LABOR COMPLIANCE PROGRAM PROCEDURES MANUAL

Transcription

1 LABOR COMPLIANCE PROGRAM PROCEDURES MANUAL STATE OF CALIFORNIA REQUIREMENTS AS OF JANUARY 21,

2 TABLE OF CONTENTS Preface iii Mission Conflict of Interest Certification Statement Under Penalty & Perjury Contact Information Amended Regulations from the DIR Effective Introduction iii iv v vi x Chapter 1 Benefits of a Labor Compliance System 1 Chapter 2 Prior to Construction Procedures 3 Chapter 3 Prevailing Wage Language for Bid Documentation 4 Chapter 4 Standards of Responsibility: Prevailing Wages 5 Chapter 5 Detail of Prevailing Wage Payment Coverage 10 Chapter 6 Contractor Requirements 11 Chapter 7 Overview of Labor Code Sections 1771, 1774, and Chapter 8 Overview of Labor Code Section and (a)(1) 21 Chapter 9 Duties of the LCP Administrator 23 Chapter 10 Case Review and Document Collection 25 Chapter 11 Audit 28 Chapter 12 Penalties 30 Chapter 13 Enforcement Action 31 Chapter 14 Withholding Procedures 34 Chapter 15 Frequently Asked Questions (FAQs) 40 Chapter 16 Common Violations 44

3 Appendix A Terms and Definitions 45 Appendix B Relevant Websites 46 Appendix C DIR Determinations 47 Appendix D LCP Forms & Handouts 48 Appendix E Notice of Proposed Rulemaking - Approved January 21,

4 PREFACE MISSION STATEMENT It is the mission of The Labor Compliance Managers to actively enforce prevailing wage laws applicable in Public Works. We are implementing the labor compliance procedures described in this manual to accomplish its mission. - iii - Preface

5 CONFLICT OF INTEREST CERTIFICATION STATEMENT UNDER PENALTY & PERJURY I hereby certify that neither myself as Principal of The Labor Compliance Managers, nor any personnel, management, independent consultants, or other parties associated with our 3rd Party LCP has any affiliation with any (1) construction contractor or subcontractor within the preceding five years that has been awarded a public works contract within the geographical area in which our program operates or intends to operate, or with any public agency with which the program has contracted or intends to contract to provide labor compliance enforcement; (2) any person or entity who has been the surety of such a contract; (3) any joint labor-management committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (section 175a of Title 29 of the United States Code); or (4) any person or entity who has represented workers employed in the same or similar classifications as those employed for such a contract and who has been engaged in (i) an organizational campaign under the National Labor Relations Act with contractors, professional organizations, or other parties competing for such contracts or (ii) a jurisdictional dispute with another collective bargaining representative of workers utilized for such contracts, that can be construed as a conflict of interest. The above statement is hereby certified as true and accurate, under penalty and perjury and is in compliance with (updated) requirements noted in the Title 8, California Code of Regulations which also describes how the filing of Statements of Economic Interest (FPPC Form 700) by Designated Employees and Consultants of should be completed as described below: (a) An Awarding Body that operates either its own labor compliance program or that contracts with a third party to operate all or part of its labor compliance program shall determine and designate those employees and consultants of the program who participate in making governmental decisions for the Awarding Body within the meaning of Title 2, California Code of Regulations, sections Those designated employees and consultants shall be required to file Statements of Economic Interest (FPPC Form 700) and to comply with other applicable requirements of the Political Reform Act (commencing with Section of the Government Code) in connection with work performed on behalf of the Awarding Body. (b) Designated employees and consultants who operate or are employed by a third party labor compliance program shall file their Statements of Economic Interest (FPPC Form 700) with the filing officer of each Awarding Body with which the third party program contracts, unless the Department of Industrial Relations or the Fair Political Practices Commission specifies a different or alternative filing location. Authority cited: Section , Labor Code. Reference: Sections 87100, et seq., Government Code; Section , Labor Code. Lindley Robertson, MPA Date - iv - Preface

6 CONTACT INFORMATION Questions regarding our should be addressed to: Lin Robertson Owner & Managing Director The Labor Compliance Managers 515 Blueberry Terrace San Jose, CA (408) Phone (408) Fax Questions regarding the California Labor Code, including issues that are covered in this manual can also be directed to the California State Labor Commissioner, Department of Industrial Relations, Division of Labor Standards Enforcement, 455 Golden Gate Avenue, 9th Floor, San Francisco, California v- Preface

7 AMENDED REGULATIONS WITHIN SUBCHAPTER 3, ARTICLE 6, AND SUBCHAPTER 4 OF CHAPTER 8, TITLE 8, CALIFORNIA CODE OF REGULATIONS, SECTIONS THROUGH (See Appendix E for complete summary of approved final amendments effective January 21, 2009, per the Department of Industrial Relations.) Statutory Changes: The Director has made the following substantive changes to the regulations originally proposed in the Notice of Proposed Rulemaking: Section Use of Electronic Reporting Forms. In subpart (e), the words submit or have been inserted before the word receive to indicate that the limitations expressed in that subpart apply both to the sending and receiving of electronic payroll records. Section Applicable Dates for Enforcement of. In subpart (g)(1), the language was revised to delete the reference to Appendix B and replace it with a reference to statutes that require a labor compliance program that contains or meets the requirements of Labor Code Section The new language incorporates the customary statutory designation for mandated labor compliance programs that are subject to these regulations. Section Approved Required by Statute. The new proposed Appendix B that followed this section was deleted and replaced by a new subpart (f), which specifies that a list of the statutes requiring awarding bodies to have a labor compliance program will be maintained on the Department of Industrial Relations website. This subpart effectively replaces some of the original language of subpart (a), which listed four sets of bond statutes that are subject to a labor compliance program requirement but failed to list several other statutes that also contain such a requirement. Section Approval of Awarding Body s. Subpart (c) was further revised to clarify that the Director may impose conditions on a program s approval based on the same factors used to evaluate a program s application. Also, a new subpart - vi - Preface

8 (f) was added to enable labor compliance programs with initial approval status under the existing regulations to convert to approval status without an expiration date and subject to revocation only for cause by meeting specified requirements. Specifically, the program s annual reports would have to be up-to-date and accurate; the program would have to show that it continues to employ experienced and trained personnel and has competent legal support; the program would have to update its manuals and procedures to comply with changes in the law since the program was first approved, including changes resulting from these regulatory amendments; and the program would have to be in compliance with any specific conditions placed on its approval by the Director. Section Approval of Third Party. Subpart (c) was further revised to clarify that the Director may impose conditions on a program s approval based on the same factors used to evaluate its application. Also, a new subpart (f) was added to enable labor compliance programs with initial approval status under the existing regulations to convert to unrestricted approval status without an expiration date and subject to revocation only for cause by meeting specified requirements. Specifically, the program s annual reports would have to be up-to-date and accurate; the program would have to show that it continues to employ experienced and trained personnel and has competent legal support; the program would have to update its manuals and procedures to comply with changes in the law since the program was first approved, including changes resulting from these regulatory amendments; and the program would have to be in compliance with any specific conditions placed on its approval by the Director. Section Revocation of Approval. Subpart (f) was further revised to clarify that the Director may impose restriction or conditions on a program s approval status. - vii - Preface

9 Section Annual Report. The Director selected the Option B proposal for amending this section, which will require a prescribed reporting format for all labor compliance programs, with the exception of programs with extended authority with whom the Director has agreed to accept reports in a different format. Section Investigation Methods for s Definitions and Minimum Requirements, Including Review, Confirmation and Audits of Payroll Records; On-Site Visits; and Early Resolution of Audits. The Director selected the Option B proposal for amending this section, which will do the following: (1) require all certified payroll records to be reviewed within 30 days of receipts; (2) require random confirmation of payroll records at least monthly; (3) require weekly site visits of public works projects; (4) require preparation of an audit according to prescribed standards whenever a programs determines that there has been a violation resulting in the underpayment of prevailing wages; (5) require the labor compliance program to give contractors an opportunity to submit exculpatory information before requesting the Labor Commissioner to approve the program s determination; and (6) authorize the program to resolve certain violations without seeking the Labor Commissioner s approval, subject to a further requirement to document the violation and resolution. The process of confirmation described in subpart (c) was further revised to clarify that it requires random rather than blanket confirmation of payroll records. Subpart (f) also was further revised by changing the word may to shall so that the duty to notify contractors of their right to submit exculpatory information will be mandatory rather than permissive, and the language was clarified to indicate that the contractors are entitled to a minimum of ten days within which to submit exculpatory information for consideration by the labor compliance program. Section Duties of. The Director selected the Option B proposal for amending this section, which will do the following: (1) require labor compliance programs to follow prescribed standards for processing complaints; (2) set forth the duties of labor compliance programs with respect to apprentices; (3) require programs to maintain records demonstrating reasonable and sufficient enforcement efforts for each project monitored by the program, and requiring compliance records to be retained for prescribed periods of time; and (4) authorizing the Labor Commissioner to provide, sponsor, or endorse training of prevailing wage enforcement, covering but not limited to certain prescribed subjects. Subpart (a) was further revised to include a statement on the Labor Commissioner s practice of using attorneys in enforcement cases. The language of subpart (c)(2)(d) also was revised further to clarify enforcement policies with respect to workers who are not duly registered as apprentices and to contractors who exceed the maximum ratios for use of apprentices. - viii - Preface

10 Section Determination of Amount of Forfeiture by the Labor Commissioner. The Director selected the Option B language for subpart (a)(4) to conform to the revisions in section and also added a new optional Request for Approval of Forfeiture form. - ix - Preface

11 INTRODUCTION The Labor Compliance Managers ( LCM or the Firm ) provides 3rd party Labor Compliance Program ( LCP ) consulting services to public agencies and other parties initiating or managing construction projects that are subject to State of California prevailing wage requirements. California Labor Code Section requires that all LCPs, including The Labor Compliance Managers, facilitate the following requirements on public works construction projects: 1. All bid invitations and public works contracts issued by the district shall contain appropriate language about the requirements of the public works chapter of the California Labor Code, comprised of labor code sections A pre-job conference shall be conducted with the contractor or subcontractors to discuss labor law requirements applicable to the contract. 3. Project contractors and subcontractors shall maintain and furnish to the LCP a certified copy of each weekly payroll with a statement of compliance signed under penalty of perjury. 4. The LCP shall review and, if appropriate, audit payroll records to verify compliance with the public works chapter of the labor code. 5. The LCP shall attain an approval of forfeiture the Division of Labor Standards Enforcement to assess Labor Code 1776(g) penalties when payroll records are delinquent or inadequate. 6. The LCP shall require the district to withhold contract payments equal to the amount of underpayment and applicable penalties when the LCP establishes that underpayment occurred through an investigation. 7. Legal counsel for the LCP or awarding agency shall prepare a response to a Request for Review should a contractor or subcontractor opt not to pay amounts indicated in a Notice to Withhold Contract Payment and no settlement agreement was subsequently obtained. -x- Preface

12 CHAPTER 1 Benefits of a All public works contracts as set forth in Labor Code 1720, , , and 1771 are subject to prevailing wage rates. There are a number of benefits in establishing procedures and systems to monitor compliance with prevailing wage laws. The benefits include: Competitive bidding process integrity The establishment of an effective labor compliance program ensures the following: 1. Awarding bodies receive a higher number of qualified bidders; 2. Contractors and their subcontractors are discouraged from underbidding; 3. Contractors and their subcontractors pay the required prevailing wages; thereby 4. Creating a level playing field for all contractors who bid on Public Works. Regeneration of funds to the community When the Firm actively enforces the prevailing wage laws, the process: 1. Ensures the integrity and transparency of the LCP procedures; 2. There is incentive by community contractors to bid on local Public Works projects; 3. Construction workers who are employed on the project regenerate project funds back to the local community Quality construction work Paying the prevailing wage can attract the most skilled workers and ensure the highest quality work on Public Works projects. Better labor relations Responsible working conditions promote cooperation and communication among all constituencies and offer the best long-term prospects for a sustained, positive labor management relationship. Successful contracts Enhanced scrutiny of contractors and subcontractors allows the terms of the contract to coincide with project specifications. -1- Chapter 1

13 Ability to withhold contract payment Pursuant to the requirements of the Department of Industrial Relations Division of Labor Standards Enforcement, the can initiate procedures to withhold needed portions of contract payments to cover wage restitution as well as penalty amounts as recommended in the Labor Code for compliance violations that result in the underpayment of prevailing wages. Enforce the payment of prevailing wages Construction employees, including employees, independent contractors, partners, and owneroperators, should receive the proper prevailing wages as described in the public works sections of the California Labor Code (sections 1720, , , , and 1771), and pursuant to public works determinations issued by the Department of Industrial Relations. Limited exemptions include: 1. Work carried out by a public agency with its own forces (California Labor Code Section 1771) 2. Certain janitorial services/guards (8 CCR 16000) -2- Chapter 1

14 CHAPTER 2 Prior to Construction Procedures Listed below are procedures traditionally implemented on public works projects prior to construction: Bid documentation Contract provisions for the payment of the prevailing wages should be documented prior to bid advertisement to facilitate compliance by the eventual Apparent Low Bidder that is awarded the contract by the awarding body. Advertisement for bid/construction contract The call for bids and the contract or purchase order must contain language appropriate to the requirements of prevailing wage law as contained in Labor Code sections 1771, 1775, , 1813 and The first advertisement date of the project determines the applicable prevailing wages. Pre-Bid Conference Contractors will receive information regarding the applicable prevailing wage determination and predetermined increases prior to bid. The prevailing wage rates are available on the web site of the Department of Industrial Relations Division of Labor Statistics and Research (DLSR). If needed, contractors should also be provided with a hard copy of relevant prevailing wages for each craft that would be included in the Scope of Work to ensure that bids are cognizant of the required rates of pay during the life of the project. Contractor Pre-Qualification Contractors are to certify qualifications as a responsible bidder, including in the area of prevailing wage compliance. Pre-Construction Conference This meeting is to be held before commencement of the work by contractors and subcontractors with accepted bids. The LCP representative should be prepared to discuss and answer questions about requirements and procedures, including record keeping, wage determinations, apprenticeship requirements and all labor compliance documentation that must be filed to verify compliance with the prevailing wage requirements of the Public Works project. Labor code sections and contain the instructions for hiring Apprentices and the ratios to journeymen. A sign-in sheet for participants who attended and a checklist showing which labor compliance requirements were discussed shall be completed and kept on file for each conference. -3- Chapter 2

15 CHAPTER 3 Prevailing Wage Language for Bid Documentation The following prevailing wage language for bid documentation is recommended: Attention is called to the fact that State of California prevailing wage requirements apply to this project. In accordance with provisions of Section 1773 of the Labor Code, the Director of the Department of Industrial Relations has ascertained the general prevailing rate of wages and employer payments for health and welfare, pension, vacation, and similar purposes applicable to the particular craft, classification, or type of workers employed on the work. The General Prevailing Wage Determination is available via the Internet at: All questions regarding prevailing wage requirements can also be directed to the LCP representatives assigned to the Public Works project. -4- Chapter 3

16 CHAPTER 4 Standards of Responsibility: Prevailing Wages The awarding body should require in its procurement procedures that all persons who submit bids, proposals or offers to enter into a contract with the awarding body do so truthfully and in good faith, and shall not attempt to mislead the awarding body with respect to the following including, but not limited to, records regarding the nature or quality of the work performed under the contract, payroll records, classification of employees on payroll records, and payment of prevailing wages where called for by the contract. If directed by the awarding body, contractor shall file, and cause any subcontractor to file, compliance reports with the LCP administrator. Compliance reports shall be filed as required in Labor Code section 1776 on a weekly basis. Compliance reports shall contain such information and be supported by such data or records as may be requested by the LCP administrator to determine whether general contractor or its subcontractor is in compliance with the prevailing wage requirements. General contractors shall include the awarding bodies prevailing wage requirements in each subcontract entered into in furtherance of its Public Works agreement with the awarding bodies, so that such provisions are binding upon each of its subcontractors. A. Remedies for Contractor's Breach of Prevailing Wage Requirements 1. The general contractor shall acknowledge that it shall pay workers the proper prevailing or wage ( Wage Provision ) and submit all required labor compliance documentation to the awarding body establishing its compliance with such requirement ( Document Provision ). The contractor shall acknowledge that the Wage Provision promotes each of the following (collectively Goals ): a. It protects job opportunities and stimulates the economy by reducing the incentive to recruit and pay a substandard wage to labor. b. It benefits the public through the superior efficiency of well-paid employees, whereas the payment of inadequate wages tends to negatively affect the quality of services to the awarding body by fostering high turnover and instability in the workplace. c. Paying workers a wage that enables them not to live in poverty is beneficial to the health and welfare of all citizens of the community in which the project is located. It increases the ability of such workers to attain sustenance, decreases the amount of poverty, and reduces the amount of taxpayer funded social services in the community in which the project is located. d. It increases competition by promoting a more level playing field among contractors. -5- Chapter 4

