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Important Changes in Prevailing Wage Laws and DIR Regulations

Posted March 12, 2015 --> • Legislation

At the end of last year’s legislative session, the Governor signed into law SB 854, which mandates several changes in public contracting and prevailing wage laws which take effect in 2015.  The new law has three components, each with compliance:

1.      Contractor Registration Requirements.   All contractors bidding on public work are required to register with the Department of Industrial Relations (DIR) and to pay an annual fee.  The registration requires contractors to provide the State with evidence of the contractors’ compliance with a number of statutory requirements.  Registration is done online, and requires payment of a $300 annual fee.  Registration must be done before submitting a bid or being included in a bid on a public project.  The link to the DIR’s website for registration and related information is:

2.      Bid Proposal and Contract Award Prohibited.  Under Labor Code § 1771.1, as amended by SB 854, unless registered with the DIR, a contractor may not bid or be listed as a subcontractor for any bid proposal submitted for public work on or after March 1, 2015.  Additionally, after April 1, 2015, a public entity cannot award a public work contract to a non-registered contractor.

3.      New Certified Payroll Reporting Requirements.  Bid invitations and public works contracts will now specify that the project is subject to compliance monitoring and enforcement by the DIR and that contractors and subcontractors must register in order to submit a bid and be awarded a contract.   More importantly, the public agency must notify the DIR of contractors who are awarded (or listed on) a public work project, and all contractors and subcontractors must submit certified payrolls directly to the DIR on a weekly basis.

4.         Contractor Has Right To Sue Private Developer For Prevailing Wage Violations.  The Governor also signed AB 1939, which creates a private right of action for a contractor to recover from a private "hiring party" the added labor costs, penalties and legal fees resulting from the failure to pay prevailing wages if the hiring party, owner or developer failed to advise the contractor that the project was subject to the prevailing wage law.  This new right of action will come in handy for contractors on private projects which are subsequently determined to have been subject to the prevailing wage law.