SB 830: Public works.
- Session Year: 2023-2024
- House: Senate
- Latest Version Date: 2024-08-22
Current Status:
Failed
(2024-08-28: Ordered to inactive file on request of Assembly Member Kalra.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
This bill adds offsite, custom fabrication of nonstandard HVAC sheet‑metal ducts made for a public construction project to the definition of “public works,” affecting contractors, subcontractors, and offsite fabrication facilities used for those ducts. It requires written contracts with fabricators that require compliance with prevailing‑wage law, certified payroll plus employee‑signed time records for the offsite work, allows out‑of‑state fabricators to be exempt from California contractor registration if the hiring contractor is registered, and makes contractors and the subcontractor installing the ducts jointly liable for wage and penalty assessments while allowing them to seek repayment from the fabricator. It also sets the applicable prevailing wage based on the locality of the public project.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
(1)Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law makes a willful violation of laws relating to the payment of prevailing wages on public works a misdemeanor.
This bill would, for public works contracts advertised for bid or awarded on or after January 1, 2026, expand the definition of public works to include an offsite, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project, as specified. The bill would require a contractor engaging a third-party, offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a contract with the facility that requires compliance with specified public works laws. The bill would require certified copies of payroll records for the offsite, custom fabrication of sheet metal ducts to be accompanied by a written time record of that work certified by each employee performing the work. By expanding the scope of a crime, the bill would impose a state-mandated local program.
(2)Existing law requires the Labor Commissioner, after determining there has been a violation of prevailing wage requirements, to issue a civil wage and penalty assessment to the contractor or subcontractor, or both. Existing law requires that a contractor and subcontractor be jointly and severally liable for amounts due.
This bill would require, commencing January 1, 2026, wages or penalties assessed for violations at the above-described offsite facility to be assessed jointly and severally against the contractor and subcontractor installing the ducts. The bill would authorize the contractor or subcontractor to seek indemnity for those penalties from the offsite facility.
(3)Existing law generally requires a contractor or subcontractor to be registered with the Department of Industrial Relations to be qualified to bid on, be listed in a bid proposal, or engage in the performance of any public works contract. Existing law requires a contractor or subcontractor to meet specific conditions to qualify for this registration.
This bill would, commencing January 1, 2026, exempt the above-described offsite or out-of-state fabrication facilities from the registration requirement if the contractor or subcontractor they fabricate for is registered and qualified.
(4)Existing law generally requires that not less than the general prevailing rate of per diem wages in the locality where work for the public work project is performed be paid to workers employed on a public works project that exceeds $1,000.
(5)This bill would incorporate additional changes to Section 1743 of the Labor Code proposed by AB 2705 to be operative only if this bill and AB 2705 are enacted and this bill is enacted last.
This bill would, commencing January 1, 2026, instead require the general prevailing rate of per diem wages to be based on the locality where the public work project is located.
(5)(6)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(1)Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law makes a willful violation of laws relating to the payment of prevailing wages on public works a misdemeanor.
This bill would, for public works contracts advertised for bid or awarded on or after July 1, 2024, January 1, 2026, expand the definition of public works to include an offsite, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project, as specified. The bill would require a contractor engaging a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a contract with the facility that requires compliance with specified public works laws. The bill would require certified copies of payroll records for the offsite, custom fabrication of sheet metal ducts to be accompanied by a written time record of that work certified by each employee performing the work. By expanding the scope of a crime, the bill would impose a state-mandated local program.
(2)Existing law requires the Labor Commissioner, after determining there has been a violation of prevailing wage requirements, to issue a civil wage and penalty assessment to the contractor or subcontractor, or both. Existing law requires that a contractor and subcontractor be jointly and severally liable for amounts due.
This bill would require, commencing January 1, 2026, wages or penalties assessed for violations at the above-described offsite facility to be assessed jointly and severally against the contractor and subcontractor installing the ducts. The bill would authorize the contractor or subcontractor to seek indemnity for those penalties from the offsite facility.
(3)Existing law generally requires a contractor or subcontractor to be registered with the Department of Industrial Relations to be qualified to bid on, be listed in a bid proposal, or engage in the performance of any public works contract. Existing law requires a contractor or subcontractor to meet specific conditions to qualify for this registration.
This bill would, commencing January 1, 2026, exempt the above-described offsite or out-of-state fabrication facilities from the registration requirement if the contractor or subcontractor they fabricate for is registered and qualified.
(4)Existing law generally requires that not less than the general prevailing rate of per diem wages in the locality where work for the public work project is performed be paid to workers employed on a public works project that exceeds $1,000.
This bill would, commencing January 1, 2026, instead require the general prevailing rate of per diem wages to be based on the locality where the public work project is located.
The(5)The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law makes a willful violation of laws relating to the payment of prevailing wages on public works a misdemeanor.
This bill would would, for public works contracts advertised for bid or awarded on or after July 1, 2024, expand the definition of public works to include an offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project, as specified. The bill would require a contractor engaging a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a contract with the facility that requires compliance with specified public works laws. The bill would require certified copies of payroll records for the offsite, custom fabrication of sheet metal ducts to be accompanied by a written time record of that work certified by each employee performing the work. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines the term public works for purposes of requirements regarding the payment of prevailing wages to include construction, alteration, demolition, installation, or repair work done under contract and paid for using public funds, except as specified. Existing law makes a willful violation of laws relating to the payment of prevailing wages on public works a misdemeanor.
This bill would expand the definition of public works to include an offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project, as specified. By expanding the scope of a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law establishes within the Department of Industrial Relations the Division of Apprenticeship Standards to administer and enforce laws relating to apprenticeships. Existing law requires the division to evaluate apprenticeship and preapprenticeship programs to ensure, among other things, the program evaluated is complying with apprenticeship standards. Existing law authorizes the division to initiate a deregistration process to withdraw state approval of a program in specified circumstances and prescribes procedures for deregistration proceedings.This bill would require the division to post quarterly on its internet website a list of programs that are deregistered.Existing law establishes within the Department of Industrial Relations the Division of Apprenticeship Standards to administer and enforce laws relating to apprenticeships. Existing law requires the division to evaluate apprenticeship and preapprenticeship programs to ensure, among other things, the program evaluated is complying with apprenticeship standards. Existing law authorizes the division to initiate a deregistration process to withdraw state approval of a program in specified circumstances and prescribes procedures for deregistration proceedings.
This bill would require the division to post quarterly on its internet website a list of programs that are deregistered.
(a)For the limited purposes of Article 2 (commencing with Section 1770), public works also means offsite, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning (HVAC) systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project pursuant to paragraph (1) of subdivision (a) of Section 1720, with respect to contracts involving any state agency, including the California State University and the University of California, or any political subdivision of the state.
(b)When custom fabrication of sheet metal ducts for a public works project is performed at an offsite facility that fabricates or manufactures ducts for multiple projects or customers, the certified copies of the payroll records required by subdivision (a) of Section 1776 shall be accompanied by a written time record of that work that shall be certified by each employee performing that work.
(c)A contractor or subcontractor engaging a third-party, offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with the requirements of this chapter. A third-party offsite fabrication facility located within California shall be considered a subcontractor solely for the purposes of this chapter and must be registered and qualified to perform work pursuant to Section 1725.5 or 1725.6. Nothing in this subdivision shall cause an entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
(d)A contractor or subcontractor engaging an out-of-state offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written contractual agreement with the offsite fabrication facility that requires payment of prevailing wages for such work in compliance with this chapter. The contract shall also require the out-of-state fabrication facility to submit a certified copy of the payroll records required by subdivision (a) of Section 1776 and a copy of the written time record required by subdivision (b) to the party that engaged the entity and to the general contractor within five working days after the employee performing custom HVAC duct fabrication work for the public works project has been paid. An out-of-state fabrication facility that fabricates custom ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.5 or 1725.6 is not required to be independently registered and qualified under Section 1725.5 or 1725.6.
(e)For purposes of this section, the applicable prevailing wage rate shall be the current prevailing wage, as determined by the director, for the geographic area in which the public works project is located.
(f)Offsite, permanent fabrication facilities that fabricate custom ducts for a public works project are not subject to the requirements in subdivisions (d) to (p), inclusive, of Section 1777.5.
(g)This section does not apply to public works contracts that are advertised for bid or awarded prior to January 1, 2026.
