approval of forfeitures in a manner different from that set forth in 8 CCR §16437, and for alternate procedures for appeals of enforcement actions to the Director.
LABOR COMPLIANCE PROGRAMS
C.A.S.H. Recommended Practices Handbook
Section V - Basic Elements of a Labor Compliance Program
A. Establish an LCP Office with One or More Labor Compliance Officers. 1. How to determine the number of officers or staff needed.
There is no hard and fast rule on how many individuals will be needed to administer and implement an LCP. This will be determined by many factors closely related to the number of workers on District projects. In other words, the more workers, the more demand and work for the LCP/LCO. Some of the factors to consider include:
Number of Project(s); Size of Project(s);
Number of contractors and subcontractors working on the Project(s). 2. Examples of staffing of existing LCPs as of October 2003:
a. San Juan Unified School District:
$13,257,162 Annual Construction Expense/Budget: 8 General Contractor Projects/Ave. Budget $1,657,145 0 Multiple Prime Projects/Average Budget
LCP Staff:
1 Labor Compliance Officers, TPA
1 Full-Time Labor Compliance Staff, TPA _________Part-Time Labor Compliance Staff _________Full-Time Investigators/Interviewers 1 Part-Time Investigators/Interviewers TPA Method of Payment: Hourly with FTE, investigations extra b. Yuba City Unified School District:
$26,203,753 Annual Construction Expense/Budget:
Number of General Contractor Projects/Average Budget $3,290,000 Number of Multiple Prime Projects/Average Budget
LCP Staff:
3 Labor Compliance Officers
1 Full-Time Labor Compliance Staff _________Part-Time Labor Compliance Staff _________Full-Time Investigators/Interviewers 4 Part-Time Investigators/Interviewers
c. Center Unified School District:
$20,000,000 Annual Construction Expense/Budget:
Number of Planned CM At Risk Projects/Average Budget $20,000,000 Number of Multiple Prime Projects/Average Budget
LCP Staff:
1 Labor Compliance Officers
_________Full-Time Labor Compliance Staff _________Part-Time Labor Compliance Staff _________Full-Time Investigators/Interviewers 1 Part-Time Investigators/Interviewers 3. Immunity/liability for public employees.
Employees of Districts who are acting within the scope of their employment at the District are protected from liability to the extent indicated in the Government Code. (Government Code §§815, 815.2(b), and 820.2.) This has been interpreted by the California Attorney who found,
An employee acts within the scope of his employment when he acts in furtherance of his employer’s purposes even though he may act contrary to specific functions. (Citation omitted) Under section 825 of the Government Code, it is mandatory that the public entity indemnify the board member when he acts within the scope of his office, subject to a right of subrogation only where he acted or failed to act because of actual fraud, corruption or malice.
(47 Ops.Cal.Atty.Gen. 163 (1966).)
Employees operating a District’s LCP would be covered by this same protection and indemnification from the District.
4. Physical location and confidentiality of files.
All files related to the District’s LCP are the District’s files, not the TPA’s files, the contractor’s files, or the construction manager’s files. Therefore, the District must ensure, as with all files related to its construction projects, that these are kept, in the normal course of business, either by District staff or for the District by an agent of the District authorized to maintain those files.
The files related to the District’s LCP, including the files discovered through an audit or investigation, are not, by themselves, confidential. These documents may be confidential for other reasons, including, without limitation:
a. Any document that shows a worker’s name, social security number, or address is confidential, including CPRs. Before any CPRs can be provided to an outside party requesting them, these three pieces of information must
be blocked out/redacted. If the DIR or one of its divisions requests this information, it must receive all the information unredacted;
b. As discussed below, there are now a few companies that offer software that can be used to examine CPRs. Because some of this software likely
requires an internet connection, a District must ensure that the CPRs that are being reviewed are not accessible, either in hard copy or over the internet, by any person that is not authorized to review those records.
B. LCP Information in Bid Invitation and Contract Documents. 1. Language template for bid invitation.
The “bid invitations” for LCPs must contain “appropriate language concerning the requirements of this chapter.” (Labor Code §1771.5(b)(1).) This language need not go into detail about the LCP. Generally, a sentence similar in form to the following is sufficient:
This Project is funded in whole or in part with State bond funds and, therefore, the District and/or its designee will be operating an Initially-Approved Labor Compliance Program on this Project pursuant to Labor Code §1771.7.
The information above is in addition to the previous requirement that all public works projects indicate in the bid advertisement the prevailing wage requirements of public works. A section similar in form to the following is sufficient:
The Project is a “public work” to which general prevailing wage rates will apply in accordance with Labor Code §1770, et seq. A copy of the District’s LCP and the prevailing wage rates are on file and available for review in the District’s principal office located at _________________, and also shall be posted at the project job site. The Contractor and all Subcontractors under the Contractor shall pay all workers on all work performed pursuant to this Contract not less than the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work as determined by the Director of the Department of Industrial Relations, State of California, for the type of work performed and the locality in which the work is to be performed within the boundaries of the District. Contact _____________ at (___) _________ for further information.
