Recent Changes to California Public Works Laws through Senate Bill 96

California recently passed a budget trailer bill, Senate Bill 96, which made some important changes to the Labor Code and the manner in which the Labor Commissioner enforces compliance with public works laws. 

SB 96 became effective on July 1, 2017.  It increased the annual registration fee for public works contractors from $300 to $400.  Beginning on June 1, 2019, contractors will have the option of renewing their annual registration for up to three years at a time.  These changes are stated in Labor Code Section 1725.5(a)(1). 

Pursuant to SB 96, the Labor Commissioner is now required to assess penalties against an awarding body that fails to notify the State of a public works project via the PWC-100 form.  If the Labor Commissioner determines that a particular awarding body “willfully” violated its Labor Code obligations on two public works contracts in a 12-month period, that awarding body will become ineligible to receive state funding or financial assistance for one year.  These changes are contained in Labor Code Section 1773.3.

The Labor Commissioner may also assess penalties against unregistered contractors working on public works projects (up to $8,000) and against awarding bodies and contractors that hire unregistered contractors for public works projects (up to $10,000).  This is stated in Labor Code Section 1771.1.

Section 1771.1 also provides that if the Labor Commissioner finds that a public works contractor is not registered, it shall serve a “stop order” prohibiting the use of that contractor until the contractor becomes registered.  A contractor, owner, director, officer or managing agent that fails to observe a stop order is guilty of a misdemeanor punishable by a maximum fine of $10,000 or imprisonment in county jail for up to 60 days.

Notwithstanding these changes, SB 96 implemented a “small project exemption” for construction projects valued at under $25,000 and maintenance projects valued at under $15,000.  The total project value must be under these thresholds to qualify for the exemption.  Contractors on exempt projects are not required to be registered or file electronic certified payroll records with the State.  However, they are still required to maintain certified payroll records internally.  In addition, awarding bodies are not required to notify the state of projects subject to the small project exemption via the PWC-100 form. 

Importantly, however, prevailing wages must still be paid on projects falling under the “small project exemption.”

Finally, SB 96 also amended Section 4104 of the Public Contract Code, which is part of the Subletting and Subcontracting Fair Practices Act, to require bidders to provide the contractor registration number for each listed subcontractor.  This is an additional requirement; all prior requirements for bidders remain in place.

If you have questions about how SB 96 impacts your public works compliance efforts, or changes the law governing public works projects, contact your labor counsel.

By Jolene Kramer | September 5, 2017

Legal Developments