17 2. The general contractor agrees that the Documentation Provision is critical to the awarding body s ability to monitor contractor s compliance with the Wage Provision and to ultimately achieve the Goals. The contractor further agrees its breach of the Documentation Provision results in the need for additional enforcement action to achieve compliance with the prevailing wage provisions. In light of the critical importance of the Documentation Provision, the awarding body and contractor agree that the contractor s compliance with this Provision, as well as the Wage Provision, is an express condition of the awarding body s obligation to make each payment due the contractor pursuant to the Public Works contract. The awarding body shall not be obligated to make payment due the contractor until contractor has performed all of its obligations under these provisions. Any payment by the awarding body, despite the contractor s failure to fully perform its obligations under these provisions, shall not be deemed to be a waiver of any other term or condition contained in the Public Works contract or a waiver of the right to withhold payment for any subsequent breach of the Wage Provision or the Documentation Provision. B. Penalties for Breach of Prevailing Wage Requirements: The contractor agrees that its breach of the Prevailing Wage requirements would cause the awarding body damage by undermining the Goals, and the awarding body s damage would not be remedied by contractor s payment of restitution to the workers who were paid a substandard wage. The contractor further agrees that such damage could increase the greater number of employees not paid the applicable prevailing wage and the longer the amount of time over which such wages were not paid. The awarding body and contractor mutually agree that making a precise determination of the amount of awarding body s damages as a result of the contractor s breach of the Prevailing Wage requirements would be impracticable and/or extremely difficult. Therefore, the parties agree that, in the event of such a breach, the contractor shall pay to the awarding body appropriate penalties, per Section 1775, 1776 and 1813 of the Labor Code. As such, the contractor shall forfeit as a penalty to the awarding body, up to $50 for each day for each worker paid less than the stipulated prevailing rates for any public work done under contract by the contractor or by any subcontractor in violation of the provisions of the Labor Code, particularly Sections 1770 through 1780, inclusive. Liquidated Damages: Labor Code Section 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 , the affected contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of -6- Chapter 4

18 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 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 , 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, Chapter 4

19 C. Audit Rights: A copy of all payrolls shall be submitted weekly to the awarding body. Certified payroll records shall contain the full name, address, and social security number of each employee, his or her correct classification, rate of pay, daily and weekly number of hours worked, itemized deductions made, and actual wages paid. They shall also indicate apprentices and ratio of apprentices to journeymen. The employee s address and social security number need only appear on the first payroll on which his or her name appears. The payroll shall be accompanied by a Statement of Compliance signed by the employer or agent indicating that the payrolls are correct and complete and that the wage rates contained therein are not less than those required by the Department of Industrial Relations. The Statement of Compliance shall be on forms furnished by the awarding body or on any form with identical wording. Compliance will also need to be documented on a Fringe Benefit Statement, as well as any Public Works documentation required by the Division of Apprenticeship Standards. Per CCR Section (d): For each public work project subject to a s enforcement of prevailing wage requirements, a separate, written summary of labor compliance activities and relevant facts pertaining to that particular project shall be maintained. That summary shall demonstrate that reasonable and sufficient efforts have been made to enforce prevailing wage requirements consistent with the practice of the Labor Commissioner. Appendix C following this section provides a suggested format for tracking and monitoring enforcement activities. Compliance records for a project shall be retained until the later of (1) at least one year after the acceptance of the public work or five years after the cessation of all labor on a public work that has not been accepted, or (2) one year after a final decision or judgment in any litigation under Labor Code Section For purposes of this section, a written summary or report includes information maintained electronically, provided that the summary or report can be printed out in hard copy form or is in an electronic format that (1) can be transmitted by or compact disk and (2) would be acceptable for the filing of documents in a federal or state court of record within this state. If, by the 15th of the month, the contractor has not submitted satisfactory payroll records for all work performed during the monthly period ending on or before the first of that month, the awarding body can retain an amount equal to 10 percent of the estimated value of the work performed (exclusive of mobilization) during the month from the next monthly estimate, except that such retention shall not exceed $10,000 nor be less than $1,000. Retentions for failure to submit satisfactory payroll records shall be additional to all other retentions provided for in the Public Works contract. The retention for failure to submit satisfactory payrolls for any monthly period will be released for payment when the monthly estimate for partial payments next following the date that all such payrolls for which the retention was made are submitted. Appendix E documents changes that the Director to the Title 8, California Code of Regulations section listed below. The Notice of Proposed Rulemaking with the changes are effective January 21, 2009: -8- Chapter 4

20 Use of Electronic Reporting Forms. The certified payroll records required by Labor Code Section 1776 may be maintained and submitted electronically subject to all of the following conditions: (a) The reports must contain all of the information required by Labor Code Section 1776, with the information organized in a manner that is similar or identical to how the information is reported on the Department of Industrial Relations suggested Public Works Payroll Reporting Form (Form A-1131); (b) The reports shall be in a format and use software that is readily accessible and available to contractors, awarding bodies, s, and the Department of Industrial Relations; (c) Reports submitted to an awarding body, a, the Division of Labor Standards Enforcement, or other entity within the Department of Industrial Relations must be either (1) in the form of a non-modifiable image or record that bears an electronic signature or includes a copy of any original certification made on paper, or alternatively (2) printed out and submitted on paper with an original signature; (d) The requirements for redacting certain information shall be followed when certified payroll records are disclosed to the public pursuant to Labor Code Section 1776(e), whether the records are provided electronically or as hard copies; and (e) No contractor or subcontractor shall be mandated to submit or receive electronic reports when it otherwise lacks the resources or capacity to do so, nor shall any contractor or subcontractor be required to purchase or use proprietary software that is not generally available to the public. NOTE: Authority cited: Sections 54, 55, , and 1776, Labor Code. Reference: Section 1776, Labor Code. -9- Chapter 4

21 CHAPTER 5 Detail of Prevailing Wage Coverage A. Public Works and Prevailing Wages Defined The Prevailing Wage is defined as not less than the general prevailing rate of pay for work of a similar character in the County in which the project is located and as determined by the Director of the Department of Industrial Relations pursuant to the provisions of Division 2, Part 7, Chapter 1 of the California Labor Code. Prevailing wages shall be paid to all workers employed for construction, alteration, demolition, installation or repair work performed in the execution of a Public Works contract. The work of installing, assembling, repairing or reconditioning, or other work of any nature on machinery, equipment, or tools used in or upon the work, shall be considered a part of the work to be performed under a Public Works contract and any laborers, workers, or mechanics working on such machinery, equipment, or tools, shall be subject to all of the requirements relating to labor set forth in the Public Works contract. The construction, erection, and operation of material production, proportioning, or mixing plants from which material is used wholly on the contract or on contracts under the supervision of the awarding body, shall be considered a part of the work to be performed under the contract and any laborers, workers, or mechanics working on such plants shall be subject to all of the requirements relating to labor set forth in the contract. Eight hours labor constitutes a legal day s work. The Contractor shall forfeit as a penalty to the awarding body, $25 for each worker employed in the execution of the contract by the contractor or by any subcontractor for each day during which such worker is required or permitted to labor more than 8 hours in violation of Labor Code Sections 1810 to 1815, inclusive, except as provided for under Labor Code Section B. Apprentices The contractor s attention is directed to the provisions in Sections , and of the Labor Code concerning the employment of apprentices by the Contractor or any subcontractor. Section requires the contractor or subcontractor employing persons, as defined, in any apprenticeable occupation to apply to the joint apprenticeship committee which is nearest the site of the Public Works project and which administers the apprenticeship program in that trade for a certificate of approval. The certificate will also fix the ratio of apprentices to journeymen that will be used in the performance of a Public Works contract. The ratio of work performed by apprentices to journeymen in such cases shall not be less than 1 hour to 5 hours, except when the State has documented other ratio requirements Chapter 5

22 CHAPTER 6 Contractor Requirements The contractor shall certify that they are aware of the provisions of section 1773 of the Labor Code, which requires the payment of prevailing wage on Public Works projects. Also, the contractor and any subcontractors under the contractor shall comply with Section 1776, regarding wage records, and with Section , regarding the employment and training of apprentices of the Labor Code. It is the contractor s responsibility to ensure compliance by any and all subcontractors performing work under a Public Works contract. The contractor shall maintain certified payroll records and basic records (time cards, cancelled checks, cash receipts, trust fund forms, accounting ledgers, tax forms, etc) during the course of the work. These records shall be made available to the awarding body for a period of three (3 years) thereafter to be maintained at their project or office location. 1) Maintain and furnish records (labor code section 1776) a) Keep and maintain certified payroll records along with a Statement of Compliance (Public Works Payroll Reporting Form A in Appendix D). Each contractor and subcontractor is required by labor code section 1776 to keep and maintain certified payroll reports. b) All certified payroll reports are to be submitted for review during the course of the contract and furnished at times designated in the contract or within 10 days of the request by the awarding body or their LCP administrator. A certified payroll reporting form can be obtained from any office of the Department of Industrial Relations Division of Labor Standards Enforcement (DLSE). If the contractor uses his/her own form, it must contain the following information: Employee full name, address and social security number Work classification Amount paid per hour. If payments are made to any third party trust, funds or plans for health and welfare, pension or vacation trusts, as part of the employer s prevailing wage obligation, then those payments should be indicated on the payroll report. The basic wage rate paid per hour plus the amounts contributed per hour for benefits, including training fund contributions, must at least equal the total prevailing rate required for that classification. Daily regular, overtime and holiday hours and weekly totals. Gross/net wages paid for this project/all projects Chapter 6

23 Contractor s full name and address. Project name and location. Dates of the payroll. Certification statement or Statement of Compliance signed by a person with the authority to represent the company. This statement must declare under penalty of perjury that 1) the information contained in the payroll record is true and correct and 2) the employer has complied with the requirements of labor code sections 1771, 1811 and 1815 for any work performed by his or her employees on the public works project. It is important that each contractor and subcontractor write FINAL on the last submitted certified payroll record for the project. The contractor must complete a Non-Performance Report for each week in which no work is performed. All days worked on a project must be accounted for, including Saturdays, Sundays and holidays. Time cards (completed by workers), front and back copies of cancelled payroll checks, check stubs, daily logs, employee sign-in sheets, cancelled fringe benefit checks, fringe benefit statements, and/or any other record may be used by the LCP administrator or awarding body at any time to verify the accuracy of the certified payroll record and shall be provided by the contractor within 10 days following the receipt of a request for those records. 2) Electronic submittals of certified payroll records The Director of the Department of Industrial Relations has added a new section that expressly authorizes contractors and subcontractors to maintain and submit electronic payroll records, subject to the following conditions: a) The reports must contain all of the information required in Labor Code Section 1776 with the information organized in a manner that is similar or identical to how the information is reported on the Department of Industrial Relations suggested public works payroll form (Form A-1-131). b) The reports shall be in a format and use software that is readily accessible and available to contractors, awarding bodies, designated LCP administrators, and the Department of Industrial Relations Chapter 6

24 c) Reports submitted electronically must be either (1) in the form of a non-modifiable image or record that bears an electronic signature or includes a copy of any original certification made on paper, or alternatively (2) printed out and submitted on paper with an original signature. d) The requirements for redacting certain information shall be followed when certified payroll records are disclosed to the public pursuant to Labor Code Section 1776(e) whether the records are provided electronically or as hard copies; and e) No contractor or subcontractor shall be mandated to submit or receive electronic reports when it otherwise lacks the resources or capacity to do so, nor shall any contractor or subcontractor be required to purchase or use proprietary software that cannot be generally available to the public. Note: the Director has made the following substantive changes to the regulations originally proposed in the Notice of Proposed Rulemaking, effective January 21, 2009: Section (e). Use of Electronic Reporting Forms. The words submit or have been inserted before the word receive to indicate that the limitations expressed in that subpart apply both to the sending and receiving of electronic payroll records. See Appendix E. 3) Upon request, records can include supporting documents as described in the California Code of Regulations that can verify the payment of prevailing wages, including all time cards, canceled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project. 4) Provide a Fringe Benefit Statement The form, also known as a Statement of Employer Payments (PW 26), must be completed by each contractor and subcontractor indicating whether they pay the employees in cash or whether payments are made to a third party trust, plan or fund for health and welfare benefits, vacation funds, or makes pension contributions. It must contain the fund or trust name, address, administrator, and amount per hour contributed and frequency of contributions for each classification of worker. Training fund contributions must be reported on this form. A copy of the form can be downloaded from: Chapter 6

25 5) Provide a copy of notices to the Division of Apprenticeship Standards (DAS Form 140) Contractors who are not already participating in an approved program, and who did not receive sufficient number of apprentices from their initial request, must request dispatch of apprentices from at least one other apprenticeship committee, if more than one exists in the area of the public works project. Using DAS Form 140, contractors must submit the contract award information in writing to each of the apprenticeship program sponsors in the area within 10 days of the prime execution of the contract or subcontract. 6) Provide a copy of request(s) for apprentices (DAS Form 142) A contractor on a public works project must employ at least one (1) hour of apprentice work for every five (5) hours performed by a journeyman. 7) Provide verification of Training Fund contributions (CAC-2 Form) Contractors who are awarded public works jobs must make training fund contributions in the amount established in the prevailing wage rate publication for journeymen and apprentices. Contractors who contribute to an apprenticeship program are entitled to a full credit in the amount of those contributions. Contractors who do not contribute to an apprenticeship program must submit their contributions to the California Apprenticeship Council, P. O. Box , San Francisco, CA Training fund contributions to the Council are due and payable on the 15th day of the month for work performed during the preceding month. The contributions should be paid by check and be submitted with a training fund contribution form (CAC -2) or a letter containing the following information: Name, address and phone number of contractor Contractor license number Name and address of Labor Compliance Managers awarding agency Jobsite location, including San Francisco County information Contract or project number Time period covered by contributions being paid Chapter 6

26 Contribution rate and total hours worked by apprenticeable craft Name of the program(s) providing apprentices, if applicable Number if apprentice hours worked, by apprenticeable craft and by program 8) Responsibility of Subcontractors The prime contractor shall be responsible for ensuring that the labor standards provisions are followed by all subcontractors. Moreover, the prime contractor may be jointly liable for the Labor Code violations of all subcontractors Chapter 6

27 CHAPTER 7 Overview of Labor Code Sections 1771, 1774, and 1813 In accordance with provisions of Section 1773 of the Labor Code, the Director of the Department of Industrial Relations has ascertained the general prevailing rate of wages and employer payments for health and welfare, pension, vacation, and similar purposes available to the particular craft, classification, or type of workers employed on the work. The General Prevailing Wage Determination is available on the web site of the Division of Labor Statistics and Research (DLSR): All questions regarding prevailing wage requirements should also be provided by the Labor Compliance Managers staff, 3rd party LCP for the awarding body. Employees must be paid unconditionally, and not less than once each week, the full amounts which are due and payable for the period covered by the particular payday. The employer must establish a fixed workweek (Sunday through Saturday, for example) and an established payday (such as every Monday or the preceding day should such payday fall on a holiday). On each and every payday, each worker must be paid all sums due as of the end of the preceding workweek and must be provided with an itemized wage statement pursuant to Labor Code Section 226. If an individual who works on the project is called a subcontractor, when in fact he/she is a journey level mechanic supplying only labor, such an individual would not be deemed a bona fide subcontractor and must be reported on the payroll of the prime contractor as a tradeworker. Any person who does not hold a valid contractor s license cannot be a subcontractor, and anyone hired by that person is the worker of the general contractor for purposes of prevailing wage requirements, certified payroll reporting and workers compensation laws. A. Prevailing wage rate determinations 1) Requirements a) The law requires that workers on a publicly-funded project must be paid the prevailing wage of the area in which the project is located. Prevailing wage rates are published twice each year as prevailing wage determinations. Some trades are issued regionally (northern or southern California) and other subtrades are issued by county in which the project is located. b) Each wage determination for each classification of worker will indicate the basic wage rate and fringe benefit amounts which equal the total required wage for each classification of worker for straight time and overtime work Chapter 7

28 c) When assistance is needed with a special or unknown classification, a written request should be submitted to the DLSR for them to make a determination. d) The contractor is obligated to pay the full prevailing rate of per diem wages. He/she, however, may take credit for amounts up to the total of fringe benefit amounts listed as prevailing in the determination. The credit may be taken only for amounts which are actual payments as defined under the Employer Payments Section CCR 16000(1)-(3). If the total of employer payments for the fringe benefits listed is less than the aggregate amount in the wage determination, the contractor must pay the difference directly to the employee. No amount of credit for payments over the aggregate amount of employer payments shall be taken as a credit towards the hourly wage required to be paid. e) The determinations indicate the amount required for straight-time work, overtime, holiday, and Saturday and Sunday work. There may be special requirements for the payment of overtime and Saturday/Sunday work, and these requirements will be indicated by footnotes. These footnotes should be examined carefully. f) There are separate determinations issued for apprentices on public works. These footnotes should also be examined carefully. g) Each wage determination will indicate when the determination will expire and whether the rate will increase during the project. A single asterisk after the expiration date indicates the rate is good for the life of the project. A double asterisk after the expiration date indicates the rate for work performed after the expiration date has been determined. If work extends past that date, the new rate must be paid and should be incorporated in contracts entered into at the time of bid. Wage determinations published by the DLSR also show any predetermined increases that may apply during the life of the project. 2) Overtime Work performed by employees on public works in excess of eight hours per day and 40 hours per week must be paid for at not less than one-and-one-half times the basic rate of pay. Each wage determination will specify the wage rate required for overtime pay and possible exceptions (e.g. Asbestos Removal Workers). Failure to pay the required prevailing wage rates would be subject to required Labor Code Section 1813 penalties and as stipulated by the Department of Industrial Relations Chapter 7

