Failure to Register Public Works Projects with DIR Could Result in Penalties

Yesterday, Gov. Jerry Brown signed into law SB 96, which permits the Department of Industrial Relations to impose fines and penalties on local government agencies for failing to comply with certain prevailing wage laws. Under this new law, DIR may now assess penalties of $100 per day, up to $10,000, against a local agency if the local agency:

1. fails to notify DIR of public works and maintenance contracts that the agency awards,
2. makes final payment before notifying DIR and an unregistered contractor or subcontractor is found to have performed work, or
3. permits an unregistered contractor or subcontractor to perform work on a public works or maintenance project.

The penalties apply on projects of $25,000 or more for construction, alteration, demolition, installation or repair, and $15,000 or more for maintenance, including landscape maintenance.
 
SB 96 was added as a budget trailer item, and is a predictable expansion of SB 854, adopted in 2014. SB 854 established the prevailing wage compliance monitoring and enforcement process that has become commonplace. Under the 2014 bill, contractors are required to register with DIR prior to bidding on or performing any public works or maintenance projects, and contractors must file all certified payroll records directly with DIR. In order to establish a project file for the certified payroll records, SB 854 requires public agencies to notify DIR of awarded contracts. This is done by filing the Form PWC-100 electronically through the DIR website, which is available here.
 
Even prior to SB 854, filing the PWC-100 was a legal requirement, but there was no penalty for non-compliance. Now, SB 96 has established several instances in which local agencies may be subject to penalties.
 
In light of this new bill, public agencies will need to take extra precautions to ensure compliance with the contractor registration requirements. Agencies will need to ensure that they file the PWC-100 for any contract above the $25,000 (or $15,000) threshold within 30 days of the award of the contract and prior to the start of the project. The filing is not necessary for contracts below these amounts. Agencies should take note, however, that the 30-day window begins to run as of the contract award – i.e., when the board approves the contract – not upon the actual execution. Agencies will also want to double-check that all contractors and subcontractors are, in fact, registered.
 
Because SB 96 was adopted as a budget trailer bill, it takes immediate effect. Therefore, all public agencies should take steps now to ensure that they routinely and consistently file the PWC-100 on all prevailing wage projects. Agencies should also file the PWC-100 on any ongoing projects where the form has not yet been filed.
 
If you have any questions about this law or how it may impact your agency, please contact the authors of this Legal Alert listed to the right in the firm’s Public Contracts & Construction group, or your BB&K attorney.
 
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