SEC. 2.Section 1743 of the Labor Code is amended to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(c)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(d)A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(e)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 2.5.Section 1743 of the Labor Code is amended to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(c)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(d)Notwithstanding Section 9558 of the Civil Code, the limitations period of any action on a payment bond filed by the Labor Commissioner shall be governed by the limitations period in Section 1741 and the tolling provisions of Section 1741.1 A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(e)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 3.Section 1743 is added to the Labor Code, to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)Wages or penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility shall be assessed jointly and severally against the contractor and the subcontractor installing such ducts. The out-of-state fabrication facility shall not be directly liable for such violations. A contractor or subcontractor may contractually require a fabrication facility, including an out-of-state fabrication facility, to indemnify them for any liability that arises from failure to pay prevailing wages for custom fabrication of sheet metal ducts for a public works project.
(c)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(d)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(e)A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(f)This section shall become operative on January 1, 2026.
SEC. 3.5.Section 1743 is added to the Labor Code, to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)Wages or penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility shall be assessed jointly and severally against the contractor and the subcontractor installing such ducts. The out-of-state fabrication facility shall not be directly liable for such violations. A contractor or subcontractor may contractually require a fabrication facility, including an out-of-state fabrication facility, to indemnify them for any liability that arises from failure to pay prevailing wages for custom fabrication of sheet metal ducts for a public works project.
(c)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(d)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(e)Notwithstanding Section 9558 of the Civil Code, the limitations period of any action on a payment bond filed by the Labor Commissioner shall be governed by the limitations period in Section 1741 and the tolling provisions of Section 1741.1. A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(f)This section shall become operative on January 1, 2026.
SEC. 4.Section 1771 of the Labor Code is amended to read:1771.(a)Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
(b)This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
(c)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 5.Section 1771 is added to the Labor Code, to read:1771.(a)Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
(b)This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
(c)This section shall become operative on January 1, 2026.
SEC. 6.Section 1771.1 of the Labor Code is amended to read:1771.1.(a)A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform public work pursuant to Section 1725.5.
(c)An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1)The subcontractor is registered prior to the bid opening.
(2)Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(3)The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d)Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor.
(e)The department shall maintain on its internet website a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(h)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter.
(3)A higher tiered public works contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(i)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(j)(1)Where a contractor or subcontractor engages in the performance of any public work contract without having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first-class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the public work.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both.
(l)This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(n)This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.
(o)Awarding authorities shall annually submit to the Department of Industrial Relations electronic project registration database a list of contractors that are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project, pursuant to local debarment or suspension processes. The electronic database list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, the specific jurisdiction where the debarment or suspension applies, and the effective period of debarment or suspension of the contractor. The electronic database list shall be updated at least annually. The department shall make the lists provided by awarding authorities available to the public through its project registration database, but shall have no responsibility for verifying or ensuring the accuracy of the information provided by awarding authorities, and shall have no liability in any respect with regard to such lists.
(p)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 7.Section 1771.1 is added to the Labor Code, to read:1771.1.(a)Except as provided in subdivision (p), a contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform public work pursuant to Section 1725.5.
(c)An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1)The subcontractor is registered prior to the bid opening.
(2)Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(3)The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d)Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor.
(e)The department shall maintain on its internet website a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(h)(1) In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter.
(3)A higher tiered public works contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(i)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(j)(1)Where a contractor or subcontractor engages in the performance of any public work contract without having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first-class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the public work.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both.
(l)This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(n)This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.
(o)Awarding authorities shall annually submit to the Department of Industrial Relations electronic project registration database a list of contractors that are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project, pursuant to local debarment or suspension processes. The electronic database list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, the specific jurisdiction where the debarment or suspension applies, and the effective period of debarment or suspension of the contractor. The electronic database list shall be updated at least annually. The department shall make the lists provided by awarding authorities available to the public through its project registration database, but shall have no responsibility for verifying or ensuring the accuracy of the information provided by awarding authorities, and shall have no liability in any respect with regard to such lists.
(p)Out-of-state fabrication facilities that fabricate custom heating, ventilation, and air conditioning ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.5 are not required to be registered and qualified pursuant to Section 1725.5.
(q)This section shall become operative on January 1, 2026.
SEC. 8.Section 1771.15 of the Labor Code is amended to read:1771.15.(a)A contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, unless currently registered and qualified to perform work pursuant to Section 1725.6.(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code.(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:(A)Manual delivery of the order to the contractor or subcontractor personally.(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.(k)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.SEC. 9.Section 1771.15 is added to the Labor Code, to read:1771.15.(a)Except as provided in subdivision (k), a contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, unless currently registered and qualified to perform work pursuant to Section 1725.6.(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code.(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:(A)Manual delivery of the order to the contractor or subcontractor personally.(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.(k)Out-of-state fabrication facilities that fabricate custom ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.6 are not required to be registered and qualified under Section 1725.6. (l)This section shall become operative on January 1, 2026.SEC. 8.Section 1771.15 of the Labor Code is amended to read:1771.15.(a)A contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6, unless currently registered and qualified to perform work pursuant to Section 1725.6.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or for any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.
(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.
(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or a contract for work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.
(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 without having been registered in accordance with Section 1725.6, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.
(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code and the statutes that require registration pursuant to Section 1725.6 and include prevailing wage or skilled and trained workforce requirements.
(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any contract for work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.
(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(k)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 9.Section 1771.15 is added to the Labor Code, to read:1771.15.(a)Except as provided in subdivision (k), a contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6, unless currently registered and qualified to perform work pursuant to Section 1725.6.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or for any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.
(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.
(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or a contract for work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.
(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 without having been registered in accordance with Section 1725.6, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.
(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code and the statutes that require registration pursuant to Section 1725.6 and include prevailing wage or skilled and trained workforce requirements.
(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, 65913.4, or 65913.16 of the Government Code or any contract for work on projects or developments where a statute or regulation requires registration pursuant to Section 1725.6 without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.
(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(k)Out-of-state fabrication facilities that fabricate custom ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.6 are not required to be registered and qualified under Section 1725.6.
(l)This section shall become operative on January 1, 2026.
SEC. 10.Section 1775 of the Labor Code is amended to read:1775.(a)(1)The contractor and any subcontractor under the contractor shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rates as determined by the director for the work or craft in which the worker is employed for any public work done under the contract by the contractor or, except as provided in subdivision (b), by any subcontractor under the contractor.
(2)(A)The amount of the penalty shall be determined by the Labor Commissioner based on consideration of both of the following:
(i)Whether the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)Whether the contractor or subcontractor has a prior record of failing to meet its prevailing wage obligations.
(B)(i)The penalty may not be less than forty dollars ($40) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, unless the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)The penalty may not be less than eighty dollars ($80) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the contractor or subcontractor has been assessed penalties within the previous three years for failing to meet its prevailing wage obligations on a separate contract, unless those penalties were subsequently withdrawn or overturned.
(iii)The penalty may not be less than one hundred twenty dollars ($120) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the Labor Commissioner determines that the violation was willful, as defined in subdivision (c) of Section 1777.1.
(C)If the amount due under this section is collected from the contractor or subcontractor, any outstanding wage claim under Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 against that contractor or subcontractor shall be satisfied before applying that amount to the penalty imposed on that contractor or subcontractor pursuant to this section.
(D)The determination of the Labor Commissioner as to the amount of the penalty shall be reviewable only for abuse of discretion.
(E)The difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the contractor or subcontractor, and the body awarding the contract shall cause to be inserted in the contract a stipulation that this section will be complied with.
(b)If a worker employed by a subcontractor on a public works project is not paid the general prevailing rate of per diem wages by the subcontractor, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of that failure of the subcontractor to pay the specified prevailing rate of wages to those workers or unless the prime contractor fails to comply with all of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the public works project shall include a copy of the provisions of this section and Sections 1771, 1776, 1777.5, 1813, and 1815.
(2)The contractor shall monitor the payment of the specified general prevailing rate of per diem wages by the subcontractor to the employees, by periodic review of the certified payroll records of the subcontractor.
(3)Upon becoming aware of the failure of the subcontractor to pay their workers the specified prevailing rate of wages, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the public works project.
(4)Prior to making final payment to the subcontractor for work performed on the public works project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the specified general prevailing rate of per diem wages to their employees on the public works project and any amounts due pursuant to Section 1813.
