California and Federal Labor Compliance Overview
California Contractors’ Obligations To Maintain and Furnish Records:
Department of Industrial Relations (DIR) Labor Code § 1776(a) requires each public works contractor and subcontractor to keep accurate payroll records, including the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual wages paid to each worker. The “work classification” refers to the craft classification (or type of work performed) as fixed by the Director and specified by title on the prevailing wage determinations published and maintained by the California Office of Policy, Research and Legislation (OPRL). (Labor Code § 1773 and 8 CCR § 16203.)
Payroll records which do not identify the Director’s specified title (e.g., records which only identify a worker by status, such as “journeyman” or “apprentice” or “partner,” and do not refer to the Director’s published classification, such as “Laborer Group 1” or “Carpenter”) are inadequate. Payroll records shall be on forms provided by the California Division of Labor Standards Enforcement (DLSE) or in a manner containing the same information as the forms provided by the DLSE. The DLSE form (DIR Form A -1-131) is available on the DLSE website in the Public Works/prevailing wage section.
The payroll records may consist of printouts that are maintained as computer records so long as the printouts contain the same information as the DLSE forms. The required certification language is also on the DLSE website.
Payroll Records Must be Certified:
Labor Code § 1776(b) requires that payroll records, as defined above, shall be “certified,” that is, verified by written declaration made under penalty of perjury, that the information contained in the records is true and correct. (8 CCR § 16000.) The certification language is found on the back of the form furnished by the DLSE. Payroll records furnished to DLSE which are not certified are inadequate.
Contractors' Obligation To Electronically Submit Certified Payroll Records ("eCPRs").
DIR Labor Code Section 1771.4 was added to the Public Works Chapter by the Legislature as part of the Public Works Reforms contained in SB854 which became effective on June 20, 2014. Labor Code Section 1771.4(a)(3) requires each contractor and subcontractor to furnish “the records specified in Section 1776 directly to the Labor Commissioner.”
Contractors’ Obligations To Comply With Apprenticeship Standards.
DIR Labor Code § 1777.5 identifies the obligations of contractors (including subcontractors) to employ apprentices on public works projects. The requirements to employ apprentices do not apply to “contracts of general contractors or to contracts of specialty contractors not bidding for work through a general or prime contractor when the contracts of general contractors or those specialty contractors involves less than thirty -thousand dollars ($30,000).” Labor Code § 1777.5(o).)
Contractors who “knowingly violate” any of these requirements are subject to monetary penalties (up to $300.00 for each full calendar day of noncompliance) under Labor Code § 1777.7, and may also be “debarred,” i.e., denied the right to bid on or be awarded a contract for public works, or perform work as a subcontractor on a public works project, for up to a period of three years. The appropriate remedy in each case will be based upon a consideration of five circumstances listed in the statute.
Effective June 27,2012, the Legislature amended section 1777.7 to transfer enforcement of these apprenticeship obligations from the Chief of the Division of Apprenticeship Standards (DAS) to the Labor Commissioner (DLSE).
Three Overall Categories Of Apprenticeship Violations.
All public works contractors must:
(1) Timely submit contract award information to an authorized apprenticeship program both before commencing work on the project and after work has been concluded. (See, LC § 1777.5(e) and 8 CCR 230);
(2) Employ DAS-registered apprentices, including compliance with minimum and maximum ratios of work hours performed by apprentices to journeymen. (See, LC § 1777.5(d) and (g), and (h) -(l), LC § 3077 and 8 CCR 230.1(a) and (c));
(3) Make training fund contributions to the California Apprenticeship Council (“CAC”) in specified amounts. (See, LC § 1777.5(m)(1) and 8 CCR 230.2.)
The statutory references and/or the regulations cited are extremely detailed and explain with particularity:
(1) The procedures contractors must follow to properly submit contract award information (what, when, and where) and to request dispatch of apprentices to the project (when and from whom);
(2) The calculation of minimum and maximum ratios for determining the number of hours apprentices are to be employed before the end of the contract or subcontract;
(3) Optional payment of training fund contributions to approved apprenticeship programs rather than to the CAC;
(4) Compliance with the “journeyman on duty” rule (when required);
(5) Specified exceptions to any of these requirements.
The cited regulations were written and adopted by the CAC. DLSE investigators enforce apprenticeship standards when apprenticeship violations are the specific subject of new complaints and will include apprenticeship compliance during the course of investigations arising from complaints alleging other violations of the prevailing wage laws, such as wage underpayments to workers.
