January 16, 2015
The Implementation of Senate Bill 854
Background and Policy Goal
Labor compliance is the active monitoring of a public works project to ensure that the State’s labor laws are being followed. It includes the review of payroll records to determine that prevailing wages are being paid by contractors and subcontractors who work on a public works project. Labor compliance policy has been a legislative priority for the past decade commencing in 2003. The legislature in 2014 took action to initiate a significant change in labor compliance policy with SB 854.
One of the apparent goals of SB 854 is to provide the Department of Industrial Relations (DIR) with data for all wages paid for every public works project under contract, within every public agency in the state including those smaller projects initiated through purchase orders (PO’s). To achieve this goal the Labor Code was amended; the statute now requires that every contractor and subcontractor intending to participate in a public works project register with DIR, pay an annual registration fee of $300 and thereafter provide their DIR registration number to the public agency requesting quotes, bids or contract proposals which are submitted for maintenance and construction projects. Contractors and subcontractors will, subsequently, be responsible for submitting electronic certified payroll reports (CPR’s) into the State’s eCPR payroll report system.
Public agencies have a major role in the new DIR process created by SB 854; they are tasked by that legislation to provide notice electronically to DIR within 5 days of the date of a contract award or PO issuance via the online PWC-100 form (Notice of public works project award). The notice must include specific information about the project and the contractor and/or the subcontractors listed in the quote, bid or contract.
Senate Bill 854 was part of the State Budget package that became effective on July 1, 2014. The legislation has a series of implementation dates commencing with the start of this fiscal year and moving into the calendar year of 2015, with full compliance expected by January 1, 2016. Those stages of implementation are articulated in bullet form below.
Requirements for Contractors, Subcontractors and Public Agencies: Implementation Sequence
July 1, 2014
Public agencies must provide notice to DIR of contracts signed and purchase orders issued for projects under contract on July 1, 2014 and thereafter. The notice is accomplished through an electronic filing of the PWC-100 document.
Contractors and subcontractors intending to do public work during this period may register with DIR and pay the $300 registration fee.
The contractor registration and fee paid during this time is active for the fiscal year 2014 – 2015. Contractors and subcontractors must renew their registration (pay the annual $300 fee, again) to bid on and do public work for 2015 – 2016 and each year thereafter.
January 1, 2015
Public agency solicitations for quotes, bids and contract proposals must include the following information on and after January 1, 2015:
No contractor or subcontractor may be listed on a bid proposal for a public works project (submitted on or after March 1, 2015) unless registered with the Department of Industrial Relations pursuant to Labor Code section 1725.5 [with limited exceptions from this requirement for bid purposes only under Labor Code section 1771.1(a) in which circumstance the contractor or subcontractor is ineligible to respond to a bid or to do public work].
No contractor or subcontractor may be awarded a contract for public work on a public works project (awarded on or after April 1, 2015).
This project is subject to compliance monitoring and enforcement by the Department of Industrial Relations.
March 1, 2015
Contractors and subcontractor must be registered with DIR in order to provide quotes, bids or proposals to do public work.
Public agencies must verify that contractors and subcontractors are registered with DIR at the time that quotes, bids or proposals are accepted by the agency. Public agencies must provide notice to DIR of contracts awarded and purchase orders issued; the notice is an electronic filing (PWC-100 Form). The current PWC-100 does not require this information. It is hoped that the new, revised, form will include this data instead of the contractor license number.
April 1, 2015
Contractors and subcontractor must be registered with DIR in order to sign contracts to do public work and are required to submit CPR’s into the eCPR system.
Public agencies must verify that contractors and subcontractors are registered with DIR prior to signing contracts or issuing PO’s. Public agencies must provide notice to DIR of contracts signed and purchase orders issued; the notice is an electronic filing (PWC-100 Form). Same as above.
January 1, 2016
The final stage of implementation is applicable to ALL public works projects and requires that all contractors and subcontractors working on or intending to do public work must be registered with DIR and must be submitting CPR’s into the eCPR system.
Public agencies must verify that contractors and subcontractors are registered with DIR at the time that proposals are accepted by the agency and before signing contracts or issuing PO’s. Public agencies must provide notice to DIR of contracts signed and purchase orders issued; the notice is an electronic filing (PWC-100 Form) and must include all verified contractor and subcontractor DIR registration numbers
The intent of SB 854 is that the requirements met and the practices initiated during 2014 through 2016 continue in perpetuity.
Challenges Associated with Implementation
C.A.S.H. has produced three workshops on SB 854 with DIR Agency leaders on the new law; these were held in Sacramento, Bakersfield and Ontario. During this series of presentations on SB 854 and after hearing the public comment and questions initiated on the matter, DIR asked C.A.S.H. to assemble a work group to assist in addressing issues raised.
On Wednesday, December 10, 2014 the DIR Work Group convened in Sacramento. Three DIR leaders met with ten practitioners for two hours. During that discussion issues were raised and solutions suggested for meeting the objectives identified in the statute; a particular emphasis was given to the electronic PWC-100 document and its filing. At the close of the meeting it was determined that the dialogue should continue between DIR and the practitioners including specific suggestions offered for making the electronic document more user friendly. Jenny Hannah and Chuck Parks from the Kern County Superintendent of Schools Office have been in direct contact with DIR on behalf of C.A.S.H. since that workgroup meeting.
Jenny Hannah, C.A.S.H. Vice-Chair, will provide an update on the matter at the C.A.S.H. Membership Meeting scheduled at 11:00 am on January 28, 2015. A presentation on the new DIR procedures is being planned for the C.A.S.H. Annual Conference in February 2015.
– Tom Duffy