(c)The Division of Labor Standards Enforcement shall notify the contractor on a public works project within 15 days of the receipt by the Division of Labor Standards Enforcement of a complaint of the failure of a subcontractor on that public works project to pay workers the general prevailing rate of per diem wages.
(d)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 11.Section 1775 is added to the Labor Code, to read:1775.(a)(1)The contractor and any subcontractor under the contractor shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rates as determined by the director for the work or craft in which the worker is employed for any public work done under the contract by the contractor or, except as provided in subdivision (b), by any subcontractor under the contractor.
(2)(A)The amount of the penalty shall be determined by the Labor Commissioner based on consideration of both of the following:
(i)Whether the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)Whether the contractor or subcontractor has a prior record of failing to meet its prevailing wage obligations.
(B)(i)The penalty may not be less than forty dollars ($40) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, unless the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)The penalty may not be less than eighty dollars ($80) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the contractor or subcontractor has been assessed penalties within the previous three years for failing to meet its prevailing wage obligations on a separate contract, unless those penalties were subsequently withdrawn or overturned.
(iii)The penalty may not be less than one hundred twenty dollars ($120) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the Labor Commissioner determines that the violation was willful, as defined in subdivision (c) of Section 1777.1.
(C)If the amount due under this section is collected from the contractor or subcontractor, any outstanding wage claim under Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 against that contractor or subcontractor shall be satisfied before applying that amount to the penalty imposed on that contractor or subcontractor pursuant to this section.
(D)The determination of the Labor Commissioner as to the amount of the penalty shall be reviewable only for abuse of discretion.
(E)The difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the contractor or subcontractor, and the body awarding the contract shall cause to be inserted in the contract a stipulation that this section will be complied with.
(b)If a worker employed by a subcontractor on a public works project is not paid the general prevailing rate of per diem wages by the subcontractor, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of that failure of the subcontractor to pay the specified prevailing rate of wages to those workers or unless the prime contractor fails to comply with all of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the public works project shall include a copy of the provisions of this section and Sections 1771, 1776, 1777.5, 1813, and 1815.
(2)The contractor shall monitor the payment of the specified general prevailing rate of per diem wages by the subcontractor to the employees, by periodic review of the certified payroll records of the subcontractor.
(3)Upon becoming aware of the failure of the subcontractor to pay their workers the specified prevailing rate of wages, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the public works project.
(4)Prior to making final payment to the subcontractor for work performed on the public works project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the specified general prevailing rate of per diem wages to their employees on the public works project and any amounts due pursuant to Section 1813.
(c)The Division of Labor Standards Enforcement shall notify the contractor on a public works project within 15 days of the receipt by the Division of Labor Standards Enforcement of a complaint of the failure of a subcontractor on that public works project to pay workers the general prevailing rate of per diem wages.
(d)Penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility shall be assessed against the contractor or subcontractor installing such ducts and against a contractor that does not meet the safe haven provisions of subdivision (b). The out-of-state fabrication facility shall not be directly liable for that violation. A contractor or subcontractor may contractually require a third-party fabrication facility, including an out-of-state fabrication facility, to indemnify them for any liability that arises from a violation.
(e)This section shall become operative on January 1, 2026.
SEC. 12.(a)Section 2.5 of this bill incorporates amendments to Section 1743 of the Labor Code proposed by both this bill and Assembly Bill 2705. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1743 of the Labor Code, and (3) this bill is enacted after Assembly Bill 2705, in which case Section 2 of this bill shall not become operative.
(b)Section 3.5 of this bill incorporates amendments to Section 1743 of the Labor Code proposed by both this bill and Assembly Bill 2705. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2025, (2) each bill amends Section 1743 of the Labor Code, and (3) this bill is enacted after Assembly Bill 2705, in which case Section 3 of this bill shall not become operative.
SEC. 12.SEC. 13.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)For the limited purposes of Article 2 (commencing with Section 1770), public works also means offsite, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning (HVAC) systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project pursuant to paragraph (1) of subdivision (a) of Section 1720, with respect to contracts involving any state agency, including the California State University and the University of California, or any political subdivision of the state.
(b)When custom fabrication of sheet metal ducts for a public works project is performed at an offsite facility that fabricates or manufactures ducts for multiple projects or customers, the certified copies of the payroll records required by subdivision (a) of Section 1776 shall be accompanied by a written time record of that work that shall be certified by each employee performing that work.
(c)A contractor or subcontractor engaging a third-party, offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with the requirements of this chapter. A third-party offsite fabrication facility located within California shall be considered a subcontractor solely for the purposes of this chapter and must be registered and qualified to perform work pursuant to Section 1725.5 or 1725.6. Nothing in this subdivision shall cause an entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
(d)A contractor or subcontractor engaging an out-of-state offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written contractual agreement with the offsite fabrication facility that requires payment of prevailing wages for such work in compliance with this chapter. The contract shall also require the out-of-state fabrication facility to submit a certified copy of the payroll records required by subdivision (a) of Section 1776 and a copy of the written time record required by subdivision (b) to the party that engaged the entity and to the general contractor within five working days after the employee performing custom HVAC duct fabrication work for the public works project has been paid. An out-of-state fabrication facility that fabricates custom ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.5 or 1725.6 is not required to be independently registered and qualified under Section 1725.5 or 1725.6.
(e)For purposes of this section, the applicable prevailing wage rate shall be the current prevailing wage, as determined by the director, for the geographic area in which the public works project is located.
(f)Offsite, permanent fabrication facilities that fabricate custom ducts for a public works project are not subject to the requirements in subdivisions (d) to (p), inclusive, of Section 1777.5.
(g)This section does not apply to public works contracts that are advertised for bid or awarded prior to January 1, 2026.
SEC. 2.Section 1743 of the Labor Code is amended to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(c)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(d)A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(e)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 3.Section 1743 is added to the Labor Code, to read:1743.(a)The contractor and subcontractor shall be jointly and severally liable for all amounts due pursuant to a final order under this chapter or a judgment thereon. The Labor Commissioner shall first exhaust all reasonable remedies to collect the amount due from the subcontractor before pursuing the claim against the contractor.
(b)Wages or penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility shall be assessed jointly and severally against the contractor and the subcontractor installing such ducts. The out-of-state fabrication facility shall not be directly liable for such violations. A contractor or subcontractor may contractually require a fabrication facility, including an out-of-state fabrication facility, to indemnify them for any liability that arises from failure to pay prevailing wages for custom fabrication of sheet metal ducts for a public works project.
(c)From the amount collected, the wage claim shall be satisfied prior to the amount being applied to penalties. If insufficient money is recovered to pay each worker in full, the money shall be prorated among all workers.
(d)Wages for workers who cannot be located shall be placed in the Industrial Relations Unpaid Wage Fund and held in trust for the workers pursuant to Section 96.7. Penalties shall be paid into the General Fund.
(e)A final order under this chapter or a judgment thereon shall be binding, with respect to the amount found to be due, on a bonding company issuing a bond that secures the payment of wages and a surety on a bond. The limitations period of any action on a payment bond shall be tolled pending a final order that is no longer subject to judicial review.
(f)This section shall become operative on January 1, 2026.
SEC. 4.Section 1771 of the Labor Code is amended to read:1771.(a)Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
This(b)This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
(c)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 5.Section 1771 is added to the Labor Code, to read:1771.(a)Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
(b)This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
(c)This section shall become operative on January 1, 2026.
SEC. 6.Section 1771.1 of the Labor Code is amended to read:1771.1.(a)A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform public work pursuant to Section 1725.5.
(c)An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1)The subcontractor is registered prior to the bid opening.
(2)Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(3)The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d)Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor.
(e)The department shall maintain on its internet website a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(h)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter.
(3)A higher tiered public works contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(i)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(j)(1)Where a contractor or subcontractor engages in the performance of any public work contract without having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first-class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the public work.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both.
(l)This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(n)This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.
(o)Awarding authorities shall annually submit to the Department of Industrial Relations electronic project registration database a list of contractors that are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project, pursuant to local debarment or suspension processes. The electronic database list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, the specific jurisdiction where the debarment or suspension applies, and the effective period of debarment or suspension of the contractor. The electronic database list shall be updated at least annually. The department shall make the lists provided by awarding authorities available to the public through its project registration database, but shall have no responsibility for verifying or ensuring the accuracy of the information provided by awarding authorities, and shall have no liability in any respect with regard to such lists.
