For Contractors Bidding on California State and Local Public Projects
In addition to general California state and federal laws applicable to performing work on private construction jobs, contractors bidding to prime contractors, developers or California state or local public agencies and performing work on California state or local public agency projects MUST COMPLY with ADDITIONAL laws governing award and performance of work. Laws to be aware of when bidding on and performing California public construction contracts include, but are not necessarily limited to:
- Contractor Registration Requirement
Any contractor or subcontractor seeking to bid on a public works construction project or to be listed as a subcontractor in a bid proposal must be registered with the Department of Industrial Relations before submitting a bid. See: http://www.dir.ca.gov/Public-Works/PublicWorks.html for additional information on the registration requirements and to register. All public works projects are subject to compliance monitoring and enforcement by the Department of Industrial Relations.
- State Contractor License Laws
Business and Professions Code sections 7026 and 7028.15 specify that all contractors submitting bids must be properly licensed at the time bids are submitted (this includes all subcontractors). Labor Code section 1021 provides for penalties of $120 per worker employed per day for contracting without the proper California State License. This penalty is in addition to other penalties that may be provided by law.
- Subletting and Subcontracting Law
Public Contract Code section 4100 et seq. (the Subletting and Subcontracting Fair Practices Act) requires that the prime contractor list in the bid proposal, the name, location of the place of business and license number of each subcontractor, and prohibits the substitution of any listed subcontractor after the bid is awarded without the formal consent of the awarding authority.
- Prevailing Wage Laws
Labor Code sections 1771, 1773, 1773.1 require all contractors to pay all workers employed on public works not less than the per diem prevailing wage as determined by the State Department of Industrial Relations. This wage includes employer payments for health and welfare, pension, vacation, travel time and subsistence pay and apprenticeship or other training programs authorized by Labor Code section 3093. Contractors and subcontractors found in violation are subject to payment of all back wages found owing and may be subjected to liquidated damages and penalties of up to $50 per worker per day and/or debarment pursuant to Labor Code section 1777.1.
- Overtime Pay
Labor Code section 1815 requires payment of overtime pay for all work in excess of 8 hours per day and in excess of 40 hours per week at not less than 1.5 times the basic rate of pay. Labor Code section 1813 assesses the payment of $25 per worker per day for violation of overtime requirements.
- Itemized Wage Statement
Labor Code section 226 et seq. requires that all employers provide their employees with an itemized wage statement showing, among other things: gross wages earned, hours worked, the hourly rate paid, all deductions taken, net wages earned, the start and end dates of the pay period, the employee’s name, and either the I.D. number or the last four (4) digits of the employee’s social security number, and the name and address of the entity that is the employer. The itemized statement or voucher must be provided with the paycheck.An employee who suffers injury because of a violation of Labor Code section 226 is entitled to recover the greater of actual damages or $50 for the first violation, and $100 for each subsequent violation up to $4,000, in addition to attorney fees and costs. In addition, the Labor Commissioner may impose penalties of $250 per employee per violation and $1,000 per employee per violation for each subsequent violation.
- Unemployment Insurance
Unemployment Insurance Code sections 2101 and 13101 make it unlawful for an employer to fail to report information required by law to the Employment Development Department or to provide false information. This sort of violation commonly occurs when a contractor fails to withhold payroll taxes from his employees and then fails to report wages paid to employees on the Employer’s Quarterly Tax Returns. Violations of these statutes are a crime and subject violators to substantial civil penalties.
- Anti-Kickback
Labor Code sections 223 and 1778 prohibit paying a wage less than the prevailing wage rate on a public work, and prohibit the taking of any portion of the wages of any worker or working subcontractor in connection with services rendered on any public work. Such violation may constitute a felony.
- Certified Payroll Records Required
Labor Code section 1776 requires that all contractors or subcontractors maintain and submit upon request of the public agency certified payroll records for all construction employees. Certified Payroll Records must be provided to the Labor Commissioner on a monthly basis, or more frequently if specified in the contract with the awarding body. The Department of Industrial Relations has an online system for lodging Certified Payroll Records. The Labor Commissioner may exempt a project from the requirement to lodge Certified Payroll Records under certain circumstances.
- Workers Compensation Coverage Required
Labor Code section 1861 requires that each contractor to whom a public works contract is awarded maintain workers compensation insurance for all construction workers employed on the public works job and file a statement with the awarding body attesting to such coverage.
- Apprentices on Public Works
Labor Code section 1777.5 requires all contractors and subcontractors on public works jobs to: (1) Notify in writing the local apprenticeship committee for each applicable craft of the contractor’s public contract award within 10 days of contract award including information specified on the DAS 140 Form (available from the California Division of Apprenticeship Standards); (2) Request dispatch of and employ state-registered apprentices in accordance with the required 1:5 ratio of apprentice to journeyman hours, or other applicable ratio approved by the Division of Apprenticeship Standards; and (3) Make apprenticeship contributions to either the local Apprenticeship Committee or the California Apprenticeship Council. Violations may result in being denied the right to bid on public works projects for one year and civil penalties of $100 for each full calendar day of non-compliance.
- Minority & Women Business Opportunities
Various provisions in the Public Contract Code, and many local ordinances and invitations for bids require that minority and women business enterprises have the maximum opportunity to participate in the performance of contracts and subcontracts.
- Health and Safety Laws Labor Code section 6400 et seq. requires that all employers furnish a safe and healthy place of employment; establish, implement and maintain an effective injury prevention program; and comply with all applicable occupational safety and health standards.
- Non Discrimination in Employment
Contractors on public works projects shall not discriminate on the basis of any protected characteristic in the employment of persons on a public works project.
- Misclassification of Employees as Independent Contractors
Labor Code section 2750.5 creates a rebuttable presumption that a worker providing services to a licensed contractor is an employee, not an independent contractor. Under Labor Code section 226.8 contractors who misclassify employees as independent contractors may be subject to civil penalties of not less than $5,000 and not higher than $15,000, and potentially higher.