2. LCP language in the other bid documents.
The “public works contracts” for LCPs must also contain “appropriate language concerning the requirements of this chapter.” (Labor Code §1771.5(b).) There are no specific guidelines on what language to include. A good practice would be to
include information in the District’s bid documents to provide sufficient notice to prospective bidders. Generally, include language in the Instructions to Bidders, the Bid Form, the Agreement, and the General Conditions. The following text may be used or adapted to be included in these bid documents:
The District and/or its designee will be operating a labor compliance program on this Project pursuant to Labor Code §1771.7. Contractor specifically acknowledges and understands that it shall perform the Work of the Project while complying with all the applicable provisions of the District’s Labor Compliance Program, including, without limitation, the requirement that the Contractor and all of its Subcontractors shall timely submit complete and accurate CPRs. Submission of these CPRs shall be as indicated in the Contract Documents and the District shall withhold payments to the Contractor for failure to comply with these requirements as indicated in the Contract Documents. This provision is only applicable if the Project is funded in whole or in part with State bond funds.
3. Review General Conditions for the Contract.
As stated above, Districts should include provisions relating to the LCP in its bid documents stating that full cooperation with the District’s LCP is a requirement of the contract. In addition, each District must ensure that its bid documents,
especially its general conditions, are consistent with the LCP.
a. The reasons for which the District can withhold payment (full or partial) to the contractor should include the contractor or its subcontractor failing to provide complete and accurate CPRs.
b. The provisions regarding CPRs must include the requirement that the contractor and its subcontractors submit CPRs to the LCO, not just that the contractor shall maintain those records.
Many LCPs require contractors to submit their CPRs weekly. Some LCPs are able to operate when contractors submit their CPRs bi-weekly,
staggered bi-weekly, or monthly. DIR has recommended that LCPs maintain a weekly submittal requirement so that Districts are not
inundated with, for example, four weeks of CPRs with each monthly pay application, which could delay payment to contractors. The District may want to follow this recommendation and only reduce the frequency if the District determines, after operating its LCP, that the LCP could operate with a reduced frequency of submittal.
c. The information above is in addition to the existing requirement that contractors and subcontractors submit CPRs within 10 days of a request.
See Appendix 15 for Optional General Conditions for
Construction Contracts Relating to Timely Submission of CPRs and the Withholding of Contract Payments.
4. Whether to include the LCP in the Project Manual/Specifications.
Regardless of whether the LCP is included in the District’s Contract Documents and Project Manual, the LCP is part of the District’s contract with its
contractor(s). Some Districts reference the LCP only and only give one copy to bidders who request a copy. In any case, Districts should ensure that the
successful bidder receives a copy of the LCP either at or before the pre-job conference.
C. Pre-Bid, Pre-Job Conference and Pre-qualification. 1. Pre-Bid conference (optional).
There is no requirement in the LCP statute that a District have a pre-bid
conference, job walk, or site visit. Most Districts do have pre-bid conferences to inform bidders about the project specifics, site features, and other items. Because informing bidders about labor compliance requirements without scaring bidders away is a recommended practice, it is best to discuss the District’s LCP at any pre-bid conferences. Districts should note that any mandatory pre-bid conference must be noticed in the advertisement for bids and cannot occur until after five (5) days from the publication of the “initial notice.” (Public Contract Code §6610.) 2. Pre-job conference (mandatory).
a. The District must hold a “pre-job conference [that] shall be conducted with the contractor and subcontractors to discuss federal and state labor law requirements applicable to the contract.” (Labor Code §1771.5(b)(2).) There are twelve items that the LCP administrator must discuss with the contractors. A checklist of those twelve items for review and signature by all present at the meeting is at Appendix 6. Although the District should inform its general contractor(s) that all subcontractors must attend the pre-job conference, the District should hold the pre-pre-job conference with all the contractors who show up and not postpone it in the hopes of getting all subcontractors there.
b. Some LCPs also include the following:
i. A specific requirement that the General Contractor ensure that all subcontractors receive and acknowledge the information and requirements of the LCP;
ii. A requirement that each attendee at the pre-job conference sign an attendance sheet in addition to the checklist because some
attendees may be reluctant to sign the checklist;
iii. A specific notification to the contractor and all subcontractors that they must comply with all LCP requirements, including that every worker of every contractor and subcontractor of every tier must be listed on a CPR.
3. Pre-qualification.
California Public Contract Code §20111.5, in conjunction with some provisions of §20101, provides that a District may pre-qualify bidders by requiring that the bidder complete and submit a standardized questionnaire and financial statement and then by evaluating this information pursuant to an adopted uniform system of rating bidders.