29 3) Holidays Work performed on certain holidays may require the payment of overtime or double time. A list of designated holidays for each craft or classification of labor can be found on the Division of Labor Statistics and Research (DLSR) Web site at: Each wage determination will specify the appropriate wage rate for holiday work. 4) Saturday/Sunday work Most classifications of workers require the payment of overtime or double time for work performed on Saturdays and Sundays. Each wage determination will specify the required wage rate for this work. Pay attention to any footnotes that may contain exceptions or special requirements. 5) Travel/subsistence payments Because the law requires that workers receive the general prevailing rate of per diem as part of the contractor s prevailing wage obligation, there may be a requirement to pay travel/subsistence. Many classifications require the payment of mileage or subsistence for traveling certain distances. These requirements are contained in the collective bargaining agreement on file with DLSR for each craft/classification of worker. You can download those requirements from the DLSR Web site at: 6) Owner, operator, partners The law prescribes that workers on a Public Works project receive prevailing wages. Owners, owner-operators, partners, or officers of corporations performing labor on a prevailing wage project must be paid prevailing wage rates. Owner-operators are individuals that own and operate their own machines or equipment. Owner-operators are not to be confused with Operating Engineer employees, who operate equipment owned by a company and are employees of that company. If owner operators are incorporated they must submit Certified Payroll Records. For example, J. Doe Compacting, Inc., is a corporation and its owner, Mr. John Doe is an employee of the corporation who operates a compactor; J. Doe Compacting, Inc. must report Mr. Doe as an Operating Engineer and the company must submit CPRs for employee John Doe Chapter 7

30 However, if Mr. Doe, is a sole-proprietor Owner-Operator, is not incorporated, he must be included in the CPRs of the company that contracted him as an Owner-Operator. B. Selecting the Correct Prevailing Wage Determination The Prevailing Wage Determination published bi-annually (February 22 and August 22) and are divided into Statewide, Northern and County Sections. The Statewide Prevailing Wage Determination Website is: The link for the Statewide Wage Determinations provides the prevailing wage rates for classifications such as Boiler Maker, Iron Worker, etc. These classifications are applicable to workers who work throughout the State. The Northern California Prevailing Wage Determination Website is: The link for the Northern Wage Determinations provides the prevailing wage rates for classifications such as Carpenter, Laborer, Operating Engineer, etc. These classifications are applicable to workers who work throughout the Northern California. The San Francisco County (example) Prevailing Wage Determination Website is: Selecting the above link will show the San Francisco County Wage Determinations where classifications such as Electrician, Plumber, Painter, etc can be found. These classifications are applicable to workers who work in San Francisco County, San Francisco, California. Prevailing wage rates for Apprentices has been moved to the website for the Division of Apprenticeship Standards (DAS): Selecting the above links will show the rates for apprentices that are applicable for Statewide, Northern and San Francisco County. Apprentices shall be permitted to work and be employed at the apprentice rate only when they are registered under a bona fide apprenticeship program with a State apprenticeship agency which is Chapter 7

31 recognized the State Division of Apprenticeship Standards (DAS). (Labor Code Section (c)). (See Chapter 9 for further information on Apprentice Requirements.) The appropriate Prevailing Wage Determination for use in the course of an audit is determined by the first of the two bid advertisement dates for the contract/project. Bid advertisement date from February 22 to August 21 call for the determination that is listed as yyyy-01 (yyyy stands for year, for example ). Dates from August 22 to February 1 call for the yyyy-02 ( ) Chapter 7

32 CHAPTER 8 Overview of Labor Code Sections and (a)(1) Apprentices shall be permitted to work in this capacity only when they are registered with a bona fide apprenticeship program registered with a State apprenticeship agency which is recognized by the State Division of Apprenticeship Standards (DAS). The definitions of Public Works pursuant to Labor Code Sections and (a)(1) are documented below: A. Labor Code ) California Labor Code Section requires all Public Works contractors and subcontractors to comply with the following: a) Contractors must submit the contract award information in writing to each of the apprenticeship program sponsors in the area of your Public Works project within 10 days of the prime execution of the contract or subcontract, but in no event later than the first day in which the contractor has workers employed on the public work. Contractors may use form DAS 140. This is simply a notification of award, it is not automatically a request for dispatch of a registered apprentice. b) Apprentice to Journeyman ratios requirements are at least one (1) hour of apprentice work for every five (5) hours performed by a journeyman. Ratio requirements are subject to the approved bargaining agreements that are recognized by the Department of Industrial Relations and published in the Scope of Work section of the wage determination. All contractors must request for dispatch of an apprentice from an apprenticeship program (for each apprenticeable craft or trade) by giving the program actual notice of at least 48 hours (business days only) before the date on which apprentices are required. Contractors who are not already participating in an approved program and who did not receive sufficient number of apprentices from their initial request must dispatch of apprentices from at least one other apprenticeship committee, if more than one exists in the area of the Public Works project. c) The prime contractor shall furnish to the awarding body written evidence of the registration of its and all subcontractors training programs and apprentices, with the State of California, as well as the ratios allowed (as defined in the Labor Code and by DAS) and the wage required to be paid thereunder for the area of construction. d) Pre-apprentice trainees, trainees in nonapprenticeable crafts and others who are not duly registered as apprentices will not be permitted on Public Works projects unless they are paid full prevailing wage rates as journeypersons. e) Contractors who are awarded Public Works jobs must make training fund Chapter 8

33 contributions in the amount established in the prevailing wage rate publication for journeymen and apprentices. f) Apprentices employed on Public Works projects must at all times work with or under the direct supervision of journeyperson(s). B. Labor Code (a)(1) A contractor or subcontractor that is determined by the Chief of the Division of Apprenticeship Standards to have knowingly violated Section shall forfeit as a civil penalty an amount not exceeding one hundred dollars ($100) for each full calendar day of noncompliance. The amount of this penalty may be reduced by the Chief if the amount of the penalty would be disproportionate to the severity of the violation. A contractor or subcontractor that knowingly commits a second or subsequent violation of Section within a three-year period, where the noncompliance results in apprenticeship training not being provided as required by this chapter, shall forfeit as a civil penalty the sum of not more than three hundred dollars ($300) for each full calendar day of noncompliance. Notwithstanding Section 1727, upon receipt of a determination that a civil penalty has been imposed by the Chief, the awarding body shall withhold the amount of the civil penalty from contract progress payments then due or to become due Chapter 8

34 CHAPTER 9 Duties of the As per CCR requirements: (a) A shall have a duty to the Director to enforce the requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code and these regulations in a manner consistent with the practice of the Labor Commissioner. It is the practice of the Labor Commissioner to refer to the Director s ongoing advisory service of web-posted public works coverage determinations as a source of information and guidance in making enforcement decisions. It is also the practice of the Labor Commissioner to be represented by an attorney in prevailing wage hearings conducted pursuant to Labor Code Section 1742(b) and sections of Title 8 of the California Code of Regulations. (b) Upon receipt of a written complaint alleging that a contractor or subcontractor has failed to pay prevailing wages as required by the Labor Code, the shall do all of the following: (1) Within 15 days after receipt of the complaint, send a written acknowledgment to the complaining party that the complaint has been received and identifying the name, address, and telephone number of the investigator assigned to the complaint; (2) Within 15 days after receipt of the complaint, provide the affected contractor with the notice required under Labor Code section 1775(c) if the complaint is against a subcontractor; (3) Notify the complaining party in writing of the resolution of the complaint within ten days after the complaint has been resolved by the ; (4) Notify the complaining party in writing at least once every 30 days of the status of a complaint that has not been resolved by the ; and (5) Notify the complaining party in writing at least once every 90 days of the status of a complaint that has been resolved by the but remains under review or in litigation before another entity. (c) The duties of a with respect to apprenticeship standards are as follows: (1) Either the Awarding Body or the acting on its behalf shall (A) inform contractors and subcontractors bidding public works about apprenticeship requirements, (B) send copies of awards and notices of discrepancies to the Division of Apprenticeship Standards as required under Section of the Labor Code, and (C) refer complaints and promptly report suspected violations of apprenticeship requirements to the Division of Apprenticeship Standards. (2) The shall be responsible for enforcing prevailing wage pay requirements for apprentices consistent with the practice of the Labor Commissioner, including (A) that any contributions required pursuant to Labor Code Section (m) are paid to the appropriate entity, (B) that apprentices are paid no less than the prevailing apprentice rate, (C) that workers listed and paid as apprentices on the certified payroll records are duly registered as apprentices with the Division of Chapter 9

35 Apprenticeship Standards, and (D) requiring that the regular prevailing wage rate be paid (i) to any worker who is not a duly registered apprentice and (ii) for all hours in excess of the maximum ratio permitted under Labor Code Section (g), as determined at the conclusion of the employing contractor or subcontractor s work on the public works contract. (d) For each public work project subject to a s enforcement of prevailing wage requirements, a separate, written summary of labor compliance activities and relevant facts pertaining to that particular project shall be maintained. That summary shall demonstrate that reasonable and sufficient efforts have been made to enforce prevailing wage requirements consistent with the practice of the Labor Commissioner. Appendix C following this section provides a suggested format for tracking and monitoring enforcement activities. Compliance records for a project shall be retained until the later of (1) at least one year after the acceptance of the public work or five years after the cessation of all labor on a public work that has not been accepted, or (2) one year after a final decision or judgment in any litigation under Labor Code Section For purposes of this section, a written summary or report includes information maintained electronically, provided that the summary or report can be printed out in hard copy form or is in an electronic format that (1) can be transmitted by or compact disk and (2) would be acceptable for the filing of documents in a federal or state court of record within this state. (e) The Labor Commissioner may provide, sponsor, or endorse training on how to enforce prevailing wage requirements, including but not necessarily limited to the subjects of (1) ascertaining prevailing wage requirements and rates from the Division of Labor Statistics and Research, (2) monitoring and investigation under section above, (3) enforcement responsibilities under this Section and Sections below, and (4) procedural requirements and responsibilities as an enforcing agency under Labor Code Sections and and sections of Title 8 of the California Code of Regulations. NOTE: Authority cited: Section , Labor Code. Reference: Sections , , , , and through , Labor Code Chapter 9

36 CHAPTER 10 Case Review and Document Collection Below is an outline of critical steps for document collection, which should be routinely applied in every prevailing wage violation case and particularly for those cases that lead to the filing of a Notice of Withholding of Contract Payments: 1) Copy of worker complaint Notes from worker interview. Calendar of dates and hours worked. Copies of check stubs or other form of proof of underpayment. Document all attempts to authenticate the complaint. Other supporting documentation where necessary. 2) Copy of all correspondence to contractor Job-start meeting checklist. Initial notification of complaint. Invitation to review the preliminary findings. Request for additional documentation such as canceled checks, check stubs, time cards, cash receipts, ledgers, etc. Log of all calls to contractor with notes about the content of discussion. 3) Certified payroll records Job-start meeting checklist. Initial notification of complaint. Invitation to review the preliminary findings. Request for additional documentation such as canceled checks, check stubs, time cards, cash receipts, ledgers, etc. Log of all calls to contractor with notes about the content of discussion. 4) Inspector s daily log Or another detailed record of work performed by date and the numbers of workers on project. For the period of time covered in the complaint. 5) Correct prevailing wage determination and applicable increases For each classification appearing in the audit Chapter 10

37 6) Scope of work for trade classifications used From Division Labor Statistics and Research (DLSR). 7) Tabulation of bids Advertisement date(s). List of subcontractors. Contract award amounts. Description of project. 8) Notice to proceed Official project start and completion dates. Duration of project. 9) Notice of completion (if applicable) With date stamp showing when it was recorded. Any withholding or action must take place within 180 days from the date of recording. Another 180 days is granted beyond this date if funds are still available in contract. 10) Surety company information The surety is entitled to receive a copy of any action taken or Notice of Withholding of Contract Payments filed. 11) Contractor s previous record of violations (if applicable) Provide documentation regarding prior formal actions and withholdings. 12) The Notice of Withholding of Contract Payments (if applicable) Always attach a copy of the audit spreadsheet. 13) Release of Notice of Withholding of Contract Payments Returns withheld funds. Filed when a case is settled in whole or part. Filed when it is determined the violation did not occur Chapter 10

38 14) Memo to file Explains circumstances and reasons for case closure without action. Provides explanation and reasons for settlement and spells any agreements reached with contractor or other parties Chapter 10

39 CHAPTER 11 Audit In order to achieve compliance on Public Works projects, audits shall be conducted routinely by the LCP administrator and shall be conducted if requested by the: Labor Commissioner Complainants Unions Contractor(s) Workers and Member of the general public When the LCP administrator receives a complaint, a labor standards investigation file shall be opened. If after reviewing all documents and interviewing workers and other witnesses, it is revealed that a willful violation of the Labor Code has occurred, an audit shall be conducted. The audit should consist of: 1) A comparison of payroll records to the best available information as to the actual hours worked; 2) The classification of workers employed on the construction contract; 3) A review of fringe benefit payments. Examples of willful violations include some of the following: 1. Failure to Comply with Prevailing Wage Rate Requirements Failure to comply with prevailing wage rate requirements (as set forth in Labor Code and awarding body contracts) is determined a willful violation whenever less that the stipulated basic hourly rate is paid to tradeworkers, or if overtime, Holiday, rate, fringe benefits and/or employer payments are paid at a rate less than stipulated. 2. Falsification of Payroll Records, misclassification of work, and/or failure to: Falsification of Payroll Records, misclassification of work, and/or failure to accurately report hours of work is characterized by deliberate underreporting of hours of work, underreporting the head count, stating that the proper prevailing wage rate was paid when it in fact was not, misclassifying the work performed by the worker, and any other deliberate and/or willful act which results in the falsification or inaccurate reporting of payroll records Chapter 11

40 3. Failure to Submit Certified Payroll Records: Prime contractor shall be responsible for the submission of certified payroll records for itself and all subcontractors, of any tier, within ten (10) days of the week ending date of each week. The prime contractor and subcontractors have 10 days upon notification by the awarding body or their representative in which to submit basic records and/or to correct inaccuracies or omissions that have been detected by the review of records. 4. Failure to Pay Fringe Benefits: Fringe benefits are defined as the amounts stipulated for employer payments or trust fund contributions and are determined to be part of the required prevailing wage rate. Failure to pay or provide fringe benefits and/or make trust fund contributions on a timely basis is equivalent payment of less than the stipulated wage rate. Should back wages be due and there is no agreement on payment after meeting with the contractors, the LCP administrator shall report the matter to the Labor Commissioner as a willful violation, upon completion of an investigation and audit. 5. Failure to pay the Correct Apprentice Rate and/or misclassifications of workers as Apprentices: Failure to pay the correct apprentice rate as a result of: Classifying a worker as an apprentice when not properly registered Employing apprentices outside of the prescribed ratios is equivalent 6. Taking of Kickbacks: Accepting or extracting kickbacks from employee wages under Labor Code Section 1778 constitutes a felony and may be prosecuted by the appropriate enforcement agency Chapter 11

41 CHAPTER 12 Penalties Failure to pay prevailing wages to every worker on a California State regulated project may result in the contractor being prohibited from bidding on public works projects for three years by the Division of Labor Standards Enforcement. In addition, wages not paid become forfeitures and can be collected from the contractor. Fines of up to $50 per day can also be assessed. The penalties are severe and range from misdemeanors to felonies (Labor Code sections ). Although the fundamental obligation to pay prevailing wage rates rests with the contractor, ensuring payment also is important to the awarding body of Labor Compliance Managers. Failure to pay required overtime wages will result in the assessment of $25 per worker per violation, per Labor Code Section It is against the law for an employer or other person to accept any compensation from workers on a prevailing wage project. Anyone found guilty of accepting fees, bribes or any other form of compensation or kickbacks from a worker on a prevailing wage project is guilty of a felony. Any person or company that attempts to charge a fee for registration or information about public works employment is guilty of a misdemeanor. See Labor Code Section Every person, who individually or as a representative of an awarding or public body or officer, or as a contractor or subcontractor doing public work, or agent or officer thereof, who takes, receives, or conspires with another to take or receive, for his own use or the use of any other person any portion of the wages of any workman or working subcontractor, in connection with services rendered upon any Public Work is guilty of a felony Chapter 12