(p)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 7.Section 1771.1 is added to the Labor Code, to read:1771.1.(a)Except as provided in subdivision (p), a contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or by Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and public works contracts, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform public work pursuant to Section 1725.5.
(c)An inadvertent error in listing a subcontractor who is not registered pursuant to Section 1725.5 in a bid proposal shall not be grounds for filing a bid protest or grounds for considering the bid nonresponsive, provided that any of the following apply:
(1)The subcontractor is registered prior to the bid opening.
(2)Within 24 hours after the bid opening, the subcontractor is registered and has paid the penalty registration fee specified in subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(3)The subcontractor is replaced by another registered subcontractor pursuant to Section 4107 of the Public Contract Code.
(d)Failure by a subcontractor to be registered to perform public work as required by subdivision (a) shall be grounds under Section 4107 of the Public Contract Code for the contractor, with the consent of the awarding authority, to substitute a subcontractor who is registered to perform public work pursuant to Section 1725.5 in place of the unregistered subcontractor.
(e)The department shall maintain on its internet website a list of contractors who are currently registered to perform public work pursuant to Section 1725.5.
(f)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for public work shall not be unlawful, void, or voidable solely due to the failure of the awarding body, contractor, or any subcontractor to comply with the requirements of Section 1725.5 or this section.
(g)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any public work contract without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.5.
(h)(1) In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered public works contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any public work in violation of the requirements of Section 1725.5 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter.
(3)A higher tiered public works contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.5 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered public works contractor or subcontractor pursuant to paragraph (1). A higher tiered public works contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(i)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (g) and paragraph (1) of subdivision (h). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(j)(1)Where a contractor or subcontractor engages in the performance of any public work contract without having been registered in violation of the requirements of Section 1725.5 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on all public works until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the public work.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the public work and by thereafter mailing copies of the order by first-class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the public work.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(k)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to subdivision (j) is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days or by a fine not exceeding ten thousand dollars ($10,000), or both.
(l)This section shall apply to any bid proposal submitted on or after March 1, 2015, and any contract for public work entered into on or after April 1, 2015. This section shall also apply to the performance of any public work, as defined in this chapter, on or after January 1, 2018, regardless of when the contract for public work was entered.
(m)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(n)This section shall not apply to work performed on a public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction, alteration, demolition, installation, or repair work or to work performed on a public works project of fifteen thousand dollars ($15,000) or less when the project is for maintenance work.
(o)Awarding authorities shall annually submit to the Department of Industrial Relations electronic project registration database a list of contractors that are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project, pursuant to local debarment or suspension processes. The electronic database list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, the specific jurisdiction where the debarment or suspension applies, and the effective period of debarment or suspension of the contractor. The electronic database list shall be updated at least annually. The department shall make the lists provided by awarding authorities available to the public through its project registration database, but shall have no responsibility for verifying or ensuring the accuracy of the information provided by awarding authorities, and shall have no liability in any respect with regard to such lists.
(p)Out-of-state fabrication facilities that fabricate custom heating, ventilation, and air conditioning ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.5 are not required to be registered and qualified pursuant to Section 1725.5.
(q)This section shall become operative on January 1, 2026.
SEC. 8.Section 1771.15 of the Labor Code is amended to read:1771.15.(a)A contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, unless currently registered and qualified to perform work pursuant to Section 1725.6.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.
(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.
(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.
(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.
(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code.
(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.
(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(k)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 9.Section 1771.15 is added to the Labor Code, to read:1771.15.(a)Except as provided in subdivision (k), a contractor or subcontractor shall not be qualified to be awarded contracts for, or engage in the performance of, any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, unless currently registered and qualified to perform work pursuant to Section 1725.6.
(b)Notice of the requirement described in subdivision (a) shall be included in all bid invitations and contracts for any work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code, and a bid shall not be accepted nor any contract or subcontract entered into without proof of the contractor or subcontractors current registration to perform work pursuant to Section 1725.6.
(c)The department shall maintain on its internet website a list of contractors who are currently registered to perform work pursuant to Section 1725.6.
(d)A contract entered into with any contractor or subcontractor in violation of subdivision (a) shall be subject to cancellation, provided that a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code shall not be unlawful, void, or voidable solely due to the failure of the developer, development proponent, contractor, or any subcontractor to comply with the requirements of Section 1725.6 or this section.
(e)If the Labor Commissioner or their designee determines that a contractor or subcontractor engaged in the performance of any a contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in accordance with this section, the contractor or subcontractor shall forfeit, as a civil penalty to the state, one hundred dollars ($100) for each day of work performed in violation of the registration requirement, not to exceed an aggregate penalty of eight thousand dollars ($8,000) in addition to any penalty registration fee assessed pursuant to clause (ii) of subparagraph (E) of paragraph (2) of subdivision (a) of Section 1725.6.
(f)(1)In addition to, or in lieu of, any other penalty or sanction authorized pursuant to this chapter, a higher tiered contractor or subcontractor who is found to have entered into a subcontract with an unregistered lower tier subcontractor to perform any work in violation of the requirements of Section 1725.6 or this section shall be subject to forfeiture, as a civil penalty to the state, of one hundred dollars ($100) for each day the unregistered lower tier subcontractor performs work in violation of the registration requirement, not to exceed an aggregate penalty of ten thousand dollars ($10,000).
(2)The Labor Commissioner shall use the same standards specified in subparagraph (A) of paragraph (2) of subdivision (a) of Section 1775 when determining the severity of the violation and what penalty to assess, and may waive the penalty for a first time violation that was unintentional and did not hinder the Labor Commissioners ability to monitor and enforce compliance with the requirements of this chapter and of the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code.
(3)A higher tiered contractor or subcontractor shall not be liable for penalties assessed pursuant to paragraph (1) if the lower tier subcontractors performance is in violation of the requirements of Section 1725.6 due to the revocation of a previously approved registration.
(4)A subcontractor shall not be liable for any penalties assessed against a higher tiered contractor or subcontractor pursuant to paragraph (1). A higher tiered contractor or subcontractor may not require a lower tiered subcontractor to indemnify or otherwise be liable for any penalties pursuant to paragraph (1).
(g)The Labor Commissioner or their designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741, upon determination of penalties pursuant to subdivision (e) and paragraph (1) of subdivision (f). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770), shall apply.
(h)(1)Where a contractor or subcontractor engages in the performance of any contract for work on projects or developments subject to the requirements of Section 65852.24, 65912.130, 65912.131, or 65913.4 of the Government Code without having been registered in violation of the requirements of Section 1725.6 or this section, the Labor Commissioner shall issue and serve a stop order prohibiting the use of the unregistered contractor or the unregistered subcontractor on the project or development until the unregistered contractor or unregistered subcontractor is registered. The stop order shall not apply to work by registered contractors or subcontractors on the project or development.
(2)A stop order may be personally served upon the contractor or subcontractor by either of the following methods:
(A)Manual delivery of the order to the contractor or subcontractor personally.
(B)Leaving signed copies of the order with the person who is apparently in charge at the site of the project or development and by thereafter mailing copies of the order by first class mail, postage prepaid to the contractor or subcontractor at one of the following:
(i)The address of the contractor or subcontractor on file with either the Secretary of State or the Contractors State License Board.
(ii)If the contractor or subcontractor has no address on file with the Secretary of State or the Contractors State License Board, the address of the site of the project or development.
(3)The stop order shall be effective immediately upon service and shall be subject to appeal by the party contracting with the unregistered contractor or subcontractor, by the unregistered contractor or subcontractor, or both. The appeal, hearing, and any further review of the hearing decision shall be governed by the procedures, time limits, and other requirements specified in subdivision (a) of Section 238.1.
(4)Any employee of an unregistered contractor or subcontractor who is affected by a work stoppage ordered by the commissioner pursuant to this subdivision shall be paid at their regular hourly prevailing wage rate by that employer for any hours the employee would have worked but for the work stoppage, not to exceed 10 days.
(i)Failure of a contractor or subcontractor, owner, director, officer, or managing agent of the contractor or subcontractor to observe a stop order issued and served upon them pursuant to this subdivision is guilty of a misdemeanor punishable by imprisonment in county jail not exceeding 60 days, by a fine not exceeding ten thousand dollars ($10,000), or both.