Districts must carefully consider whether and how to do pre-qualification of its contractors and whether labor compliance is part of the information that a pre-qualifying contractor must submit to the District. Because pre-qualification can reduce the number of potential bidders on a project, the District, with its
construction manager and architect, should carefully evaluate the bidding climate in the area at the time before deciding to pre-qualify bidders on its projects. Assuming the District decides to pre-qualify bidders, the District must carefully evaluate what labor compliance information to request, if any, and the weight to give that information. For example, if a District decides to ask whether the DIR has ever found that a contractor has violated the prevailing wage laws, the District must determine if that is fatal. If so, the contractor would be precluded from bidding. If it is not fatal, the District would only deduct points from the contractor.
A finding that a contractor is not qualified to bid is not a finding that a bidder is non-responsible or debarred from bidding, but the end result is the same for that contractor – that contractor cannot bid on the project. Contractors will always challenge a finding of non-responsibility and will more often than not challenge a finding of not qualified. If the District does not qualify a bidder based on past prevailing wage violations – even if the State did not debar that contractor from bidding – the District must do so knowing it is penalizing that contractor more than the State itself did for the same violation.
Therefore, based on this example, the District must carefully consider how to treat labor compliance information received during a pre-qualification process.
LCP information that a District may consider requesting could include, for example:
a. Whether the contractor has had experience in working with a labor
compliance program on a public works project at the federal, state, or local level;
b. Whether the contractor has been debarred by any public agency for prevailing wage violations;
c. Whether the contractor has had any complaints filed against it with DIR, the status of the complaint(s), and the outcome of those complaints. Also, the completed questionnaires and financial statements provided to Districts are confidential, and may not be produced as a public record.
4. In-Service and training.
Because LCPs are new to virtually every District, most Districts should provide management in-servicing and workshops for facilities, business, accounting, and legal staff relative to the terms, requirements, and administration of the LCP. This is important even if the District is contracting with a TPA for LCP services because many on District staff will be coordinating with the TPA and should know the goals and intent of, and procedures in, the LCP.
D. Contractor’s Responsibilities Pursuant to the LCP.
The following provides the requirements of each contractor on a public works project where an LCP is in place:
1. Contractor’s Maintenance and submittal of CPRs.
a. All CPRs must be on forms provided by the DLSE (Form A-1-131) or shall contain the same information, such as the name, address, and social security number of each worker, his or her classification, a general description of the work each employee performed each day, the rate of pay, including rates of contributions for/or costs assumed to provide fringe benefits, daily and weekly number of hours worked, deductions made, and actual wages paid.
See Appendix 7 for DLSE Form A-1-131.
b. Each individual, laborer, or craftsperson working on the Project must appear on the CPRs. Each Contractor who pays a worker must report that individual on its CPRs, including each individual working as an apprentice in an apprenticeable trade. This applies as well to Contractors employing owner-operators, sole proprietors, and partners. Owner-operators, sole proprietors, and partners performing labor also must report their wages. Similarly, rental companies paying rental equipment operator’s wages must report those wages. An authorized signatory of the Contractor must
verify CPRs under penalty of perjury. The Contractor must submit the CPR to the District at the time designated in General Conditions. 2. General Contractor responsibilities for Subcontractors.
Even before AB 1506, each of the District’s prime contractor(s) was responsible for ensuring that all its subcontractors of any tier comply with the prevailing wage requirements. (Labor Code §1775.) The prime contractor must monitor the subcontractors’ payment of the specified general prevailing wages to their employees by periodically reviewing the subcontractors’ CPRs. Upon becoming aware that a subcontractor has failed to apply the specified prevailing rate of wages, the prime contractor must take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the
subcontractor for work performed on the public works project. When the wage complaint has been resolved, the contractor must pay any money retained from and owed to a subcontractor.
Prior to making a final payment to the subcontractor for work performed on the public works project, the prime contractor must obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the general prevailing rate of per diem wages to its employees on the public works project, as well as any penalties which may have been imposed for working hours violations.
3. Contractor’s obligation to employ apprentices.
a. Every contractor and subcontractor on a District project must employ available apprentices that are individually registered under a bona fide apprenticeship program registered and approved by the State Division of Apprenticeship Standards (DAS). Apprentices employed on public works projects must work at all times under the direct supervision of
journeymen. Any worker listed on a payroll at an apprentice wage rate, who is not registered, must be paid the journey level wage rate determined by the DIR for the classification of work he/she actually performed. Pre-apprentice trainees, trainees in non-Pre-apprenticeable crafts, helpers, and/or others who are not duly registered as apprentices must be paid full prevailing wage rates as journeypersons in the appropriate craft.
b. The above requirement means that each contractor must do the following: i. Submit Contract award information to the apprenticeship
committee for each apprenticeable craft or trade in the area of the project. A copy of DAS Form 140 that must be used for this purpose is at Appendix 8;
ii. Request dispatch of apprentices from the applicable apprenticeship program(s) and employ apprentices on the project in a ratio to