42 CHAPTER 13 Enforcement Action A. Duties of the LCP administrator The LCP administrator has a duty to enforce: The Labor Code public works requirements, and; The procedural regulations of the Department of Industrial Relations The above shall be enforced in a manner consistent with the practice of Title 8, California Code of Regulations, Section 16000, et seq. and in accordance with the Precedential Prevailing Wage Decisions issued by the Director, and of the Department of Industrial Relations in a manner consistent with the practiced of the Labor Commissioner. B. Withholding Contract Payments When Payroll Records are delinquent or Inadequate As per CCR 16435, please note the following: (a) "Withhold" means to cease payments by the Awarding Body, or others who pay on its behalf, or agents, to the general contractor. Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (b) "Contracts." Except as otherwise provided by agreement, only contracts under a single master contract, including a Design-Build contract, or contracts entered into as stages of a single project, may be the subject of withholding. (c) "Delinquent payroll records" means those not submitted on the date set in the contract. (d) "Inadequate payroll records" are any one of the following: (1) A record lacking any of the information required by Labor Code Section 1776; (2) A record which contains all of the required information but is not certified, or is certified by someone who is not an agent of the contractor or subcontractor; (3) A record remaining uncorrected for one payroll period, after the has given the contractor or subcontractor notice of inaccuracies detected by audit or record review. However, prompt correction will stop any duty to withhold if such inaccuracies do not amount to one (1) percent of the entire Certified Weekly Payroll in dollar value and do not affect more than half the persons listed as workers employed on that Certified Weekly Payroll, as defined in Labor Code Section 1776 and section of Title 8 of the California Code of Regulations. (e) The withholding of contract payments when payroll records are delinquent or inadequate is required by Labor Code Section (b)(5), and it does not require the prior approval of the Labor Commissioner. The Awarding Body shall only withhold those payments due or estimated to be due to Chapter 13

43 the contractor or subcontractor whose payroll records are delinquent or inadequate, plus any additional amount that the has reasonable cause to believe may be needed to cover a back wage and penalty assessment against the contractor or subcontractor whose payroll records are delinquent or inadequate; provided that a contractor shall be required in turn to cease all payments to a subcontractor whose payroll records are delinquent or inadequate until the provides notice that the subcontractor has cured the delinquency or deficiency. (f) When contract payments are withheld under this section, the shall provide the contractor and subcontractor, if applicable, with immediate written notice that includes all of the following: (1) a statement that payments are being withheld due to delinquent or inadequate payroll records, and that identifies what records are missing or states why records that have been submitted are deemed inadequate; (2) specifies the amount being withheld; and (3) informs the contractor or subcontractor of the right to request an expedited hearing to review the withholding of contract payments under Labor Code Section 1742, limited to the issue of whether the records are delinquent or inadequate or the has exceeded its authority under this section. (g) No contract payments shall be withheld solely on the basis of delinquent or inadequate payroll records after the required records have been produced. (h) In addition to withholding contract payments based on delinquent or inadequate payroll records, penalties shall be assessed under Labor Code Section 1776(g) for failure to timely comply with a written request for certified payroll records. The assessment of penalties under Labor Code Section 1776(g) does require the prior approval of the Labor Commissioner under section of these regulations. NOTE: Authority cited: section , Labor Code. Reference: sections 1729, , and 1776, Labor Code. C. Withholding for Violation of the Requirement to Pay Prevailing Wages CCR requires the withholding of contract payments when, after investigation, it is established that an underpayment or other violation has occurred. Please note the following: (a) "Withhold" and contracts have the same meaning set forth in Sections 16435(a) and 16435(b) of these regulations. (b) Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (c) "Amount equal to the underpayment" is the total of the following determined by payroll review, audit, or admission of contractor or subcontractor: (1) The difference between amounts paid workers and the correct General Prevailing Rate of Per Diem Wages, as defined in Labor Code Section 1773, and determined to be the prevailing rate due workers in Chapter 13

44 such craft, classification or trade in which they were employed and the amounts paid; (2) The difference between amounts paid on behalf of workers and the correct amounts of Employer Payments, as defined in Labor Code Section and determined to be part of the prevailing rate costs of contractors due for employment of workers in such craft, classification or trade in which they were employed and the amounts paid; (3) Estimated amounts of "illegal taking of wages"; (4) Amounts of apprenticeship training contributions paid to neither the program sponsor's training trust nor the California Apprenticeship Council; (5) Estimated penalties under Labor Code Sections 1775, 1776, and (d) The withholding of contract payments when, after investigation, it is established that underpayment or other violations have occurred requires the prior approval of the Labor Commissioner under Sections and of these regulations. NOTE: Authority cited: section , Labor Code. Reference: sections 1729, , 1773, , 1775, 1776, , 1778, 1813 and 1815, Labor Code Chapter 13

45 CHAPTER 14 Withholding Procedures The (LCP) has a duty to the Director of the Department of Industrial Relations to enforce Labor Code Sections 1720 through 1861 in a manner consistent with the practice of the Division of Labor Standards Enforcement and reflective of the new rules in the amended regulations as of January 21, 2009 within Subchapter 3, Article 6, and Subchapter 4 of Chapter 8, Title 8, California Code of Regulations, Sections through 16438: Withholding Contract Payments When Payroll Records are Delinquent or Inadequate. (a) "Withhold" means to cease payments by the Awarding Body, or others who pay on its behalf, or agents, to the general contractor. Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (b) "Contracts." Except as otherwise provided by agreement, only contracts under a single master contract, including a Design-Build contract, or contracts entered into as stages of a single project, may be the subject of withholding. (c) "Delinquent payroll records" means those not submitted on the date set in the contract. (d) "Inadequate payroll records" are any one of the following: (1) A record lacking any of the information required by Labor Code Section 1776; (2) A record which contains all of the required information but is not certified, or is certified by someone who is not an agent of the contractor or subcontractor; (3) A record remaining uncorrected for one payroll period, after the Labor Compliance Program has given the contractor or subcontractor notice of inaccuracies detected by audit or record review. However prompt correction will stop any duty to withhold if such inaccuracies do not amount to 1 percent of the entire Certified Weekly Payroll in dollar value and do not affect more than half the persons listed as workers employed on that Certified Weekly Payroll, as defined in Labor Code Section 1776 and section of Title 8 of the California Code of Regulations. (e) The withholding of contract payments when payroll records are delinquent or inadequate is required by Labor Code Section (b)(5), and it does not require the prior approval of the Labor Commissioner. The Awarding Body shall only withhold those payments due or estimated to be due to the contractor or subcontractor whose payroll records are delinquent or inadequate, plus any additional amount that the has reasonable cause to believe Chapter 14

46 may be needed to cover a back wage and penalty assessment against the contractor or subcontractor whose payroll records are delinquent or inadequate; provided that a contractor shall be required in turn to cease all payments to a subcontractor whose payroll records are delinquent or inadequate until the provides notice that the subcontractor has cured the delinquency or deficiency. (f) When contract payments are withheld under this section, the shall provide the contractor and subcontractor, if applicable, with immediate written notice that includes all of the following: (1) a statement that payments are being withheld due to delinquent or inadequate payroll records, and that identifies what records are missing or states why records that have been submitted are deemed inadequate; (2) specifies the amount being withheld; and (3) informs the contractor or subcontractor of the right to request an expedited hearing to review the withholding of contract payments under Labor Code Section 1742, limited to the issue of whether the records are delinquent or inadequate or the has exceeded its authority under this section. (g) No contract payments shall be withheld solely on the basis of delinquent or inadequate payroll records after the required records have been produced. (h) In addition to withholding contract payments based on delinquent or inadequate payroll records, penalties shall be assessed under Labor Code Section 1776(g) for failure to timely comply with a written request for certified payroll records. The assessment of penalties under Labor Code Section 1776(g) does require the prior approval of the Labor Commissioner under section of these regulations Withholding Contract Payments When, After Investigation, It Is Established That Underpayment or Other Violation Has Occurred. (a) "Withhold" and contracts have the same meaning set forth in Sections 16435(a) and 16435(b) of these regulations. (b) Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (c) "Amount equal to the underpayment" is the total of the following determined by payroll review, audit, or admission of contractor or subcontractor: (1) The difference between amounts paid workers and the correct General Prevailing Rate of Per Diem Wages, as defined in Labor Code Section 1773, and determined to be the prevailing rate due workers in such craft, classification or trade in which they were employed and the amounts paid; (2) The difference between amounts paid on behalf of workers and the correct amounts of Employer Payments, as defined in Labor Code Section and determined to be part of the prevailing rate costs of contractors due for employment of workers in such craft, classification or trade in which they Chapter 14

47 were employed and the amounts paid; (3) Estimated amounts of "illegal taking of wages"; (4) Amounts of apprenticeship training contributions paid to neither the program sponsor's training trust nor the California Apprenticeship Council; (5) Estimated penalties under Labor Code Sections 1775, 1776, and (d) The withholding of contract payments when, after investigation, it is established that underpayment or other violations have occurred requires the prior approval of the Labor Commissioner under Sections and of these regulations. NOTE: Authority cited: section , Labor Code. Reference: sections 1729, , 1773, , 1775, 1776, , 1778, 1813 and 1815, Labor Code Forfeitures Requiring Approval by the Labor Commissioner. (a) For purposes of this section and section below, "forfeitures" means the amount of wages, penalties, and forfeitures assessed by the and proposed to be withheld pursuant to Labor Code section (a), and includes the following: (1) the difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate by the contractor or subcontractor; and (2) penalties assessed under Labor Code Sections 1775, 1776 and (b) If the aggregate amount of forfeitures assessed as to a contractor or subcontractor is less than $ , the forfeitures shall be deemed approved by the Labor Commissioner upon service and the Labor Commissioner's receipt of copies of the following: (1) the Notice of Withholding of Contract Payments authorized by Labor Code Section (a); (2) an Audit as defined in section 16432(e) of these regulations, and (3) a brief narrative identifying the Bid Advertisement Date of the contract for public work and summarizing the nature of the violation, the basis of the underpayment, and the factors considered in determining the assessment of penalties, if any, under Labor Code Section (c) For all other forfeitures, approval by the Labor Commissioner shall be requested and obtained in accordance with section below Determination of Amount of Forfeiture by the Labor Commissioner. (a) Where the requests a determination of the amount of forfeiture, the request shall include a file or report to the Labor Commissioner which contains at least the information specified in subparts (1) through (9) below. Appendix D is a suggested format for a Request for Approval of Forfeiture under this section Chapter 14

48 (1) Whether the public work has been accepted by the awarding body and whether a valid notice of completion has been filed, the dates if any when those events occurred, and the amount of funds being held in retention by the Awarding Body; (2) Any other deadline which if missed would impede collection; (3) Evidence of violation, in narrative form; (4) Evidence of violation obtained under section of these regulations and a copy of the Audit prepared in accordance with section 16432(e) setting forth the amounts of unpaid wages and applicable penalties; (5) Evidence that before the forfeiture was sent to the Labor Commissioner (A) the contractor and subcontractor were given the opportunity to explain why there was no violation, or that any violation was caused by good faith mistake and promptly corrected when brought to the contractor or subcontractor's attention, and (B) the contractor and subcontractor either did not do so or failed to convince the Labor Compliance Program of its position; (6) Where the seeks not only wages but also a penalty as part of the forfeiture, and the contractor or subcontractor has unsuccessfully contended that the cause of violation was a good faith mistake that was promptly corrected when brought to the contractor or subcontractor's attention, a short statement should accompany the proposal for a forfeiture, with a recommended penalty amount pursuant to Labor Code Section 1775(a); (7) Where the seeks only wages or a penalty less than $50 per day as part of the forfeiture because the contractor or subcontractor has successfully contended that the cause of the violation was a good faith mistake that was promptly corrected when brought to the contractor or subcontractor's attention, the file should include the evidence as to the contractor or subcontractor's knowledge of his or her obligation, including the program's communication to the contractor or subcontractor of the obligation in the bid invitations, at the pre-job conference agenda and records, and any other notice given as part of the contracting process. With the file should be a statement, similar to that described in (6), and recommended penalty amounts, pursuant to Labor Code Section 1775(a); (8) The previous record of the contractor and subcontractor in meeting their prevailing wage obligations; and (9) Whether the has been granted approval on only an Chapter 14

49 interim or temporary basis under sections or above or whether it has been granted extended approval under section above. (b) The file or report shall be served on the Labor Commissioner as soon as practicable after the violation has been discovered, and not less than 30 days before the final payment, but in no event not less than 30 days before the expiration of the limitations period set forth in Labor Code Section (c) A copy of the recommended forfeiture and the file or report shall be served on the contractor and subcontractor at the same time as it is sent to the Labor Commissioner. The may exclude from the documents served on the contractor and subcontractor copies of documents secured from the contractor or subcontractor during an audit, investigation, or meeting if those are clearly referenced in the file or report. (d) The Labor Commissioner shall affirm, reject, or modify the forfeiture in whole or in part as to the wages and penalties due. (e) The Labor Commissioner's determination of the forfeiture is effective on one of the two following dates: (1) For all programs other than those having extended authority under section of these regulations, on the date the Labor Commissioner serves by first class mail, on the, on the Awarding Body if different, on the contractor and on the subcontractor, if any, an endorsed copy of the proposed forfeiture, or a newly drafted forfeiture statement which sets out the amount of forfeiture approved. Service on the contractor or subcontractor is effective if made on the last address supplied by the contractor or subcontractor in the record. The Labor Commissioner's approval, modification or disapproval of the proposed forfeiture shall be served within 30 days of receipt of the proposed forfeiture. (2) For programs with extended authority under section above, approval is effective 20 days after the requested forfeitures are served upon the Labor Commissioner, unless the Labor Commissioner serves a notice upon the parties, within that time period, that this forfeiture request is subject to further review. For such programs, a notice that approval will follow such a procedure will be included in the transmittal of the forfeiture request to the contractor. If the Labor Commissioner notifies the parties of a decision to undertake further review, the Labor Commissioner's final approval, modification or disapproval of the proposed forfeiture shall be served within 30 days of the date of notice of further review Deposits of Penalties and Forfeitures Withheld. (a) Where the involvement of the Labor Commissioner has been limited to a determination of the Chapter 14

50 actual amount of penalty, forfeiture or underpayment of wages, and the matter has been resolved without litigation by or against the Labor Commissioner, the shall deposit penalties and forfeitures with the Awarding Body. (b) Where collection of fines, penalties or forfeitures results from administrative proceedings or court action to which the Labor Commissioner and Awarding Body or its Labor Compliance Program are both parties, the fines, penalties or forfeitures shall be divided between the general funds of the state and the Awarding Body, as the Hearing Officer or court may decide. (c) All penalties recovered in administrative proceedings or court action brought by or against the Labor Commissioner and to which the Awarding Body or its is not a party, shall be deposited in the general fund of the state. (d) All wages and benefits which belong to an employee and are withheld or collected from a contractor or subcontractor, either by withholding or as a result of administrative proceedings or any court action, and which have not been paid to the employee or irrevocably committed on the employee's behalf to a benefit fund, shall be deposited with the Labor Commissioner, who shall handle such wages and benefits in accordance with Labor Code Section Chapter 14

51 CHAPTER 15 Frequently asked Questions (FAQs) Q. A. Who must receive prevailing ages on public works projects? The prevailing wage must be paid to all workers on public works projects, including partners who are performing the work. Q. A. What is the penalty for not paying the prevailing wage? This is defined in Labor Code Section Q. A. How often are Certified Payroll Records due and who should receive them? Certified Payroll Records should be sent each week to the awarding body or their their 3rd party LCP. Q. A. As a contractor or subcontractor when should I hire and train apprentices? When employing workers in an apprenticeable craft or trade, the contractor or subcontractor must apply to the appropriate joint apprenticeship committee for certification to employ and train apprentices in the affected industry. Contractors not signatory to a trust agreement shall contribute a training fee to the California Apprenticeship Council for each hour worked on the project. Awards of less than thirty thousand dollars or 20 working days are exempt from this provision. Q. A. How do I know what is the correct prevailing wage rate? The current prevailing wage rates are available on the internet at: A copy is available from the contracting department. Copies of all wage determinations are also available from: Department of Industrial Relations Division of Labor Statistics and Research Prevailing Wage Unit P. O. Box San Francisco, CA Q. A. How do I know what is the correct craft or classification for the work my employees are doing? The Scope of Work for each craft is listed on the DIR website and on some of the wage determinations. If you have questions about the type of work that many be performed by each craft please call: Lin Robertson at (408) Chapter 15

52 Q. A. If owners or partners work on a project do they have to be paid prevailing wages? Yes, anyone who works on a project must be paid the prevailing wage rate for all hours worked. This does not include office staff and supervisor who are not hands on employees. Q. A. What should I do if an employee performs more than one type of work each day? You must keep accurate records of how many hours the employee works in each classification. The employee must be paid the prevailing wage rate for each craft, classification, and type of work performed. If accurate records are not kept, the highest wage rate may be required. Q. What if an employee is just learning a trade or is just a helper on the project. Can I pay him/her a lesser wage? No. All employees must be paid the prevailing wage rate for the type of work they perform. Only apprentices who are enrolled in a state-approved program are allowed to be paid less than journeyman rates (which are higher). Applicable wage rates for apprentices apply. A. Q. A. What happens if I don t understand the prevailing wage rates? If you are unsure of the rates you should pay, you should contact the LCP administrator for clarification or you can call the Department of Industrial Relations, Division of Labor Statistics & Research at (415) Q. A. What is the methodology for determining the prevailing wage rates? The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and the nearest labor market area (if a majority of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing. Q. A. How does the prevailing wage affect me? California s prevailing wage laws ensure that the ability to get a public workers contract is not based on paying lower wage rates that a competitor. All bidders are required to use the same wage rates when bidding on a public works project. California law requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a public works project. Q. A. What is a general prevailing wage determination? When the Director of the California Department of Industrial Relations determine that the general prevailing rate of per diem wages for a particular craft, classification or type of worker is uniform throughout an area, the Director issues a determination enumerated county by county, but covering the entire area. General determinations are issued twice a year on February 22 and August Chapter 15