(j)Penalties received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section.
(k)Out-of-state fabrication facilities that fabricate custom ducts for a contractor or subcontractor that is registered and qualified to perform work pursuant to Section 1725.6 are not required to be registered and qualified under Section 1725.6.
(l)This section shall become operative on January 1, 2026.
SEC. 10.Section 1775 of the Labor Code is amended to read:1775.(a)(1)The contractor and any subcontractor under the contractor shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rates as determined by the director for the work or craft in which the worker is employed for any public work done under the contract by the contractor or, except as provided in subdivision (b), by any subcontractor under the contractor.
(2)(A)The amount of the penalty shall be determined by the Labor Commissioner based on consideration of both of the following:
(i)Whether the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)Whether the contractor or subcontractor has a prior record of failing to meet its prevailing wage obligations.
(B)(i)The penalty may not be less than forty dollars ($40) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, unless the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)The penalty may not be less than eighty dollars ($80) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the contractor or subcontractor has been assessed penalties within the previous three years for failing to meet its prevailing wage obligations on a separate contract, unless those penalties were subsequently withdrawn or overturned.
(iii)The penalty may not be less than one hundred twenty dollars ($120) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the Labor Commissioner determines that the violation was willful, as defined in subdivision (c) of Section 1777.1.
(C)If the amount due under this section is collected from the contractor or subcontractor, any outstanding wage claim under Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 against that contractor or subcontractor shall be satisfied before applying that amount to the penalty imposed on that contractor or subcontractor pursuant to this section.
(D)The determination of the Labor Commissioner as to the amount of the penalty shall be reviewable only for abuse of discretion.
(E)The difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the contractor or subcontractor, and the body awarding the contract shall cause to be inserted in the contract a stipulation that this section will be complied with.
(b)If a worker employed by a subcontractor on a public works project is not paid the general prevailing rate of per diem wages by the subcontractor, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of that failure of the subcontractor to pay the specified prevailing rate of wages to those workers or unless the prime contractor fails to comply with all of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the public works project shall include a copy of the provisions of this section and Sections 1771, 1776, 1777.5, 1813, and 1815.
(2)The contractor shall monitor the payment of the specified general prevailing rate of per diem wages by the subcontractor to the employees, by periodic review of the certified payroll records of the subcontractor.
(3)Upon becoming aware of the failure of the subcontractor to pay his or her their workers the specified prevailing rate of wages, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the public works project.
(4)Prior to making final payment to the subcontractor for work performed on the public works project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the specified general prevailing rate of per diem wages to his or her their employees on the public works project and any amounts due pursuant to Section 1813.
(c)The Division of Labor Standards Enforcement shall notify the contractor on a public works project within 15 days of the receipt by the Division of Labor Standards Enforcement of a complaint of the failure of a subcontractor on that public works project to pay workers the general prevailing rate of per diem wages.
(d)This section shall remain in effect only until January 1, 2026, and as of that date is repealed.
SEC. 11.Section 1775 is added to the Labor Code, to read:1775.(a)(1)The contractor and any subcontractor under the contractor shall, as a penalty to the state or political subdivision on whose behalf the contract is made or awarded, forfeit not more than two hundred dollars ($200) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rates as determined by the director for the work or craft in which the worker is employed for any public work done under the contract by the contractor or, except as provided in subdivision (b), by any subcontractor under the contractor.
(2)(A)The amount of the penalty shall be determined by the Labor Commissioner based on consideration of both of the following:
(i)Whether the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)Whether the contractor or subcontractor has a prior record of failing to meet its prevailing wage obligations.
(B)(i)The penalty may not be less than forty dollars ($40) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, unless the failure of the contractor or subcontractor to pay the correct rate of per diem wages was a good faith mistake and, if so, the error was promptly and voluntarily corrected when brought to the attention of the contractor or subcontractor.
(ii)The penalty may not be less than eighty dollars ($80) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the contractor or subcontractor has been assessed penalties within the previous three years for failing to meet its prevailing wage obligations on a separate contract, unless those penalties were subsequently withdrawn or overturned.
(iii)The penalty may not be less than one hundred twenty dollars ($120) for each calendar day, or portion thereof, for each worker paid less than the prevailing wage rate, if the Labor Commissioner determines that the violation was willful, as defined in subdivision (c) of Section 1777.1.
(C)If the amount due under this section is collected from the contractor or subcontractor, any outstanding wage claim under Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 against that contractor or subcontractor shall be satisfied before applying that amount to the penalty imposed on that contractor or subcontractor pursuant to this section.
(D)The determination of the Labor Commissioner as to the amount of the penalty shall be reviewable only for abuse of discretion.
(E)The difference between the prevailing wage rates and the amount paid to each worker for each calendar day or portion thereof for which each worker was paid less than the prevailing wage rate shall be paid to each worker by the contractor or subcontractor, and the body awarding the contract shall cause to be inserted in the contract a stipulation that this section will be complied with.
(b)If a worker employed by a subcontractor on a public works project is not paid the general prevailing rate of per diem wages by the subcontractor, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of that failure of the subcontractor to pay the specified prevailing rate of wages to those workers or unless the prime contractor fails to comply with all of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the public works project shall include a copy of the provisions of this section and Sections 1771, 1776, 1777.5, 1813, and 1815.
(2)The contractor shall monitor the payment of the specified general prevailing rate of per diem wages by the subcontractor to the employees, by periodic review of the certified payroll records of the subcontractor.
(3)Upon becoming aware of the failure of the subcontractor to pay their workers the specified prevailing rate of wages, the contractor shall diligently take corrective action to halt or rectify the failure, including, but not limited to, retaining sufficient funds due the subcontractor for work performed on the public works project.
(4)Prior to making final payment to the subcontractor for work performed on the public works project, the contractor shall obtain an affidavit signed under penalty of perjury from the subcontractor that the subcontractor has paid the specified general prevailing rate of per diem wages to their employees on the public works project and any amounts due pursuant to Section 1813.
(c)The Division of Labor Standards Enforcement shall notify the contractor on a public works project within 15 days of the receipt by the Division of Labor Standards Enforcement of a complaint of the failure of a subcontractor on that public works project to pay workers the general prevailing rate of per diem wages.
(d)Penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility shall be assessed against the contractor or subcontractor installing such ducts and against a contractor that does not meet the safe haven provisions of subdivision (b). The out-of-state fabrication facility shall not be directly liable for that violation. A contractor or subcontractor may contractually require a third-party fabrication facility, including an out-of-state fabrication facility, to indemnify them for any liability that arises from a violation.
(e)This section shall become operative on January 1, 2026.