DIR Minimum Ratio Violations.
Understanding the minimum ratio requirement (“one hour of apprentice work for every five hours of journeyman work”) and the mathematical calculation of penalties when violations occur lends itself to a step-by-step approach:
(1) To determine whether a violation has occurred, the investigator must first count the total number of journeyman hours worked in a particular craft by a specific contractor “before the end of the contract or, in the case of a subcontractor, before the end of the subcontract.” (See, subdivision (h) of § 1777.5.) Assume the contractor in question has submitted certified payroll records (“CPRs”) which reflect that journeyman carpenters worked a total of 750 straight -time hours over the course of the contract. (Note that hours worked by journeymen in excess of 8 per day or 40 per week are excluded from this calculation, also pursuant to subdivision (h) of § 1777.5.)
(2) Calculate 20% of 750 journeyman hours to determine the minimum number of apprentice hours required before the end of the contract. (750 x 0.20 = 150 minimum apprentice hours.)
(3) Assume that this contractor’s CPRs only reflect a total of 40 apprentice hours worked in the carpenter craft during the contract. That number is less apprentice hours than the minimum required under the statutory formula. Violation of the minimum ratio requirement has therefore been established.
(4) The investigator must now determine the penalty. The Legislature did not base the penalty upon the number of hours a contractor may have fallen short in providing apprentices with work on the project. Rather, § 1777.7(a)(1) provides that contractors who knowingly violate any of the apprenticeship standards found in § 1777.5 “shall forfeit as a civil penalty” an amount not exceeding $100 “for each full calendar day of noncompliance.” (Note that the maximum increases to $300 per day when two or more violations occur within a three-year period. Assume that our contractor does not have a prior violation.)
Because subdivision (h) of § 1777.5 informs us that compliance with the minimum ratio requirement applies during “any day or portion of a day when any journeyman is employed at the jobsite,” noncompliance with the ratio should be also measured against that same total number of calendar days. (Note that it is therefore irrelevant for penalty purposes whether the contractor’s apprentices and journeymen were employed in accordance with the ratio on any single day.
This is so because our statute mandates that compliance with the ratio is not to be determined at the end of each day, but only by “the end of the contract.”) Assume the CPRs in our example reflect that the total count of calendar days during which one or more journeyman carpenters were employed by this contractor was 50. (5) The contractor is therefore subject to a maximum penalty of $5000 ($100 x 50 days of noncompliance = $5000) for failing to employ apprentice carpenters in accordance with the minimum ratio required by § 1777.5.
Federal Projects Under Davis-Bacon Act.
The California law restricting the reduction of the Basic Hourly Rate is distinct from the federal prevailing wage laws under the Davis-Bacon Act. The Davis-Bacon Act does not prohibit the crediting of employer payments or benefit contributions towards fulfilling the hourly wage rate listed in the contract wage determination on federally funded projects. Contractors performing work on projects which are governed by both the federal Davis-Bacon Act and the California prevailing wage requirements must, however, continue to comply with state requirements in order to be in compliance with California law. DLSE investigators may encounter this issue when dealing with contractors on public works projects which have mixed funding (both federal and state) or federally funded projects which are controlled or carried out by California awarding bodies of any sort. In both of these situations, the application of state prevailing wage rates when higher is required. (See 8 CCR § 16001(b).)
Consulting Services We Provide
- Review public works preconstruction contracts
- Monitor DIR contractor/subcontractor certified payrolls
- Audit labor classification for each worker employed
- Review DIR pre-DAS 140/142 submissions
- Review CAC training fund contributions form CAC-2
- Review DIR Fringe Benefits Statement PW-26
- Monitor DIR wage determinations
- Audit fringe benefits allowances
- Review DIR holiday payment requirements
- Audit DIR travel & subsistence requirements
- Caltrans Labor Compliance
- County of Sacramento Labor Compliance
- City of Los Angeles Labor Compliance
- Los Angeles Unified School District Labor Compliance
- Federal Davis-Bacon Project Monitoring
- Federal DBE Implementation & Review
- Federal FAA AIP Goal Setting
- DIR & Davis-Bacon Training
- DIR Civil Wage Penalty Review
- Local-Hire Review (e.g., San Francisco)
- Skilled and Trained Workforce
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or legal opinions on any specific facts or circumstances.