53 Q. A. What is a special prevailing wage determination? When a particular craft, classification or type of worker is not covered by a general determination, the awarding body may request a special prevailing wage determination. Requests must be made at least 45 days prior the bid advertisement date. Q. A. What is an issue date? The date upon which copies of the determinations of the Director are deposited in the mail. Determinations are issued twice a year on February 22 and August 22. Q. A. Why is there an expiration date for each prevailing wage determination? The expiration date indicates when the determination of the Director of the California Department of Industrial Relations is subject to change. Q. What does it mean when there is a single asterisk ( * ) or double asterisk ( **) after the expiration date of a prevailing wage determination? Prevailing wage determinations with a single asterisk (*) after the expiration date which are in effect on the date of advertisement for bids remain in effect for the life of the project. Prevailing wage determinations with double asterisks (**) after the expiration date indicate that the basic hourly wage rate, overtime and holiday pay rates, and employer payments to be paid for work performed after this date have been predetermined. If work is to extend past this date, the new rate must be paid and should be incorporated in contracts entered into now. The contractor should contact the Prevailing Wage Unit, DLSR (415) , or the awarding body to obtain predetermined wage A. Q. A. What is a predetermined change? Definitely changes to the basic hourly wage rate, overtime, holiday pay rates and employer payments which are know and specified in the applicable collective bargaining agreement at the time of the bid advertisement date and which are referenced in the general prevailing rate of per diem wages. Q. A. What is the effective date of a prevailing wage determination? The date upon which the determinations of the Director of the California Department of Industrial Relations go into effect. This date is 10 days after the issue date of the determination. Q. A. What is a coverage determination? A process in which the awarding body or any other interested party (such as a contractor, employee, union or labor-management compliance organization) may request a written determination by the Director of the Department of Industrial Relations about a specific construction project or type of work performed Chapter 15

54 Q. A. When does overtime pay apply? Compensation for all hours worked in excess of eight hours per day and 40 hours during any one week should not be less than one-and-one half times the basic rate of pay. For specific overtime requirements, refer to the prevailing wage determinations. Q. A. What are the threshold requirements for a public works project? Prevailing wages must be paid to all workers employed on a public works project when the public works project is over $1,000. If an awarding body elects to initiate and enforce a labor compliance program, that has been approved by the Director of the Department of Industrial Relations, for every public works project under the authority of the awarding body, prevailing wages are not required to be paid for any public works project of $25,000 or less when the project is for construction work, or for any public works project of $15,000 or less when the project is for alteration, demolition, repair, or maintenance work Chapter 15

55 CHAPTER 16 Common Violations 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 Chapter 16

56 APPENDIX A Terms and Definitions Awarding body CAC CCR CFR CPR DAS DIR DLSE DLSR DSA FBS IOR JATC LCP LEA PW PWD T&M TLCM Owner of project, body awarding contract California Apprenticeship Council California Code of Regulations Code of Federal Regulations Certified payroll record Division of Apprenticeship Standards Department of Industrial Relations Division of Labor Standards Enforcement Division of Labor Statistics & Research Department of State Architect Fringe benefit statement Inspector of Record, DSA assigned building inspector Joint apprenticeship training committee Labor compliance program Local education agency Public works or prevailing wage, depending on context Prevailing wage division Time & material The Labor Compliance Managers Appendix A

57 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 Apprentice Schedules Apprenticeship Programs, Requirements & Forms Contractors State License Status Public Works Interactive Databases Forms Appendix B

58 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 ). Dates from August 22 to February 21 call for the yyyy-02 determination. DIR Website to verify Prevailing Wage Rates for Journeymen: DIR Website to verify Prevailing Wage Rates for Apprentices: DIR Website to verify Apprentices are properly registered with DAS: DIR Website to verify Electricians are certified by DAS: Links to download reference material: Statewide: Northern California: San Francisco (example): Appendix C

59 APPENDIX D LCP Forms & Handouts The following pages will show the forms listed below: Pre-Construction Checklist of Labor Law Requirements Public Works Contract Award - DAS Form140 Request for Dispatch of an Apprentice - DAS Form142 Training Funds Contribution Form CAC-2 Apprentice Agreement (front and back side) Fringe Benefit Statement (Statement of Employer Payments) Statement of Compliance Certified Payroll Record (DIR Form A1-131) Notice to Construction Employees (posted on project site) Request for Approval of Forfeiture Amount Notice of Withholding of Contract Payments (language for when needed) Notice of Right to Obtain Review Formal Hearing (language for when needed) Opportunity for Settlement Meeting (language for when needed) Notice of Opportunity to Review Evidence Pursuant to Labor Code Section 1742(b) Request to Review Evidence (language for when needed) Notice of Transmittal (language for when needed) Appendix D

60 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 ; (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 ; (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 ; 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 ; Appendix D

61 (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 Appendix D

62 Appendix D

63 Appendix D

64 Appendix D

65 Front Appendix D

66 Back Appendix D

67 Fringe Benefit Statement Appendix D

68 Statement of Compliance Appendix D

69 Appendix D

70 NOTICE TO CONSTRUCTION EMPLOYEES Please call Lin Robertson at (408) 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) 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) 與 Lin Robertson 女士 聯絡 Appendix D

71 LABOR COMPLIANCE PROGRAM REQUEST FOR APPROVAL OF FORFEITURE AMOUNT Awarding body or 3rd Party Administrator: Name: Date Requested: Name of Affected Public Agency: Project Information Project Name Contract Number Project Location (County) Bid Advertisement Estimated Completion Date Date Project Accepted/Completion Date 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 $ Appendix D

72 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 2 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. 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 Appendix D

73 Disposition of the Case by the Labor Commissioner Approved: Wages $ 1775 Penalties $ 1776 Penalties $ TOTAL $ Training $ 1813 Penalties Approved as alternative (modified) penalty amount: Wages $ Training $ 1775 Penalties $ 1813 Penalties $ 1776 Penalties $ TOTAL $ Rejected: State Labor Commissioner Date Appendix D

74 LCP Administrator Contact Information Awarding Body Seal In Reply Refer to Case No.: Date: Notice of Withholding of Contract Payments Awarding Body Project Name Work Performed in County of: 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 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 and , the 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 has determined that the total amount of wages due was: (Verification of restitution pending). The has determined that the total amount of outstanding penalties due under Labor Code sections 1775 and 1813 is: The has determined that the amount of penalties assessed under Labor Code section 1776 is: By: Appendix D

75 Notice of Right to Obtain Review - Formal Hearing In accordance with Labor Code sections 1742 and , 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 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: 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 at the hearing within 20 days of the '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 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 Appendix D

76 Opportunity for Settlement Meeting In accordance with Labor Code Section (b), the 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 '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 's designee to attempt to settle a dispute regarding this notice must be transmitted to: Contact Information Liquidated Damages Labor Code Section 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 , 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 shall not apply to claims for prevailing wages under this chapter Appendix D

77 (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 , 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, The Amount of Liquidated Damages Available Under this Notice is Distribution: General Contractor and their bonding company Affected Contractor and their bonding company Appendix D

78 Notice of Opportunity to Review Evidence Pursuant to Labor Code Section 1742(b) To: Prime Contractor Subcontractor Please be advised that this office has received your Request for Review, dated, and pertaining to the Notice of Withholding of Contract Payments issued by the in Case No.. In accordance with Labor Code section 1742(b), this notice provides you with an opportunity to review evidence to be utilized by the at the hearing on the Request for Review, and the procedures for reviewing such evidence. Rule of the Prevailing Wage Hearing Regulations provides as follows: (a) Within ten (10) days following its receipt of a Request for Review, the Enforcing Agency shall also notify the affected contractor or subcontractor of its opportunity 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 review evidence required by this Rule if it (1) gives the affected contractor or subcontractor 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 normal business hours; or if (2) The Enforcing Agency at its own expense forwards copies of all such evidence to the affected contractor or subcontractor. (c) The evidence required to be provided under this Rule shall include the identity of witnesses whose testimony the Enforcing Agency intends to present, either in person at the hearing or by declaration or affidavit. This provision shall not be construed as requiring the Enforcing Agency to prepare or provide any separate listing of witnesses whose identities are disclosed within the written materials made available under subpart (a). (d) The Enforcing Agency shall make evidence available for review as specified in subparts (a) through (c) within 20 days of its receipt of the Request for Review; Appendix D

79 provided that, this deadline may be extended by written request or agreement of the affected contractor or subcontractor. The Enforcing Agency's failure to make evidence available for review as required by Labor Code Section 1742(b) and this Rule, shall preclude the enforcing agency from introducing such evidence in proceedings before the Hearing officer or the Director. (e) This Rule shall not preclude the Enforcing Agency from relying upon or presenting any evidence first obtained after the initial disclosure of evidence under subparts (a) through (d), provided that, such evidence is promptly disclosed to the affected contractor or subcontractor. This Rule also shall not preclude the Enforcing Agency from presenting previously undisclosed evidence to rebut new or collateral claims raised by another party in the proceeding. In accordance with the above Rule, please be advised that the Labor Compliance Program's procedure for you to exercise your opportunity to review evidence is as follows: Within five calendar days of the date of this notice, please transmit the attached Request to Review Evidence to the following address: Attention: Appendix D

80 Request to review evidence To: From: Regarding Notice of Withholding of Contract Payments Dated Our Case No.: The undersigned hereby requests an opportunity to review evidence to be utilized by the Labor Compliance Program at the hearing on the Request for Review. Phone No.: Fax No.: Appendix D

81 LCP Contact Information Awarding body seal if applicable Date: Re: Request for Review dated Notice of Transmittal To: Department of Industrial Relations Office of the Director-Legal Unit Attention: Lead Hearing Officer P. O. Box San Francisco, CA Enclosed herewith please find a Request for Review, dated, and received by the, (LCP Administrator with LCP ID number) for the School District, on (date). Also enclosed please find the following: Copy of Notice of Withholding of Contract Payments Copy of Audit Summary By: LCP Administrator Rep cc: Prime Contractor: Affected Contractor: Surety(s) on Bond: Please be advised that the attached Request for Review identified above has been received and transmitted to the address indicated. Please be further advised that the governing procedures applicable to these hearings are set forth at Title 8, California Code of Regulations sections These hearings are not governed by Chapter 5 of the Government Code, commencing with section Appendix D

82 Appendix E Notice of Proposed Rulemaking Approved January 21, 2009 Source: Appendix E

83 Text from code: REGULATIONS GOVERNING CERTIFIED PAYROLL RECORDS and LABOR COMPLIANCE PROGRAMS CALIFORNIA CODE OF REGULATIONS TITLE 8, CHAPTER 8, SUBCHAPTER 3, Article 6, and SUBCHAPTER 4 (as amended effective January 21, 2009) Appendix E

84 Contents Subchapter 3. Payment of Prevailing Wages upon Public Works Article 6. Certified Payroll Records: Requests, Content, and Cost Request for Payroll Records Reporting of Payroll Requests Cost Privacy Considerations Use of Electronic Reporting Forms Appendix E

85 Subchapter 4. Awarding Body s Article 1. Operation of and Contracts Subject to Labor Compliance Program Jurisdiction Composition and Components of Applicable Dates for Enforcement of s Approved Required by Statute. Article 2. Approval and Revocation of Approval of Labor Compliance Programs by Director Application for Approval Approval of Awarding Body s Approval of Third Party Extended Authority Revocation of Approval Notice of Approval. Article 3. Reports and Audits Filing of Statements of Economic Interest (FPPC Form 700) by Designated Employees and Consultants of Annual Report Investigation Methods for Definitions and Minimum Requirements, Including Review, Confirmation and Audits of Payroll Records; On-Site Visits; and Early Resolution of Audits Appendix E

86 Article 4. Limited Exemption from the Requirement to Pay Prevailing Wages Limited Exemption. Article 5. Enforcement Duties of Withholding Contract Payments When Payroll Records are Delinquent or Inadequate Withholding Contract Payments When, After Investigation, It Is Established That Underpayment or Other Violation Has Occurred Forfeitures Requiring Approval by the Labor Commissioner Determination of Amount of Forfeiture by the Labor Commissioner Deposits of Penalties and Forfeitures Withheld Request for Review of a Enforcement Action; Settlement Authority Appendix E

87 Subchapter 3. Payment of Prevailing Wages upon Public Works Article 6. Certified Payroll Records: Requests, Content, and Cost Request for Payroll Records. (a) Requests may be made by any person for certified copies of payroll records. Requests shall be made to any of the following: (1) the body awarding the contract, or (2) any office of the Division of Labor Standards Enforcement, or the Division of Apprenticeship Standards. (b) Requests for certified copies of payroll records pursuant to Section 1776 of the Labor Code may be made by any person. However, any such request shall be in writing and contain at least the following information: (1) The body awarding the contract; (2) The contract number and/or description; (3) The particular job location if more than one; (4) The name of the contractor; (5) The regular business address, if known. NOTE: Requests for records of more than one contractor of subcontractor must list the information regarding that contractor individually, even if all requests pertain to the same particular public works project. Blanket requests covering an entire public works project will not be accepted; unless contractor and subcontractor responsibilities regarding the project are not clearly defined. (c) Acknowledgment of Request. The public entity receiving a request for payroll records shall acknowledge receipt of such, and indicate the cost of providing the payroll records based on an estimate by the contractor, subcontractor or public entity. The acknowledgment of the receipt of said request for payroll records may be accomplished by the public entity's furnishing a copy of its written correspondence requesting certified copies of the payroll records sent to the specific contractor pursuant to Section 16400(d) below, to the person who requested said records. (d) Request to Contractor. The request for copies of payroll records by the requesting public entity shall be in any form and/or method which will assure and evidence receipt thereof. The request shall include the following: (1) Specify the records to be provided and the form upon which the information is to be provided; (2) Conspicuous notice of the following: Appendix E

88 (A) that the person certifying the copies of the payroll records is, if not the contractor, considered as an agent acting on behalf of the contractor; and (B) that failure to provide certified copies of the records to the requesting public entity within 10 working days of the receipt of the request will subject the contractor to a penalty of twenty-five ($25.00) dollars per calendar day or portion thereof for each worker until strict compliance is effectuated; (3) Cost of preparation as provided in Section 16402; and (4) Provide for inspection. (e) Inspection of Payroll Records. Inspection of the original payroll records at the office of the contractor(s) pursuant to subdivision (b) of Section 1776 of the Labor Code shall be limited to the public entities upon reasonable written or oral notice. NOTE: Authority cited: Sections 54, and 1776, Labor Code. Reference: Sections and 1776, Labor Code Reporting of Payroll Requests. (a) Reporting Format. The format for reporting of payroll records requested pursuant to Labor Code Section 1776 shall be on a form provided by the public entity. Copies of the forms may be procured at any office of the Division of Labor Standards Enforcement (DLSE) throughout the state and/or: Division of Labor Statistics & Research P.O. Box San Francisco, CA ATTENTION: Prevailing Wage Unit Acceptance of any other format shall be conditioned upon the requirement that the alternate format contain all of the information required pursuant to Labor Code Section If, however, the contractor does not comply with the provisions of Labor Code Section 1776, the Labor Commissioner may require the use of DIR's suggested format, "Public Works Payroll Reporting Form" (Form A-1131). (b) Words of Certification. The form of certification shall be as follows: I, (Nameprint) the undersigned, am (position in business) with the authority to act for and on behalf of, (name of business and/or contractor) certify under penalty of perjury that the records or copies thereof submitted and consisting of (description, no. of pages) are the originals or true, full and correct copies of the originals which depict the payroll record(s) of the actual disbursements by way of cash, check, or whatever form to the individual or individuals named. Date: Signature: A public entity may require a more strict and/or more extensive form of certification Appendix E

89 NOTE: Authority cited: Sections 54 and , Labor Code. Reference: Section 1776, Labor Code Cost. The cost of preparation to each contractor, subcontractor, or public entity when the request was made shall be provided in advance by the person seeking the payroll record. Such cost shall be $1 for the first page of the payroll record and 25 cents for each page thereafter, plus $10 to the contractor or subcontractor for handling costs. Payment in the form of cash, check or certified money order shall be made prior to release of the documents to cover the actual costs of preparation. NOTE: Authority cited: Section 1776, Labor Code. Reference: Section 1776(h), Labor Code Privacy Considerations. (a) Records received from the employing contractor shall be kept on file in the office or entity that processed the request for at least 6 months following completion and acceptance of the project. Thereafter, they may be destroyed unless administrative, judicial or other pending litigation, including arbitration, mediation or other methods of dispute resolution, are in process. Copies on file shall not be obliterated in the manner prescribed in subdivision (b) below; (b) copies provided to the public upon written request shall be marked, obliterated or provided in such a manner that the name, address and Social Security number, and other private information pertaining to each employee cannot be identified. All other information including identification of the contractor shall not be obliterated; (c) the public entity may affirm or deny that a person(s) was or is employed on a public works contract (by a specific contractor) when asked, so long as the entity requires such information of an identifying nature which will reasonably preclude release of private or confidential information. NOTE: Authority cited: Sections 54, and 1776, Labor Code. Reference: Section 1776, Labor Code Use of Electronic Reporting Forms. The certified payroll records required by Labor Code Section 1776 may be maintained and submitted electronically subject to all of the following conditions: (a) The reports must contain all of the information required by Labor Code Section 1776, with the information organized in a manner that is similar or identical to how the information is reported on the Department of Industrial Relations suggested Public Works Payroll Reporting Form (Form A-1131); (b) The reports shall be in a format and use software that is readily accessible and available to contractors, awarding bodies, s, and the Department of Industrial Appendix E