SEC. 12.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SECTION 1.Section 1720 of the Labor Code is amended to read:1720.(a)As used in this chapter, public works means all of the following:(1)Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. For purposes of this paragraph, construction includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. For purposes of this paragraph, installation includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems.(2)Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. Public works does not include the operation of the irrigation or drainage system of an irrigation or reclamation district, except as used in Section 1778 relating to retaining wages.(3)Street, sewer, or other improvement work done under the direction and supervision or by the authority of an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders charter or not.(4)The laying of carpet done under a building lease-maintenance contract and paid for out of public funds.(5)The laying of carpet in a public building done under contract and paid for in whole or in part out of public funds.(6)Public transportation demonstration projects authorized pursuant to Section 143 of the Streets and Highways Code.(7)(A)Infrastructure project grants from the California Advanced Services Fund pursuant to Section 281 of the Public Utilities Code.(B)For purposes of this paragraph, the Public Utilities Commission is not the awarding body or the body awarding the contract, as defined in Section 1722.(8)Tree removal work done in the execution of a project under paragraph (1).(9)Offsite, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project under paragraph (1). This paragraph does not apply to any public works contracts that are advertised for bid or awarded prior to July 1, 2024.(b)For purposes of this section, paid for in whole or in part out of public funds means all of the following:(1)The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.(2)Performance of construction work by the state or political subdivision in execution of the project.(3)Transfer by the state or political subdivision of an asset of value for less than fair market price.(4)Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.(5)Money loaned by the state or political subdivision that is to be repaid on a contingent basis.(6)Credits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision.(c)Notwithstanding subdivision (b), all of the following apply:(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.(2)If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.(3)(A)If the state or a political subdivision reimburses a private developer for costs that would normally be borne by the public, or provides directly or indirectly a public subsidy to a private development project that is de minimis in the context of the project, an otherwise private development project shall not thereby become subject to this chapter.(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.(4)The construction or rehabilitation of affordable housing units for low- or moderate-income persons pursuant to paragraph (5) or (7) of subdivision (e) of Section 33334.2 of the Health and Safety Code that are paid for solely with moneys from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health and Safety Code or that are paid for by a combination of private funds and funds available pursuant to Section 33334.2 or 33334.3 of the Health and Safety Code do not constitute a project that is paid for in whole or in part out of public funds.(5)Unless otherwise required by a public funding program, the construction or rehabilitation of privately owned residential projects is not subject to this chapter if one or more of the following conditions are met:(A)The project is a self-help housing project in which no fewer than 500 hours of construction work associated with the homes are to be performed by the home buyers.(B)The project consists of rehabilitation or expansion work associated with a facility operated on a not-for-profit basis as temporary or transitional housing for homeless persons with a total project cost of less than twenty-five thousand dollars ($25,000).(C)Assistance is provided to a household as either mortgage assistance, downpayment assistance, or for the rehabilitation of a single-family home.(D)The project consists of new construction, expansion, or rehabilitation work associated with a facility developed by a nonprofit organization to be operated on a not-for-profit basis to provide emergency or transitional shelter and ancillary services and assistance to homeless adults and children. The nonprofit organization operating the project shall provide, at no profit, not less than 50 percent of the total project cost from nonpublic sources, excluding real property that is transferred or leased. Total project cost includes the value of donated labor, materials, and architectural and engineering services.(E)The public participation in the project that would otherwise meet the criteria of subdivision (b) is public funding in the form of below-market interest rate loans for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by deed or regulatory agreement, to individuals or families earning no more than 80 percent of the area median income.(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to this chapter:(1)Qualified residential rental projects, as defined by Section 142(d) of the Internal Revenue Code, financed in whole or in part through the issuance of bonds that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.(2)Single-family residential projects financed in whole or in part through the issuance of qualified mortgage revenue bonds or qualified veterans mortgage bonds, as defined by Section 143 of the Internal Revenue Code, or with mortgage credit certificates under a Qualified Mortgage Credit Certificate Program, as defined by Section 25 of the Internal Revenue Code, that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.(3)Low-income housing projects that are allocated federal or state low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code, Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code, or Section 12206, 17058, or 23610.5 of the Revenue and Taxation Code, on or before December 31, 2003.(e)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.(f)If a statute, other than this section, or a regulation, other than a regulation adopted pursuant to this section, or an ordinance or a contract applies this chapter to a project, the exclusions set forth in subdivision (d) do not apply to that project.(g)For purposes of this section, references to the Internal Revenue Code mean the Internal Revenue Code of 1986, as amended, and include the corresponding predecessor sections of the Internal Revenue Code of 1954, as amended.(h)The amendments made to this section by either Chapter 938 of the Statutes of 2001 or the act adding this subdivision shall not be construed to preempt local ordinances requiring the payment of prevailing wages on housing projects.(i)(1)A contractor engaging a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with the requirements of this chapter. The third-party offsite fabrication facility shall be considered a subcontractor solely for the purposes of this chapter. Nothing in this paragraph shall cause any entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.(2)Certified copies of the payroll records for the offsite, custom fabrication of sheet metal ducts for public works projects required by subdivision (a) of Section 1776 shall be accompanied by a written time record of that work that shall be certified by each employee performing such work.(3)This subdivision does not apply to any public works contracts that are advertised for bid or awarded prior to July 1, 2024.SEC. 2.Section 1771 of the Labor Code is amended to read:1771.Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.(a)As used in this chapter, public works means all of the following:
(1)Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. For purposes of this paragraph, construction includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. For purposes of this paragraph, installation includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems.
(2)Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. Public works does not include the operation of the irrigation or drainage system of an irrigation or reclamation district, except as used in Section 1778 relating to retaining wages.
(3)Street, sewer, or other improvement work done under the direction and supervision or by the authority of an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders charter or not.
(4)The laying of carpet done under a building lease-maintenance contract and paid for out of public funds.
(5)The laying of carpet in a public building done under contract and paid for in whole or in part out of public funds.
(6)Public transportation demonstration projects authorized pursuant to Section 143 of the Streets and Highways Code.
(7)(A)Infrastructure project grants from the California Advanced Services Fund pursuant to Section 281 of the Public Utilities Code.
(B)For purposes of this paragraph, the Public Utilities Commission is not the awarding body or the body awarding the contract, as defined in Section 1722.
(8)Tree removal work done in the execution of a project under paragraph (1).
(9)Offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project under paragraph (1). This paragraph does not apply to any public works contracts that are advertised for bid or awarded prior to July 1, 2024.
(b)For purposes of this section, paid for in whole or in part out of public funds means all of the following:
(1)The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.
(2)Performance of construction work by the state or political subdivision in execution of the project.
(3)Transfer by the state or political subdivision of an asset of value for less than fair market price.
(4)Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.
(5)Money loaned by the state or political subdivision that is to be repaid on a contingent basis.
(6)Credits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(2)If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.
(3)(A)If the state or a political subdivision reimburses a private developer for costs that would normally be borne by the public, or provides directly or indirectly a public subsidy to a private development project that is de minimis in the context of the project, an otherwise private development project shall not thereby become subject to this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(4)The construction or rehabilitation of affordable housing units for low- or moderate-income persons pursuant to paragraph (5) or (7) of subdivision (e) of Section 33334.2 of the Health and Safety Code that are paid for solely with moneys from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health and Safety Code or that are paid for by a combination of private funds and funds available pursuant to Section 33334.2 or 33334.3 of the Health and Safety Code do not constitute a project that is paid for in whole or in part out of public funds.
(5)Unless otherwise required by a public funding program, the construction or rehabilitation of privately owned residential projects is not subject to this chapter if one or more of the following conditions are met:
(A)The project is a self-help housing project in which no fewer than 500 hours of construction work associated with the homes are to be performed by the home buyers.
(B)The project consists of rehabilitation or expansion work associated with a facility operated on a not-for-profit basis as temporary or transitional housing for homeless persons with a total project cost of less than twenty-five thousand dollars ($25,000).
(C)Assistance is provided to a household as either mortgage assistance, downpayment assistance, or for the rehabilitation of a single-family home.
(D)The project consists of new construction, expansion, or rehabilitation work associated with a facility developed by a nonprofit organization to be operated on a not-for-profit basis to provide emergency or transitional shelter and ancillary services and assistance to homeless adults and children. The nonprofit organization operating the project shall provide, at no profit, not less than 50 percent of the total project cost from nonpublic sources, excluding real property that is transferred or leased. Total project cost includes the value of donated labor, materials, and architectural and engineering services.
(E)The public participation in the project that would otherwise meet the criteria of subdivision (b) is public funding in the form of below-market interest rate loans for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by deed or regulatory agreement, to individuals or families earning no more than 80 percent of the area median income.
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to this chapter:
(1)Qualified residential rental projects, as defined by Section 142(d) of the Internal Revenue Code, financed in whole or in part through the issuance of bonds that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.
(2)Single-family residential projects financed in whole or in part through the issuance of qualified mortgage revenue bonds or qualified veterans mortgage bonds, as defined by Section 143 of the Internal Revenue Code, or with mortgage credit certificates under a Qualified Mortgage Credit Certificate Program, as defined by Section 25 of the Internal Revenue Code, that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.
(3)Low-income housing projects that are allocated federal or state low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code, Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code, or Section 12206, 17058, or 23610.5 of the Revenue and Taxation Code, on or before December 31, 2003.
(e)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)If a statute, other than this section, or a regulation, other than a regulation adopted pursuant to this section, or an ordinance or a contract applies this chapter to a project, the exclusions set forth in subdivision (d) do not apply to that project.
(g)For purposes of this section, references to the Internal Revenue Code mean the Internal Revenue Code of 1986, as amended, and include the corresponding predecessor sections of the Internal Revenue Code of 1954, as amended.
