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Section 6 of 7 · about 5% of the exam

Public Works

Official subtopics: Prevailing wage requirements, Bonding requirements, Insurance requirements.

Public Works is about 5% of the CSLB Law and Business exam. The CSLB study guide lists three subtopics: prevailing wage requirements, bonding requirements, and insurance requirements. "Public works" generally means construction work done under contract and paid for, in whole or in part, with public funds (DIR Public Works Manual). This note covers who must pay prevailing wages, the penalties for underpaying, certified payroll, registration, apprentices, and payment bonds.

Prevailing wage

  • Who must be paid prevailing wages. All workers employed on public works must be paid at least the general prevailing rate of per diem (daily) wages for similar work in the area, including holiday and overtime rates. The exception is public works projects of $1,000 or less. (Lab. Code §1771)
  • Contracted work, including maintenance. The rule applies to work done under contract, including maintenance contracts. It does not apply to work a public agency does with its own employees. (Lab. Code §1771)
  • Subcontractors too. The contractor who gets the contract, and every subcontractor under it, must pay at least the specified prevailing wage rates to all workers on the job. (Lab. Code §1774)

Penalties for underpaying

  • Up to $200 per worker per day. A contractor or subcontractor forfeits up to $200 for each calendar day, or part of a day, for each worker paid less than the prevailing wage. (Lab. Code §1775)
  • Minimum penalties. The Labor Commissioner sets the amount. It is at least $40 per worker per day unless the underpayment was a good faith mistake that was promptly and voluntarily corrected; at least $80 if the contractor was assessed penalties in the previous three years on another contract; and at least $120 if the violation was willful. (Lab. Code §1775)
  • Example. A subcontractor underpaid 3 workers for 5 days. The maximum penalty is 3 x 5 x $200 = $3,000.

Certified payroll records

  • What to keep. Each contractor and subcontractor must keep accurate payroll records for the public work. They show each worker's name, address, Social Security number, work classification, straight time and overtime hours worked each day and week, and the actual wages paid. (Lab. Code §1776)
  • Signed under penalty of perjury. Each payroll record must include or be verified by a written declaration under penalty of perjury that the information is true and correct. (Lab. Code §1776)
  • 10 days to provide copies. After receiving a written request, a contractor or subcontractor must file a certified copy of the payroll records with the requesting entity within 10 days. Missing the deadline leads to penalties. (Lab. Code §1776)
  • More detail is in the DIR Public Works Manual.

Registration with DIR

  • A contractor (including a subcontractor) must be registered with the Department of Industrial Relations (DIR) to bid on, be listed in a bid for, or work on a public works contract that is covered by the prevailing wage law. (Lab. Code §1725.5)
  • Registration requires a fee, with renewal each year on or before July 1, and evidence of the contractor's workers' compensation coverage, among other things. (Lab. Code §1725.5)

Apprentices

  • The 1-to-5 ratio. In general, a contractor on a public work must employ at least one hour of apprentice work for every five hours of journeyman work in an apprenticeable craft or trade. (Lab. Code §1777.5)
  • Small contracts. The apprentice rules do not apply to general contractors' contracts, or to contracts of specialty contractors who are not bidding through a general or prime contractor, when the contract is less than $30,000. (Lab. Code §1777.5)

Payment bonds

  • Over $25,000. A direct contractor awarded a public works contract of more than $25,000 must give a payment bond, approved by the public entity that awarded the contract, before work starts. (Civ. Code §9550)
  • The public entity must say in its call for bids that a payment bond is required. (Civ. Code §9550)
  • This rule does not apply to contracts with a "state entity" as defined in the Public Contract Code. (Civ. Code §9550)

Sources