90 Relations; (c) Reports submitted to an awarding body, a, the Division of Labor Standards Enforcement, or other entity within the Department of Industrial Relations must be either (1) in the form of a non-modifiable image or record that bears an electronic signature or includes a copy of any original certification made on paper, or alternatively (2) printed out and submitted on paper with an original signature; (d) The requirements for redacting certain information shall be followed when certified payroll records are disclosed to the public pursuant to Labor Code Section 1776(e), whether the records are provided electronically or as hard copies; and (e) No contractor or subcontractor shall be mandated to submit or receive electronic reports when it otherwise lacks the resources or capacity to do so, nor shall any contractor or subcontractor be required to purchase or use proprietary software that is not generally available to the public. NOTE: Authority cited: Sections 54, 55, , and 1776, Labor Code. Reference: Section 1776, Labor Code. Subchapter 4. Awarding Body s Article 1. Operation of and Contracts Subject to Labor Compliance Program Jurisdiction Composition and Components of. (a) In accordance with Labor Code Section (b), a shall include, but not be limited to, the following requirements: (1) The Call for Bids, Design-Build Request, and the contract or purchase order shall contain appropriate language concerning the requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code. (2) A prejob conference shall be conducted before commencement of the work with contractors and subcontractors listed in the bid or who are required to be identified or prequalified in a Design-Build Contract. At the prejob conference applicable federal and state labor law requirements shall be discussed, and copies of suggested reporting forms furnished. A checklist, showing which federal and state labor law requirements were discussed, shall be kept for each conference. A checklist in the format of Appendix A presumptively meets this requirement. (3) A requirement that certified payroll records be kept by the contractor in accordance with Labor Code Section 1776 and furnished to the at times designated in the contract, which shall be at least monthly, or within 10 days of any request by the Awarding Body. Use of the current version of DIR's "Public Works Payroll Reporting Form" (A-1-131) and Statement of Appendix E

91 Employer Payments (PW26) constitutes presumptive compliance with the requirement for certified payroll records kept in accordance with Labor Code Section 1776, provided the forms are filled out accurately and completely. These suggested forms are available from the Department of Industrial Relations. (4) A program for orderly review of payroll records and, if necessary, for audits to verify compliance with the requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code. (5) A prescribed routine for withholding penalties, forfeitures, and underpayment of wages for violations of the requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code. (6) All contracts to which prevailing wage requirements apply shall include a provision that contract payments shall not be made when payroll records are delinquent or inadequate. (b) To the extent otherwise authorized by law, an Awarding Body or a Joint Powers Authority consisting of two or more Awarding Bodies may contract with a third party to initiate and enforce all or part of its, provided that the third party has been approved by the Director to operate a in accordance with these regulations. However, this subpart (b) shall not be construed as limiting an Awarding Body s or Joint Powers Authority s authority to contract for services for the operation of its own approved, including services by persons licensed or certified by the State of California to practice one of the following recognized professions: law, architecture, engineering, or accounting. (c) A private entity that is approved by the Director to operate a and that operates a pursuant to a contract with an Awarding Body or a Joint Powers Authority shall have the same rights and responsibilities as the Awarding Body or Joint Powers Authority in administering the, including but not limited to (1) complying with the conflict of interest provisions of the Political Reform Act (commencing with Section of the Government Code) including disclosure requirements for employees and consultants who participate in making governmental decisions, as defined under Title 2 California Code of Regulations Section 18701, and (2) maintaining, disclosing, or keeping confidential personnel information, payroll records, and other information and records in accordance with Labor Code Section 1776, the California Public Records Act, (Chapter 3.5 (commencing with Section 6250), Division 7, Title 1, Government Code) and the Information Practices Act of 1977, (Title 1.8 (commencing with Section 1798), Part 4, Division 3, Civil Code). (d) Nothing in this section or these regulations shall be construed as limiting the responsibility and authority of an Awarding Body to take cognizance of prevailing wage violations under Section 1726 of the Labor Code and take any appropriate action pursuant to and in accordance with that responsibility and authority. (e) It is the responsibility of a to enforce prevailing wage requirements, consistent with the policy of the state as expressed in Labor Code Section 90.5(a). A Labor Compliance Program shall take reasonable, vigorous, and prompt action to (1) determine whether violations exist, and (2) enforce compliance, including through imposition of appropriate penalties and formal enforcement action, when violations are found. A shall neither Appendix E

92 avoid use of its enforcement authority based on cost considerations nor shall it use that authority in an unreasonable manner to gain leverage over a contractor or subcontractor. Unreasonable use of enforcement authority includes, but is not necessarily limited to, prolonged or excessive withholdings of contract payments without making a determination that a violation has occurred. (f) The failure of an Awarding Body or to comply with any requirement imposed by this subchapter shall not of itself constitute a defense to the failure to pay prevailing wages or to comply with any other obligation imposed by Chapter 1 (commencing with Section 1720), Part 7, Division 2 of the Labor Code. NOTE: Authority cited: Section , Labor Code. Reference: Sections , Civil Code; Sections , and , Government Code; Sections 90.5, 1726, (b), , , , and 1776, Labor Code Appendix E

93 Appendix A Suggested Checklist of Labor Law Requirements to Review at Prejob Conference, Section 16421, with suggested Certification by subcontractor. 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 ; (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 ; (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 ; 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 Sections ; (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: Appendix E

94 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 Applicable Dates for Enforcement of s. (a) No contracts shall be subject to jurisdiction nor shall the limited exemption from payment of prevailing wages pursuant to Labor Code Section (a) apply to any contract of an Awarding Body unless and until the has been approved by the Director pursuant to this subchapter. (b) Contracts for which the Date of Notice or the Call for Bids is subsequent to the date of approval of a are subject to Labor Code Section In the case of a contract for which there is no Call for Bids, the applicable date shall be the date of the award of the contract. (c) Revocation of approval of a by the Director shall not affect the limited exemption from payment of prevailing wages provided by Labor Code Section (a) if the date of such revocation is subsequent to the Date of Notice or Call for Bids or, in the case of a contract for which there is no Call for Bids, subsequent to the date of the award of the contract. (d) If the Director revokes approval of an awarding body s that was approved pursuant to section below, the Director shall give notice to the Awarding Body specifying enforcement responsibilities, including with respect to cases pending hearing, as of the date of revocation. (e) An Awarding Body may voluntarily terminate its. With respect to each contract pending on the date of termination, the Awarding Body shall: (1) Notify the Director of its intention and the effective date of the termination; (2) Notify the contractor(s) and the Labor Commissioner of the identity of the agent who will carry out the compliance enforcement obligations of Labor Code Section on the remaining contracts; and (3) Specify the fund into which penalties or forfeitures withheld from any contract payments shall be deposited. (f) The Labor Commissioner may, in writing, agree to assume enforcement obligations on pending contracts of an Awarding Body which has voluntarily terminated its. In such case, penalties and forfeitures shall be deposited in the general fund of the state. (g) Upon receipt of a notice of revocation, a that was approved pursuant to section below shall (1) enter into no new contracts to provide labor compliance program services for the purpose of meeting an awarding body s statutory obligation to have a labor Appendix E

95 compliance program that contains or meets the requirements of Labor Code Section ; (2) provide immediate written notice to all awarding bodies for which the Program has an existing contract to provide labor compliance program services that the Program has received a revocation notice; and (3) provide all reasonable assistance to those awarding bodies in transferring labor compliance program responsibilities to another approved Program in order to avoid any forfeiture of funds by those awarding bodies and any forfeiture of rights by workers on the projects for which the Program had monitoring and enforcement responsibilities. NOTE: Authority cited: Section , Labor Code. Reference: Sections and , Labor Code Approved Required by Statute. (a) Whenever an Awarding Body is required by statute to enforce or contract to enforce a Labor Compliance Program that contains or meets the requirements of Labor Code section , the Awarding Body must have its own program that has been approved by the Director pursuant to section below, unless it fully contracts out its responsibilities and decision-making authority to a third party program that has been approved by the Director pursuant to section below. (b) The governing board of any Awarding Body that is required to enforce a Labor Compliance Program under subpart (a) above shall make a written finding that the Awarding Body has (1) established its own in accordance with the requirements of Labor Code Section (b) and this subchapter; or (2) has contracted with a third party that has been approved by the Director to operate a Labor Compliance Program in accordance with the requirements of Labor Code Section (b) and this subchapter. Copies of the finding required by this subpart (b) together with (A) notice of whether or not the Awarding Body intends to initiate and enforce its for all public works projects in which the Awarding Body participates, and (B) notice of any contract or agreement with a third party to operate a shall be provided promptly to the Director and prior to certifying to any other entity that the Awarding Body has complied with the statutory requirement to have a. (c) For purposes of these regulations, an approved program refers to the entity that has applied for and received approval by the Director based on a consideration of the factors in sections 16425, 16426, or below, and not to that entity s manual or methodology for conducting labor compliance enforcement. (d) Unless otherwise required by statute, an Awarding Body is not required to have separate Labor Compliance Programs, and a third party is not required to have separate approvals from the Director for different types of projects or funding sources, provided that (1) the Awarding Body has provided all notices required by subpart (b) above, (2) the Labor Compliance Appendix E

96 Program has timely filed all reports required by this subchapter, and (3) the Director has not otherwise limited the approved scope of operation for the. (e) The limited exemption from payment of prevailing wages provided by Labor Code Section (a) shall not apply unless the Awarding Body elects to initiate and enforces a Labor Compliance Program for every public works project under the authority of the Awarding Body. (f) A list of statutes that require Awarding Bodies to have a as a condition of project authorization, project funding, or use of specified contracting authority shall be maintained on the Department of Industrial Relations website. Authority cited: Section , Labor Code. Reference: Section , Labor Code. Article 2. Approval and Revocation of Approval of Labor Compliance Programs by Director Application for Approval. An application for Approval of an Awarding Body s or for Approval of a Third Party shall include the information specified either in section 16425(a) or in Section 16426(a) respectively, and shall be sent to the following address: Office of the Director Department of Industrial Relations 455 Golden Gate Avenue, 10th Floor San Francisco, CA Attention: Executive Assistant to the Director Suggested application forms are available on the Department of Industrial Relations website. NOTE: Authority cited: Section , Labor Code. Reference: Section , Labor Code Approval of Awarding Body s. (a) An Awarding Body seeking approval of its own shall submit evidence of its capacity and ability to operate an effective consistent with applicable legal requirements, based on the following factors: (1) Experience and training of the Awarding Body's personnel on public works labor compliance issues, including private sector experience on behalf of unions or contractors or on a joint labor Appendix E

97 management committee established pursuant to the federal Labor Management Cooperation Act of 1978 (section 175a of Title 29 of the United States Code) and participation in any public works enforcement training provided by the Division of Labor Standards Enforcement; (2) The average number of public works contracts the Awarding Body annually administers; (3) Whether the is a joint or cooperative venture among Awarding Bodies, and how the resources and expanded responsibilities of the compare to the Awarding Bodies involved; (4) The Awarding Body's record of taking cognizance of Labor Code violations and of withholding in the preceding five years; (5) The availability of competent legal support for the ; (6) The availability and quality of a manual outlining the responsibilities and procedures of the Labor Compliance Program to the Awarding Body; and (7) The method by which the Awarding Body will transmit notice to the Labor Commissioner of violations which may lead to debarment under Labor Code Section (b) The Director shall notify the Awarding Body within 60 days of receipt of the request for approval that approval is granted and the effective date of approval, or that the request is incomplete and of the materials necessary to complete the request or that the request is disapproved for other reasons. (c) The Director may grant approval on an interim or temporary basis and may impose specific restrictions on a Program s approval based on factors limiting its capacity and ability to operate an effective or conflict of interest concerns, subject to reasonable conditions for removing an interim or temporary designation or other specified restrictions. (d) The Director will maintain a list of all approved s, including programs approved on an interim, temporary or restricted basis, for distribution to interested parties upon request. (e) An Awarding Body that intends to operate a on behalf of other Awarding Bodies or Joint Powers Authorities must obtain approval pursuant to section below. (f) A with an initial approval or extended initial approval that is set to expire on or after January 30, 2009, shall be entitled to convert to approved status without a prescribed expiration date and subject to revocation only in accordance with section below, upon providing satisfactory evidence to the Director of all of the following: (1) the program has submitted timely, accurate, and complete annual reports in accordance with section below; (2) the program continues to employ personnel with experience and training on public works labor compliance issues; (3) competent legal support remains available to the program; (4) the program s manual of policies and procedures has been updated to accurately reflect any Appendix E

98 amendments to the public works laws and regulations (including the laws and regulations governing s) between the time of the program s approval and the effective date of this subpart (f); and (5) the program is in compliance with any specific conditions placed by the Director on its approval, and there is no written decision, order, or directive that requires the program either to cease or limit its operations as of a specified date. NOTE: Authority cited: Section , Labor Code. Reference: Sections and , Labor Code; Section 175a, Title 29 United States Code Approval of Third Party. (a) Any entity seeking approval to operate a pursuant to a contract with one or more Awarding Bodies or Joint Powers Authorities shall submit evidence of its capacity and ability to operate an effective consistent with applicable legal requirements, based on the following factors: (1) Experience and training of the entity s personnel on public works labor compliance issues, including private sector experience on behalf of unions or contractors or on a joint labor-management committee established pursuant to the federal Labor Management Cooperation Act of 1978 (section 175a of Title 29 of the United States Code) and participation in any public works enforcement training provided by the Division of Labor Standards Enforcement; (2) The geographical area in which the entity intends to operate its and the identity of the Awarding Bodies and Joint Powers Authorities, if any, with whom the entity intends to contract for operation of a ; (3) Whether the entity shares personnel, management, ownership or other close affiliation with (A) any contractor or subcontractor that within the preceding five years has been awarded a public works contract within the geographical area with any Awarding Body or Joint Powers Authority identified in subpart (2) above, (B) any person or entity who has been the surety on such a contract, (C) any joint labor-management committee established pursuant to the Federal Labor Management Cooperation Act of 1978 (section 175a of Title 29 of the United States Code), or (D) any person or entity who has represented workers employed in the same or similar classifications as those employed for such a contract and who has been engaged in (i) an organizational campaign under the National Labor Relations Act with contractors competing for such contracts or (ii) a jurisdictional dispute with another collective bargaining representative of workers utilized for such contracts; (4) The record of any contractor, subcontractor, surety, or worker representative referred to in subpart (3) above with respect to compliance and enforcement or aiding in the compliance and enforcement of prevailing wage requirements under the Labor Code in the preceding five years; (5) The availability of competent legal support for the and whether the persons or firms providing that support also represent any contractor, subcontractor, surety, or worker Appendix E

99 representative referred to in subpart (3) above; (6) The availability and quality of a manual outlining the responsibilities and procedures of the Labor Compliance Program to any Awarding Body or Joint Powers Authority with which it contracts; (7) The method by which the will transmit notice to the Labor Commissioner of violations which may lead to debarment under Labor Code Section ; (8) Awareness of the rights and responsibilities imposed on the as an agent of a governmental agency under section 16421(c) above and the existence of procedures designed to inform personnel of the of these rights and responsibilities and to insure the compliance of employees and consultants who participate in making governmental decisions with conflict of interest reporting requirements, such as through participation in internetbased or live training programs provided by the Fair Political Practices Commission; and (9) The identity by job title and number of program employees who will participate in making governmental decisions within the meaning of Title 2 California Code of Regulations sections through or any successor regulations, and whether required statements of economic interest (FPPC Form 700) will be filed with local awarding bodies with which the program contracts, with the Director, or with some other specified entity. (b) The Director shall notify the applicant within 60 days of receipt of the request for approval that approval is granted and the effective date of approval, or that the request is incomplete and of the materials necessary to complete the request or that the request is disapproved for other reasons. (c) The Director may grant approval on an interim or temporary basis and may impose specific restrictions on a Program s approval based on factors limiting its capacity and ability to operate an effective or conflict of interest concerns, subject to reasonable conditions for removing an interim or temporary designation or other specified restrictions. (d) The Director will maintain a list of all approved third party s, including programs approved on an interim, temporary or restricted basis, for distribution to interested parties upon request. (e) When the Director has approved a third party entity to operate a pursuant to Article 2 of this subchapter, that approval shall extend to any Awarding Body or Joint Powers Authority that has contracted with the approved entity for operation of its Labor Compliance Program, subject to the following: (1) No such approval shall apply unless the Awarding Body or Joint Powers Authority has first provided written notice to the Director of its contractual relationship with the approved entity together with such further information as the Director may reasonably require to document that relationship, as well as notice of whether or not the Awarding Body intends to initiate and enforce its Labor Compliance Program for all public works projects in which the Awarding Body participates; (2) The parties shall provide immediate written notice to the Director and the Labor Commissioner upon the termination or proposed termination of such contractual relationship; and Appendix E