(h)The amendments made to this section by either Chapter 938 of the Statutes of 2001 or the act adding this subdivision shall not be construed to preempt local ordinances requiring the payment of prevailing wages on housing projects.
(i)(1)A contractor engaging a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project shall enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with the requirements of this chapter. The third-party offsite fabrication facility shall be considered a subcontractor solely for the purposes of this chapter. Nothing in this paragraph shall cause any entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
(2)Certified copies of the payroll records for the offsite, custom fabrication of sheet metal ducts for public works projects required by subdivision (a) of Section 1776 shall be accompanied by a written time record of that work that shall be certified by each employee performing such work.
(3)This subdivision does not apply to any public works contracts that are advertised for bid or awarded prior to July 1, 2024.
SEC. 2.Section 1771 of the Labor Code is amended to read:1771.Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)As used in this chapter, public works means all of the following:
(1)Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. For purposes of this paragraph, construction includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. For purposes of this paragraph, installation includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems.
(2)Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. Public works does not include the operation of the irrigation or drainage system of an irrigation or reclamation district, except as used in Section 1778 relating to retaining wages.
(3)Street, sewer, or other improvement work done under the direction and supervision or by the authority of an officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholders charter or not.
(4)The laying of carpet done under a building lease-maintenance contract and paid for out of public funds.
(5)The laying of carpet in a public building done under contract and paid for in whole or in part out of public funds.
(6)Public transportation demonstration projects authorized pursuant to Section 143 of the Streets and Highways Code.
(7)(A)Infrastructure project grants from the California Advanced Services Fund pursuant to Section 281 of the Public Utilities Code.
(B)For purposes of this paragraph, the Public Utilities Commission is not the awarding body or the body awarding the contract, as defined in Section 1722.
(8)Tree removal work done in the execution of a project under paragraph (1).
(9)Offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a project under paragraph (1).
(b)For purposes of this section, paid for in whole or in part out of public funds means all of the following:
(1)The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.
(2)Performance of construction work by the state or political subdivision in execution of the project.
(3)Transfer by the state or political subdivision of an asset of value for less than fair market price.
(4)Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.
(5)Money loaned by the state or political subdivision that is to be repaid on a contingent basis.
(6)Credits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision.
(c)Notwithstanding subdivision (b), all of the following apply:
(1)Private residential projects built on private property are not subject to this chapter unless the projects are built pursuant to an agreement with a state agency, a redevelopment agency, a successor agency to a redevelopment agency when acting in that capacity, or a local public housing authority.
(2)If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.
(3)(A)If the state or a political subdivision reimburses a private developer for costs that would normally be borne by the public, or provides directly or indirectly a public subsidy to a private development project that is de minimis in the context of the project, an otherwise private development project shall not thereby become subject to this chapter.
(B)(i)For purposes of subparagraph (A), a public subsidy is de minimis if it is both less than six hundred thousand dollars ($600,000) and less than 2 percent of the total project cost.
(ii)Notwithstanding clause (i), for purposes of subparagraph (A), a public subsidy for a project that consists entirely of single-family dwellings is de minimis if it is less than 2 percent of the total project cost.
(iii)This subparagraph shall not apply to a project that was advertised for bid, or a contract that was awarded, before July 1, 2021.
(4)The construction or rehabilitation of affordable housing units for low- or moderate-income persons pursuant to paragraph (5) or (7) of subdivision (e) of Section 33334.2 of the Health and Safety Code that are paid for solely with moneys from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health and Safety Code or that are paid for by a combination of private funds and funds available pursuant to Section 33334.2 or 33334.3 of the Health and Safety Code do not constitute a project that is paid for in whole or in part out of public funds.
(5)Unless otherwise required by a public funding program, the construction or rehabilitation of privately owned residential projects is not subject to this chapter if one or more of the following conditions are met:
(A)The project is a self-help housing project in which no fewer than 500 hours of construction work associated with the homes are to be performed by the home buyers.
(B)The project consists of rehabilitation or expansion work associated with a facility operated on a not-for-profit basis as temporary or transitional housing for homeless persons with a total project cost of less than twenty-five thousand dollars ($25,000).
(C)Assistance is provided to a household as either mortgage assistance, downpayment assistance, or for the rehabilitation of a single-family home.
(D)The project consists of new construction, expansion, or rehabilitation work associated with a facility developed by a nonprofit organization to be operated on a not-for-profit basis to provide emergency or transitional shelter and ancillary services and assistance to homeless adults and children. The nonprofit organization operating the project shall provide, at no profit, not less than 50 percent of the total project cost from nonpublic sources, excluding real property that is transferred or leased. Total project cost includes the value of donated labor, materials, and architectural and engineering services.
(E)The public participation in the project that would otherwise meet the criteria of subdivision (b) is public funding in the form of below-market interest rate loans for a project in which occupancy of at least 40 percent of the units is restricted for at least 20 years, by deed or regulatory agreement, to individuals or families earning no more than 80 percent of the area median income.
(d)Notwithstanding any provision of this section to the contrary, the following projects are not, solely by reason of this section, subject to this chapter:
(1)Qualified residential rental projects, as defined by Section 142(d) of the Internal Revenue Code, financed in whole or in part through the issuance of bonds that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.
(2)Single-family residential projects financed in whole or in part through the issuance of qualified mortgage revenue bonds or qualified veterans mortgage bonds, as defined by Section 143 of the Internal Revenue Code, or with mortgage credit certificates under a Qualified Mortgage Credit Certificate Program, as defined by Section 25 of the Internal Revenue Code, that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 (commencing with Section 8869.80) of Division 1 of Title 2 of the Government Code on or before December 31, 2003.
(3)Low-income housing projects that are allocated federal or state low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code, Chapter 3.6 (commencing with Section 50199.4) of Part 1 of Division 31 of the Health and Safety Code, or Section 12206, 17058, or 23610.5 of the Revenue and Taxation Code, on or before December 31, 2003.
(e)Notwithstanding paragraph (1) of subdivision (a), construction, alteration, demolition, installation, or repair work on the electric transmission system located in California constitutes a public works project for the purposes of this chapter.
(f)If a statute, other than this section, or a regulation, other than a regulation adopted pursuant to this section, or an ordinance or a contract applies this chapter to a project, the exclusions set forth in subdivision (d) do not apply to that project.
(g)For purposes of this section, references to the Internal Revenue Code mean the Internal Revenue Code of 1986, as amended, and include the corresponding predecessor sections of the Internal Revenue Code of 1954, as amended.
(h)The amendments made to this section by either Chapter 938 of the Statutes of 2001 or the act adding this subdivision shall not be construed to preempt local ordinances requiring the payment of prevailing wages on housing projects.
SEC. 2.Section 1771 of the Labor Code is amended to read:1771.Except for public works projects of one thousand dollars ($1,000) or less, not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, project is located, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works.