100 (3) For good cause, the Director may disallow or withdraw approval for the operation of a Labor Compliance Program as to any particular Awarding Body or Joint Powers Authority, whether or not the third party entity remains approved to operate a on behalf of one or more other Awarding Bodies or Joint Powers Authorities. (f) A third party with an initial approval or extended initial approval that is set to expire on or after January 30, 2009, shall be entitled to convert to approved status without a prescribed expiration date and subject to revocation only in accordance with section below, upon providing satisfactory evidence to the Director of all of the following: (1) the program has submitted timely, accurate, and complete annual reports in accordance with section below; (2) the program continues to employ personnel with experience and training on public works labor compliance issues; (3) competent legal support remains available to the program; (4) the program s manual of policies and procedures has been updated to accurately reflect any amendments to the public works laws and regulations (including the laws and regulations governing s) between the time of the program s approval and the effective date of this subpart (f); and (5) the program is in compliance with any specific conditions placed by the Director on its approval, and there is no written decision, order, or directive that requires the program to cease or limit its operations as of a specified date. NOTE: Authority cited: Section , Labor Code. Reference: Sections and , Labor Code; Section 175a, Title 29 United States Code Extended Authority. (a) An Awarding Body or third party entity which has operated a with active enforcement responsibilities for at least three consecutive years after initial approval may apply to the Director for extended authority. The applicant bears the burden of producing evidence that it meets the criteria in subpart (b) below. (b) The Director may grant extended authority to an applicant that has satisfactorily demonstrated its understanding of and ability to monitor compliance with the requirements of the Labor Code and these regulations, and that has filed timely, complete, and accurate reports as required by these regulations. (c) The Director shall notify the applicant within 90 days of the receipt of a request for extended authority that the request is granted and the effective date of and extent of any extended authority that is granted, or that the request is denied and the reason for the denial. (d) A with extended authority may enter into an agreement with the Labor Appendix E

101 Commissioner providing for different procedures for securing approval of forfeitures than those set forth in Section below. (e) Any with final approval on the effective date of the amendments changing final approval to extended authority shall automatically be converted to the status of having extended authority. The Director will maintain a list of s with extended authority, for distribution to interested parties upon request. The Director may agree to alternative reporting formats under Section of these regulations for such programs, and shall maintain a list of interested parties who wish notification of alternative reporting formats before adoption. NOTE: Authority cited: Section , Labor Code. Reference: Sections , Labor Code Revocation of Approval. (a) The Director may revoke approval of a after giving due notice, conducting a hearing if appropriate, and finding cause for revocation. Cause for revocation of approval includes, but is not limited to: (1) Failure of the to monitor compliance with the requirements of the Labor Code and these regulations or to take appropriate enforcement action for violations of which it becomes or should have become cognizant; (2) Failure of the to file timely, complete, and accurate reports to the Director as required by section or elsewhere in these regulations.; (3) A pattern of failures in hearings conducted pursuant to Labor Code Section 1742(b) either (A) to establish violations under Labor Code Sections 1775(a) and 1776(g) for which contract payments have been withheld or (B) to comply with the requirements imposed on enforcing agencies or their representatives in the prevailing wage hearing regulations at Sections of Title 8 of the California Code of Regulations; (4) Failure to comply with applicable laws and reporting requirements pertaining to conflicts of interest and the handling of personnel and payroll records and information; (5) Failure to comply with requirements imposed on s by statute or these regulations or with any terms, conditions, or restrictions imposed by the Director on the Labor Compliance Program s approval. (b) Interested parties may request the Director to revoke approval of a. A request for revocation shall include evidence of failure of the to monitor compliance with the requirements of the Labor Code and these regulations or to take enforcement action after becoming cognizant of a violation of the Labor Code or these regulations. A request for revocation shall also include any other relevant evidence. (1) Approval of a may be revoked by the Director based on a request by Appendix E

102 an interested party after a proceeding conducted as provided in subpart (a) above. A copy of the request for revocation shall be provided to the Awarding Body as part of the notice required under subpart (a) above. (2) As part of a proceeding for revocation of approval based on a request by an interested party, the Director may require the to furnish a supplemental report for the period between the ending date of the last annual report filed by the pursuant to section and the date of notice by the Director, and containing the information listed in subpart (a) of said section (3) Revocation of approval of a based on a request by an interested party is solely within the discretion of the Director. The duty to operate a in accordance with the requirements of this subchapter runs solely to the Director and not to any worker, contractor, or interested party. The sole remedy for failure to comply with this duty is revocation of approval by the Director. (c) Upon determining that the request for revocation will be denied without hearing, the Director shall give notice of the decision and of the reasons therefore by mail to the, any Awarding Body or Joint Powers Authority that has contracted with the pursuant to section 16421(b) above, and any interested party that requested revocation. (d) Upon determining that a hearing is necessary, the parties will be notified and a hearing on cause for revocation of approval will be held in accordance with the procedures for notice and hearing proceedings set forth in section of Title 8 of the California Code of Regulations. (e) The Labor Commissioner is authorized to conduct investigations into whether a Labor Compliance Program has operated in accordance with the requirements of this subchapter and to participate in the role of prosecutor in any revocation proceedings. The Director shall make all final determinations. (f) Nothing in this section shall be construed as (1) requiring the Director to extend any approval granted on a temporary or interim basis pursuant to sections or above or (2) restricting the Director s authority to impose conditions or restrictions on a s approval in lieu of revocation. NOTE: Authority cited: Sections 55, , Labor Code. Reference: Sections 55, 1742(b), , 1775(a), and 1776(g), Labor Code Notice of Approval. (a) Notice of approval of an Awarding Body's shall be given in the Call for Bids and in the contract or purchase order and shall also be posted at the job site. If more than one job site exists or where such posting would endanger public safety, the notice may be posted in the manner prescribed by section 16100(b) of Title 8 of the California Code of Regulations Appendix E

103 (b) Notice of an approved shall contain, at the minimum, the effective date of the Director's approval, a statement whether the limited exemption from prevailing wages pursuant to Labor Code Section (a) applies to contracts under the jurisdiction of the Labor Compliance Program, a telephone number to call for inquiries, questions, or assistance with regard to the Labor Compliance Program, and the name of the agent or office administering the Labor Compliance Program. NOTE: Authority cited: Section , Labor Code. Reference: Section , Labor Code. Article 3. Reports and Audits Filing of Statements of Economic Interest (FPPC Form 700) by Designated Employees and Consultants of. (a) An Awarding Body that operates either its own labor compliance program or that contracts with a third party to operate all or part of its labor compliance program shall determine and designate those employees and consultants of the program who participate in making governmental decisions for the Awarding Body within the meaning of Title 2, California Code of Regulations, sections Those designated employees and consultants shall be required to file Statements of Economic Interest (FPPC Form 700) and to comply with other applicable requirements of the Political Reform Act (commencing with Section of the Government Code) in connection with work performed on behalf of the Awarding Body. (b) Designated employees and consultants who operate or are employed by a third party labor compliance program shall file their Statements of Economic Interest (FPPC Form 700) with the filing officer of each Awarding Body with which the third party program contracts, unless the Department of Industrial Relations or the Fair Political Practices Commission specifies a different or alternative filing location. Authority cited: Section , Labor Code. Reference: Sections 87100, et seq., Government Code; Section , Labor Code Annual Report. (a) The shall submit to the Director an annual report on its operation within 60 days after the close of its annual reporting period, as defined in subpart (c) (d) below. The annual report shall be made on the appropriate form [LCP-AR1, LCP-AR2, or LCP-AR3], for the type of that is submitting the report, unless the Director has agreed to a different reporting format for a Program that has been granted extended authority under section Appendix E

104 above. A third party that contracted with more than one Awarding Body or Joint Powers Authority during the annual reporting period shall separately report on Labor Code Section (b) enforcement activities for each Awarding Body or Joint Powers Authority covered by the report. (b) The Annual Report for a person or entity operating a third party shall also include (1) a certification of compliance with conflict of interest disclosure requirements by employees and consultants who participate in making governmental decisions, as defined under Title 2, California Code of Regulations, Section 18701, and (2) a current statement disclosing the information required under section 16426(a)(2), (3) and (5) above. (c) Information in the Annual Report shall be reported in sufficient detail to afford a basis for evaluating the scope and level of enforcement activity of the. An annual report shall also include such additional information as the may be required to report as a condition of its approval. (d) For purposes of this section, the annual reporting period shall be deemed to commence on the first of the month in which a is first granted approval pursuant to Section or above and shall conclude on the last day of the month immediately preceding that date in the following year. A shall use the same reporting period in succeeding years; provided that for good cause the Director may authorize a change in the reporting period. NOTE: Authority cited: Section , Labor Code. Reference: Sections , and , Labor Code. ** Annual Report Forms LCP-AR1 [awarding body program enforcing on some but not all projects], LCP-AR2 [awarding body program enforcing on all projects], and LCP-AR3 [third-party program] are available on the Department of Industrial Relations website at Investigation Methods for Definitions and Minimum Requirements, Including Review, Confirmation and Audits of Payroll Records; On-Site Visits; and Early Resolution of Audits. (a) The primary function of the is to ensure that public works contractors comply with the prevailing wage requirements found in the Public Works Chapter of the Labor Code. This regulation is intended to establish minimum requirements which all s shall meet or exceed in carrying out that function. Definitions found throughout this regulation are intended to provide s and representatives of the Department of Industrial Relations and the Division of Labor Standards Enforcement with common terminology as they each perform their respective roles in prevailing wage enforcement in furtherance of the Labor Code provisions establishing s. This regulation is also intended to confirm that Appendix E

105 the proactive investigation methods, as described in detail herein, only comprise the minimum obligations required of s to satisfy their duty to the Director to operate a as specified in sections and (b) Payroll records furnished by contractors and subcontractors in accordance with section 16421(a) (3) above, and in a format prescribed at section of Title 8 of the California Code of Regulations, shall be reviewed by the as promptly as practicable after receipt thereof, but in no event more than 30 days after such receipt. Review for this purpose shall be defined as inspection of the records furnished to determine if (1) all appropriate data elements identified in Labor Code Section 1776(a) have been reported; (2) certification forms have been completed and signed in compliance with Labor Code Section 1776(b); and (3) the correct prevailing wage rates have been reported as paid for each classification of labor listed thereon, with confirmation of payment in the manner and to the extent described in subpart (c) below. (c) Confirmation of payroll records furnished by contractors and subcontractors shall be defined as an independent corroboration of reported prevailing wage payments. Confirmation may be accomplished through worker interviews, examination of paychecks or paycheck stubs, direct confirmation of payments from third party recipients of Employer Payments (as defined at section of Title 8 of the California Code of Regulations), or any other reasonable method of corroboration. For each month in which a contractor or subcontractor reports having workers employed on the public work, confirmation of furnished payroll records shall be undertaken randomly for at least one worker for at least one weekly period within that month. Confirmation shall also be undertaken whenever complaints from workers or other interested persons or other circumstances or information reasonably suggest to the that payroll records furnished by a contractor or subcontractor are inaccurate. (d) Representatives of the shall conduct in-person inspections at the site or sites at which the contract for public work is being performed ( On-Site Visits ). On-Site Visits may be undertaken randomly or as deemed necessary by the, but shall be undertaken during each week that workers are present at sites at which the contract for public work is being performed. All On-Site Visits shall include visual inspection of (1) the copy of the determination(s) of the Director of Industrial Relations of the prevailing wage rate of per diem wages required to be posted at each job site in compliance with Labor Code Section , and (2) the Notice of Approval required to be posted at the job site in accordance with section above, listing a telephone number to call for inquiries, questions, or assistance with regard to the. On-Site Visits may include other activities deemed necessary by the to independently corroborate prevailing wage payments reported on payroll records furnished by contractors and subcontractors. (e) An Audit, as defined herein, shall be prepared by the whenever the has determined that there has been a violation of the Public Works Chapter of the Labor Code resulting in the underpayment of wages. An Audit for this purpose shall be defined as a written summary reflecting prevailing wage deficiencies for each underpaid worker, and including any penalties to be assessed under Labor Code Sections 1775 and 1813, as determined Appendix E

106 by the after consideration of the best information available as to actual hours worked, amounts paid, and classifications of workers employed in connection with the public work. Such available information may include, but is not limited to, worker interviews, complaints from workers or other interested persons, all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project. An Audit is sufficiently detailed when it enables the Labor Commissioner, if requested to determine the amount of forfeiture under section 16437, to draw reasonable conclusions as to compliance with the requirements of the Public Works Chapter of the Labor Code, and to enable accurate computation of underpayments of wages to workers and of applicable penalties and forfeitures. An Audit using the forms in Appendix B, when accompanied by a brief narrative identifying the Bid Advertisement Date of the contract for public work and summarizing the nature of the violation and the basis upon which the determination of underpayment was made, presumptively demonstrates sufficiency. Records supporting an Audit shall be maintained by the Labor Compliance Program to satisfy its burden of coming forward with evidence in administrative review proceedings under Labor Code Section 1742 and the Prevailing Wage Hearing Regulations found at sections of Title 8 of the California Code of Regulations. (f) After the has determined that violations of the prevailing wage laws have resulted in the underpayment of wages and an audit has been prepared, notification shall be provided to the contractor and affected subcontractor of an opportunity to resolve the wage deficiency prior to a determination of the amount of forfeiture by the Labor Commissioner pursuant to these regulations. The contractor and affected subcontractor shall be provided at least 10 days following such notification to submit exculpatory information consistent with the good faith mistake factors set forth in Labor Code Section 1775(a)(2)(A)(i) and (ii). If, based upon the contractor's submission, the reasonably concludes that the failure to pay the correct wages was a good faith mistake, and has no knowledge that the contractor and affected subcontractor have a prior record of failing to meet their prevailing wage obligations, the shall not be required to request the Labor Commissioner for a determination of the amount of penalties to be assessed under Labor Code Section 1775 if the underpayment of wages to workers is promptly corrected and proof of such payment is submitted to the. For each instance in which a wage deficiency is resolved in accordance with this regulation, the Labor Compliance Program shall maintain a written record of the failure of the contractor or subcontractor to meet its prevailing wage obligation. The record shall identify the public works project, the contractor or affected subcontractor involved, and the gross amount of wages paid to workers to resolve the prevailing wage deficiency; and the record shall also include a copy of the Audit prepared pursuant to subpart (e) above along with any exculpatory information submitted to the Labor Compliance Program by the affected contractor or subcontractor. NOTE: Authority cited: Section , Labor Code. Reference: Sections 1742, , , , 1775, 1776, and 1813, Labor Code Appendix E

107 Appendix B Audit Record Worksheet Forms [DLSE forms available separately] 3. Public Works Investigation Worksheet 4. Public Works Audit Worksheet 5. Prevailing Wage Determination Summary Article 4. Limited Exemption from the Requirement to Pay Prevailing Wages Limited Exemption. (a) As provided in Labor Code Section (a), an Awarding Body which operates an approved for all public works projects in which the Awarding Body participates shall not require payment of the general rate of per diem wages or the general rate of per diem wages for holiday and overtime work for any public works project of $25,000 or less when the project is for construction or installation work, or of $15,000 or less when the project is for alteration, demolition, repair, or maintenance work. (b) A project for construction, installation, alteration, demolition, repair, or maintenance work shall be identified as such in the call for bids, and in the contract or purchase order. (c) If the amount of a contract subject to subdivision (a) is changed and, as a result, exceeds the applicable limit under which the payment of the general rate of per diem wages is not required, workers employed on the contract after the amount due the contractor has reached the applicable limit shall be paid the general rate of per diem wages for regular, holiday or overtime work, as the case may be. NOTE: Authority cited: Section , Labor Code. Reference: Sections 1720(a)(1) and , Labor Code Appendix E

108 Article 5. Enforcement Duties of. (a) A shall have a duty to the Director to enforce the requirements of Chapter 1 of Part 7 of Division 2 of the Labor Code and these regulations in a manner consistent with the practice of the Labor Commissioner. It is the practice of the Labor Commissioner to refer to the Director s ongoing advisory service of web-posted public works coverage determinations as a source of information and guidance in making enforcement decisions. It is also the practice of the Labor Commissioner to be represented by an attorney in prevailing wage hearings conducted pursuant to Labor Code Section 1742(b) and sections of Title 8 of the California Code of Regulations. (b) Upon receipt of a written complaint alleging that a contractor or subcontractor has failed to pay prevailing wages as required by the Labor Code, the shall do all of the following: (1) Within 15 days after receipt of the complaint, send a written acknowledgment to the complaining party that the complaint has been received and identifying the name, address, and telephone number of the investigator assigned to the complaint; (2) Within 15 days after receipt of the complaint, provide the affected contractor with the notice required under Labor Code section 1775(c) if the complaint is against a subcontractor; (3) Notify the complaining party in writing of the resolution of the complaint within ten days after the complaint has been resolved by the ; (4) Notify the complaining party in writing at least once every 30 days of the status of a complaint that has not been resolved by the ; and (5) Notify the complaining party in writing at least once every 90 days of the status of a complaint that has been resolved by the but remains under review or in litigation before another entity. (c) The duties of a with respect to apprenticeship standards are as follows: (1) Either the Awarding Body or the acting on its behalf shall (A) inform contractors and subcontractors bidding public works about apprenticeship requirements, (B) send copies of awards and notices of discrepancies to the Division of Apprenticeship Standards as required under Section of the Labor Code, and (C) refer complaints and promptly report suspected violations of apprenticeship requirements to the Division of Apprenticeship Standards. (2) The shall be responsible for enforcing prevailing wage pay requirements for apprentices consistent with the practice of the Labor Commissioner, including (A) that any contributions required pursuant to Labor Code Section (m) are paid to the appropriate entity, (B) that apprentices are paid no less than the prevailing apprentice rate, (C) that workers listed and paid as apprentices on the certified payroll records are duly registered as apprentices with the Appendix E

109 Division of Apprenticeship Standards, and (D) requiring that the regular prevailing wage rate be paid (i) to any worker who is not a duly registered apprentice and (ii) for all hours in excess of the maximum ratio permitted under Labor Code Section (g), as determined at the conclusion of the employing contractor or subcontractor s work on the public works contract. (d) For each public work project subject to a s enforcement of prevailing wage requirements, a separate, written summary of labor compliance activities and relevant facts pertaining to that particular project shall be maintained. That summary shall demonstrate that reasonable and sufficient efforts have been made to enforce prevailing wage requirements consistent with the practice of the Labor Commissioner. Appendix C following this section provides a suggested format for tracking and monitoring enforcement activities. Compliance records for a project shall be retained until the later of (1) at least one year after the acceptance of the public work or five years after the cessation of all labor on a public work that has not been accepted, or (2) one year after a final decision or judgment in any litigation under Labor Code Section For purposes of this section, a written summary or report includes information maintained electronically, provided that the summary or report can be printed out in hard copy form or is in an electronic format that (1) can be transmitted by or compact disk and (2) would be acceptable for the filing of documents in a federal or state court of record within this state. (e) The Labor Commissioner may provide, sponsor, or endorse training on how to enforce prevailing wage requirements, including but not necessarily limited to the subjects of (1) ascertaining prevailing wage requirements and rates from the Division of Labor Statistics and Research, (2) monitoring and investigation under section above, (3) enforcement responsibilities under this Section and Sections below, and (4) procedural requirements and responsibilities as an enforcing agency under Labor Code Sections and and sections of Title 8 of the California Code of Regulations. NOTE: Authority cited: Section , Labor Code. Reference: Sections , , , , and through , Labor Code Appendix E

110 Appendix C Suggested Single Project Labor Compliance Review and Enforcement Report Form Awarding Body: Project Name: Name of Approved : Bid Advertisement Date: Acceptance Date: Notice of Completion Recordation Date: Summary of Labor Compliance Activities 1. Contract Documents Containing Prevailing Wage Requirements (Identify) 2. Prejob Conference(s) -- Attach list(s) of attendees and dates 3. Notification to Project Workers of s Contact Person. (Explain Manner of Notification for each project work site.) 4. Certified Payroll Record Review a. CPRs Received From: Contractor/Subcontractor For weeks ending ( w/e ) through w/e Appendix E

111 b. Classifications identified in CPRs and applicable Prevailing Wage Determinations Classification Determination No. 5. Further investigation or audit due to CPR review, information or complaint from worker or other interested person, or other reason: a. Independent Confirmation of CPR Data Contractor/Subcontractor b. Reconciled CPRs with Paychecks or Stubs (Yes/No) Employer Payments (Health & Welfare, Pension, Vacation/Holiday) Confirmation Contractor/Subcontractor c. Worker Interviews (Yes/No) Recipients of Employer Payments Written confirmation Obtained (Yes/No) Contributions to California Apprenticeship Council or Other Approved Apprenticeship Program Contractor/Subcontractor Recipients of Contributions Written confirmation Obtained (Yes/No) Appendix E

112 d. Additional Wage Payments or Training Fund Contributions Resulting from Review of CPRs Contractor/Subcontractor Additional amounts Paid to Workers Additional Training Fund Explanation * * * * Use separate page(s) for explanation 6. Complaints Received Alleging Noncompliance with Prevailing Wage Requirements. Name of Complainant Resolution or Current Status Date Received * * * *Use separate page(s) to explain resolution or current status 7. Requests for Approval of Forfeiture to Labor Commissioner Contractor/Subcontractor 8. Date of Request Litigation Pending Under Labor Code Section 1742 Contractor/Subcontractor 9. Approved/Modified/Denied (Check one): DIR Case Number Final report this project Annual report this project Authorized Representative for Appendix E

113 Withholding Contract Payments When Payroll Records are Delinquent or Inadequate. (a) "Withhold" means to cease payments by the Awarding Body, or others who pay on its behalf, or agents, to the general contractor. Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (b) "Contracts." Except as otherwise provided by agreement, only contracts under a single master contract, including a Design-Build contract, or contracts entered into as stages of a single project, may be the subject of withholding. (c) "Delinquent payroll records" means those not submitted on the date set in the contract. (d) "Inadequate payroll records" are any one of the following: (1) A record lacking any of the information required by Labor Code Section 1776; (2) A record which contains all of the required information but is not certified, or is certified by someone who is not an agent of the contractor or subcontractor; (3) A record remaining uncorrected for one payroll period, after the has given the contractor or subcontractor notice of inaccuracies detected by audit or record review. However, prompt correction will stop any duty to withhold if such inaccuracies do not amount to one (1) percent of the entire Certified Weekly Payroll in dollar value and do not affect more than half the persons listed as workers employed on that Certified Weekly Payroll, as defined in Labor Code Section 1776 and section of Title 8 of the California Code of Regulations. (e) The withholding of contract payments when payroll records are delinquent or inadequate is required by Labor Code Section (b)(5), and it does not require the prior approval of the Labor Commissioner. The Awarding Body shall only withhold those payments due or estimated to be due to the contractor or subcontractor whose payroll records are delinquent or inadequate, plus any additional amount that the has reasonable cause to believe may be needed to cover a back wage and penalty assessment against the contractor or subcontractor whose payroll records are delinquent or inadequate; provided that a contractor shall be required in turn to cease all payments to a subcontractor whose payroll records are delinquent or inadequate until the Labor Compliance Program provides notice that the subcontractor has cured the delinquency or deficiency. (f) When contract payments are withheld under this section, the shall provide the contractor and subcontractor, if applicable, with immediate written notice that includes all of the following: (1) a statement that payments are being withheld due to delinquent or inadequate payroll records, and that identifies what records are missing or states why records that have been submitted are deemed inadequate; (2) specifies the amount being withheld; and (3) informs the contractor or subcontractor of the right to request an expedited hearing to review the withholding of contract payments under Labor Code Section 1742, limited to the issue of whether the records are delinquent or inadequate or the has exceeded its authority under this section Appendix E

114 (g) No contract payments shall be withheld solely on the basis of delinquent or inadequate payroll records after the required records have been produced. (h) In addition to withholding contract payments based on delinquent or inadequate payroll records, penalties shall be assessed under Labor Code Section 1776(g) for failure to timely comply with a written request for certified payroll records. The assessment of penalties under Labor Code Section 1776(g) does require the prior approval of the Labor Commissioner under section of these regulations. NOTE: Authority cited: section , Labor Code. Reference: sections 1729, , and 1776, Labor Code Withholding Contract Payments When, After Investigation, It Is Established That Underpayment or Other Violation Has Occurred. (a) "Withhold" and contracts have the same meaning set forth in Sections 16435(a) and 16435(b) of these regulations. (b) Where the violation is by a subcontractor, the general contractor shall be notified of the nature of the violation and reference made to its rights under Labor Code Section (c) "Amount equal to the underpayment" is the total of the following determined by payroll review, audit, or admission of contractor or subcontractor: (1) The difference between amounts paid workers and the correct General Prevailing Rate of Per Diem Wages, as defined in Labor Code Section 1773, and determined to be the prevailing rate due workers in such craft, classification or trade in which they were employed and the amounts paid; (2) The difference between amounts paid on behalf of workers and the correct amounts of Employer Payments, as defined in Labor Code Section and determined to be part of the prevailing rate costs of contractors due for employment of workers in such craft, classification or trade in which they were employed and the amounts paid; (3) Estimated amounts of "illegal taking of wages"; (4) Amounts of apprenticeship training contributions paid to neither the program sponsor's training trust nor the California Apprenticeship Council; (5) Estimated penalties under Labor Code Sections 1775, 1776, and (d) The withholding of contract payments when, after investigation, it is established that underpayment or other violations have occurred requires the prior approval of the Labor Commissioner under Sections and of these regulations. NOTE: Authority cited: section , Labor Code. Reference: sections 1729, , 1773, , 1775, 1776, , 1778, 1813 and 1815, Labor Code Appendix E

115 Forfeitures Requiring Approval by the Labor Commissioner. (a) For purposes of this section and section below, forfeitures means the amount of wages, penalties, and forfeitures assessed by the and proposed to be withheld pursuant to Labor Code Section (a), and includes the following: (1) the difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate by the contractor or subcontractor; and (2) penalties assessed under Labor Code Sections 1775, 1776 and (b) If the aggregate amount of forfeitures assessed as to a contractor or subcontractor is less than $ , the forfeitures shall be deemed approved by the Labor Commissioner upon service and the Labor Commissioner s receipt of copies of the following: (1) the Notice of Withholding of Contract Payments authorized by Labor Code Section (a); (2) an Audit as defined in section 16432(e) of these regulations, and (3) a brief narrative identifying the Bid Advertisement Date of the contract for public work and summarizing the nature of the violation, the basis of the underpayment, and the factors considered in determining the assessment of penalties, if any, under Labor Code Section (c) For all other forfeitures, approval by the Labor Commissioner shall be requested and obtained in accordance with section below. NOTE: Authority cited: sections , Labor Code. Reference: sections , 1775, 1776, and 1813, Labor Code Determination of Amount of Forfeiture by the Labor Commissioner. (a) Where the requests a determination of the amount of forfeiture, the request shall include a file or report to the Labor Commissioner which contains at least the information specified in subparts (1) through (9) below. Appendix D is a suggested format for a Request for Approval of Forfeiture under this section. (1) Whether the public work has been accepted by the awarding body and whether a valid notice of completion has been filed, the dates if any when those events occurred, and the amount of funds being held in retention by the Awarding Body; (2) Any other deadline which if missed would impede collection; (3) Evidence of violation, in narrative form; (4) Evidence of violation obtained under section of these regulations and a copy of the Audit prepared in accordance with section 16432(e) setting forth the amounts of unpaid wages and applicable penalties; (5) Evidence that before the forfeiture was sent to the Labor Commissioner (A) the contractor and subcontractor were given the opportunity to explain why there was no violation, or that any violation was caused by good faith mistake and promptly corrected when brought to the contractor or subcontractor s attention, and (B) the contractor and subcontractor either did not do so or failed to Appendix E

116 convince the of its position; (6) Where the seeks not only wages but also a penalty as part of the forfeiture, and the contractor or subcontractor has unsuccessfully contended that the cause of violation was a good faith mistake that was promptly corrected when brought to the contractor or subcontractor s attention, a short statement should accompany the proposal for a forfeiture, with a recommended penalty amount pursuant to Labor Code Section 1775(a); (7) Where the seeks only wages or a penalty less than $50 per day as part of the forfeiture because the contractor or subcontractor has successfully contended that the cause of the violation was a good faith mistake that was promptly corrected when brought to the contractor or subcontractor s attention, the file should include the evidence as to the contractor or subcontractor's knowledge of his or her obligation, including the program's communication to the contractor or subcontractor of the obligation in the bid invitations, at the prejob conference agenda and records, and any other notice given as part of the contracting process. With the file should be a statement, similar to that described in (6), and recommended penalty amounts, pursuant to Labor Code Section 1775(a); (8) The previous record of the contractor and subcontractor in meeting their prevailing wage obligations; and (9) Whether the has been granted approval on only an interim or temporary basis under sections or above or whether it has been granted extended approval under section above. (b) The file or report shall be served on the Labor Commissioner as soon as practicable after the violation has been discovered, and not less than 30 days before the final payment, but in no event not less than 30 days before the expiration of the limitations period set forth in Labor Code Section (c) A copy of the recommended forfeiture and the file or report shall be served on the contractor and subcontractor at the same time as it is sent to the Labor Commissioner. The Labor Compliance Program may exclude from the documents served on the contractor and subcontractor copies of documents secured from the contractor or subcontractor during an audit, investigation, or meeting if those are clearly referenced in the file or report. (d) The Labor Commissioner shall affirm, reject, or modify the forfeiture in whole or in part as to the wages and penalties due. (e) The Labor Commissioner's determination of the forfeiture is effective on one of the two following dates: (1) For all programs other than those having extended authority under section of these regulations, on the date the Labor Commissioner serves by first class mail, on the Labor Compliance Program, on the Awarding Body if different, on the contractor and on the subcontractor, if any, an endorsed copy of the proposed forfeiture, or a newly drafted forfeiture statement which sets out the amount of forfeiture approved. Service on the contractor or subcontractor is effective if made on the last address supplied by the contractor or subcontractor in the record. The Labor Commissioner's approval, modification or disapproval of the proposed forfeiture shall be served within 30 days of Appendix E

117 receipt of the proposed forfeiture. (2) For programs with extended authority under section above, approval is effective 20 days after the requested forfeitures are served upon the Labor Commissioner, unless the Labor Commissioner serves a notice upon the parties, within that time period, that this forfeiture request is subject to further review. For such programs, a notice that approval will follow such a procedure will be included in the transmittal of the forfeiture request to the contractor. If the Labor Commissioner notifies the parties of a decision to undertake further review, the Labor Commissioner's final approval, modification or disapproval of the proposed forfeiture shall be served within 30 days of the date of notice of further review. NOTE: Authority cited: Section , Labor Code. Reference: Sections and 1775, Labor Code Appendix E

118 Appendix D Suggested Format for Request for Approval of Forfeiture [separately form] Deposits of Penalties and Forfeitures Withheld. (a) Where the involvement of the Labor Commissioner had been limited to a determination of the actual amount of penalty, forfeiture or underpayment of wages, and the matter has been resolved without litigation by or against the Labor Commissioner, the shall deposit penalties and forfeitures with the Awarding Body. (b) Where collection of fines, penalties or forfeitures results from administrative proceedings or court action to which the Labor Commissioner and Awarding Body or its are both parties, the fines, penalties or forfeitures shall be divided between the general funds of the state and the Awarding Body, as the Hearing Officer or court may decide. (c) All penalties recovered in administrative proceedings or court action brought by or against the Labor Commissioner and to which the Awarding Body or its is not a party, shall be deposited in the general fund of the state. (d) All wages and benefits which belong to an employee and are withheld or collected from a contractor or subcontractor, either by withholding or as a result of administrative proceedings or any court action, and which have not been paid to the employee or irrevocably committed on the employee's behalf to a benefit fund, shall be deposited with the Labor Commissioner, who shall handle such wages and benefits in accordance with Labor Code Section NOTE: Authority cited: Section , Labor Code. Reference: Sections 96.7, and 1775, Labor Code Request for Review of a Enforcement Action; Settlement Authority. (a) A contractor or subcontractor may request a settlement meeting pursuant to Labor Code Section (b) and may request review of a enforcement action in accordance with Labor Code Sections (b) and 1742 and the regulations found at sections of Title 8 of the California Code of Regulations. The shall have the rights and responsibilities of the Enforcing Agency (as defined in section 17202(f) of Title 8 of the California Code of Regulations), in responding to such a request for review, including but not limited to the obligations to serve notices, transmit the Request for Review to the hearing office, and provide an opportunity to review evidence in a timely manner, to participate through counsel in all hearing proceedings, and to meet the burden of establishing prima facie support for the Notice of Withholding of Contract Payments Appendix E

119 (b) If a contractor or subcontractor seeks review of a enforcement action, the Labor Commissioner may intervene to represent the Awarding Body, or to enforce relevant provisions of the Labor Code consistent with the practice of the Labor Commissioner, or both. (c) Except in cases where the Labor Commissioner has intervened pursuant to subpart (b) above, the shall have the authority to prosecute, settle, or seek the dismissal of any Notice of Withholding of Contract Payments issued pursuant to Labor Code Section and any review proceeding under Labor Code Section 1742, without any further need for approval by the Labor Commissioner. Whenever a settles in whole or in part or seeks and obtains the dismissal of a Notice of Withholding of Contract Payments or a review proceeding under Labor Code Section 1742, the shall document the reasons for the settlement or request for dismissal and shall make that documentation available to the Labor Commissioner upon request. NOTE: Authority cited: Sections 54, 55, 1742(b), and , Labor Code. Reference: Sections 1742, (b), and , Labor Code Appendix E