This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SECTION 1.Section 3073.1 of the Labor Code is amended to read:3073.1.(a)The division shall evaluate apprenticeship and preapprenticeship programs to ensure that the program evaluated is complying with its standards, that all on-the-job training is supervised by journeypersons, that all classroom instruction required by the apprenticeship or preapprenticeship standards is being provided, that all work processes in the standards are being covered, that graduates have completed the programs requirements, and that any funds received under this chapter were properly obtained and are being expended appropriately. The division shall examine each apprenticeship program to determine whether apprentices are graduating from or completing the program on schedule or dropping out and to determine whether graduates of the apprenticeship program have obtained employment as journeypersons. During the evaluation, the division shall attempt to contact a statistically valid sample of apprentices who have dropped out of the program prior to completion to determine their reasons for leaving the program. Every program sponsor shall have a duty to cooperate with the division in conducting an evaluation.(b)Evaluation reports for building and construction trade and firefighting programs shall be presented to the California Apprenticeship Council and reports concerning any other program shall be presented to the Interagency Advisory Committee on Apprenticeship. The division shall make reports public, except that the division shall not make public information that would infringe on the privacy of individuals. The division shall recommend remedial action to correct deficiencies recognized in the audit report, and the failure to follow division recommendations or to correct deficiencies within a reasonable period of time shall be grounds for withdrawing state approval of a program. In any case in which a program has willfully violated any of the laws, regulations, or orders governing apprenticeship programs, funding provided to apprenticeship programs and associated entities, applicants for apprenticeship, or apprentices registered under this chapter, the division may initiate the deregistration process to withdraw state approval of the program. Nothing shall prevent the division from conducting evaluations of programs where deficiencies have been identified or where it receives information that a program is not being operated in accordance with applicable federal and state laws and regulations or the programs approved program standards. If a program is found to be using funds provided under this chapter for purposes other than those for which the funds were granted or is found to have obtained the funds improperly, then the program shall not be eligible to receive any future funding from the same funding program and the division may initiate the deregistration process to withdraw state approval of the program.(c)(1)The division may suspend registrations of new apprentice agreements by providing written notice of the reasons for the suspension. The division shall provide such notice at least 10 days before the suspension is effective and shall serve the notice on the program by electronic mail, or by mail if the program does not have an electronic mail address on file.(2)If the division does not initiate deregistration proceedings within 45 days of the effective date of the suspension, the suspension is lifted.(3)If deregistration proceedings are pending when the notice of suspension is served, or the division initiates deregistration proceedings within 45 days of the effective date of the suspension, the suspension will remain in effect until one of the following occurs:(A)A decision on the deregistration is final.(B)The division provides written notice that it has dismissed deregistration proceedings.(C)The division lifts the suspension, upon a showing of good cause.(4)A program affected by a suspension under this section may appeal to the Administrator of Apprenticeship within 10 days of the effective date of the suspension. If the administrator does not act within 30 days of the appeal, the appeal is deemed denied.(5)The division shall post quarterly on its internet website a list of programs that are deregistered.(d)The division shall give priority in conducting evaluations to programs that have been identified as having deficiencies. The division may conduct simplified evaluations for programs with fewer than five registered participants.(e)One year following the creation of a new program or substantial expansion of an existing program, the division shall evaluate the program for quality and conformity with the requirements of this section.(f)If the division finds evidence that information provided to it by a apprenticeship program has been purposefully misstated, including information provided to obtain funding under this chapter, the division shall immediately investigate and determine whether an evaluation of the program or deregistration is necessary. After such investigation, the division may initiate the deregistration process to withdraw state approval of the program. The division shall report its investigatory findings for building and construction trade and firefighting programs to the California Apprenticeship Council and shall report its investigatory findings for all other programs to the Interagency Advisory Committee on Apprenticeship. The division shall make the investigatory findings available to the public, except that the division shall not make public information that would infringe upon the privacy of individuals.(g)If the division determines that an apprenticeship program has been the subject of two or more meritorious complaints that concern the recruitment, training, or education of apprentices within a five-year period, the division shall schedule the program for an evaluation within three months of the determination.(h)If the division determines that an apprenticeship program that has had at least two graduating classes has an annual apprentice completion rate below 50 percent of the average completion rate for the applicable occupation, the division shall schedule the program for an evaluation within three months of the determination.(a)The division shall evaluate apprenticeship and preapprenticeship programs to ensure that the program evaluated is complying with its standards, that all on-the-job training is supervised by journeypersons, that all classroom instruction required by the apprenticeship or preapprenticeship standards is being provided, that all work processes in the standards are being covered, that graduates have completed the programs requirements, and that any funds received under this chapter were properly obtained and are being expended appropriately. The division shall examine each apprenticeship program to determine whether apprentices are graduating from or completing the program on schedule or dropping out and to determine whether graduates of the apprenticeship program have obtained employment as journeypersons. During the evaluation, the division shall attempt to contact a statistically valid sample of apprentices who have dropped out of the program prior to completion to determine their reasons for leaving the program. Every program sponsor shall have a duty to cooperate with the division in conducting an evaluation.
(b)Evaluation reports for building and construction trade and firefighting programs shall be presented to the California Apprenticeship Council and reports concerning any other program shall be presented to the Interagency Advisory Committee on Apprenticeship. The division shall make reports public, except that the division shall not make public information that would infringe on the privacy of individuals. The division shall recommend remedial action to correct deficiencies recognized in the audit report, and the failure to follow division recommendations or to correct deficiencies within a reasonable period of time shall be grounds for withdrawing state approval of a program. In any case in which a program has willfully violated any of the laws, regulations, or orders governing apprenticeship programs, funding provided to apprenticeship programs and associated entities, applicants for apprenticeship, or apprentices registered under this chapter, the division may initiate the deregistration process to withdraw state approval of the program. Nothing shall prevent the division from conducting evaluations of programs where deficiencies have been identified or where it receives information that a program is not being operated in accordance with applicable federal and state laws and regulations or the programs approved program standards. If a program is found to be using funds provided under this chapter for purposes other than those for which the funds were granted or is found to have obtained the funds improperly, then the program shall not be eligible to receive any future funding from the same funding program and the division may initiate the deregistration process to withdraw state approval of the program.
(c)(1)The division may suspend registrations of new apprentice agreements by providing written notice of the reasons for the suspension. The division shall provide such notice at least 10 days before the suspension is effective and shall serve the notice on the program by electronic mail, or by mail if the program does not have an electronic mail address on file.
(2)If the division does not initiate deregistration proceedings within 45 days of the effective date of the suspension, the suspension is lifted.
(3)If deregistration proceedings are pending when the notice of suspension is served, or the division initiates deregistration proceedings within 45 days of the effective date of the suspension, the suspension will remain in effect until one of the following occurs:
(A)A decision on the deregistration is final.
(B)The division provides written notice that it has dismissed deregistration proceedings.
(C)The division lifts the suspension, upon a showing of good cause.
(4)A program affected by a suspension under this section may appeal to the Administrator of Apprenticeship within 10 days of the effective date of the suspension. If the administrator does not act within 30 days of the appeal, the appeal is deemed denied.
(5)The division shall post quarterly on its internet website a list of programs that are deregistered.
(d)The division shall give priority in conducting evaluations to programs that have been identified as having deficiencies. The division may conduct simplified evaluations for programs with fewer than five registered participants.
(e)One year following the creation of a new program or substantial expansion of an existing program, the division shall evaluate the program for quality and conformity with the requirements of this section.
(f)If the division finds evidence that information provided to it by a apprenticeship program has been purposefully misstated, including information provided to obtain funding under this chapter, the division shall immediately investigate and determine whether an evaluation of the program or deregistration is necessary. After such investigation, the division may initiate the deregistration process to withdraw state approval of the program. The division shall report its investigatory findings for building and construction trade and firefighting programs to the California Apprenticeship Council and shall report its investigatory findings for all other programs to the Interagency Advisory Committee on Apprenticeship. The division shall make the investigatory findings available to the public, except that the division shall not make public information that would infringe upon the privacy of individuals.
(g)If the division determines that an apprenticeship program has been the subject of two or more meritorious complaints that concern the recruitment, training, or education of apprentices within a five-year period, the division shall schedule the program for an evaluation within three months of the determination.
(h)If the division determines that an apprenticeship program that has had at least two graduating classes has an annual apprentice completion rate below 50 percent of the average completion rate for the applicable occupation, the division shall schedule the program for an evaluation within three months of the determination.
|
Date
|
Status
|
|---|---|
| Aug 28, 2024 | Ordered to inactive file on request of Assembly Member Kalra. |
| Aug 22, 2024 | Read third time and amended. |
| Aug 22, 2024 | Ordered to third reading. |
| Aug 15, 2024 | Read third time and amended. |
| Aug 15, 2024 | Ordered to third reading. |
| Aug 12, 2024 | Ordered to third reading. |
| Aug 12, 2024 | From inactive file. |
| Aug 8, 2024 | Notice of intention to remove from inactive file given by Assembly Member Kalra. |
| Sep 8, 2023 | Ordered to inactive file on request of Assembly Member Kalra. |
| Sep 5, 2023 | Read second time. Ordered to third reading. |
| Sep 1, 2023 | Read second time and amended. Ordered to second reading. |
| Sep 1, 2023 | From committee: Do pass as amended. (Ayes 12. Noes 3.) (September 1). |
| Aug 23, 2023 | August 23 set for first hearing. Placed on suspense file. |
| Jun 29, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (June 28). Re-referred to Com. on APPR. |
| Jun 8, 2023 | Referred to Com. on L. & E. |
| Jun 1, 2023 | In Assembly. Read first time. Held at Desk. |
| May 31, 2023 | Read third time. Passed. (Ayes 30. Noes 9. Page 1385.) Ordered to the Assembly. |
| May 18, 2023 | Read second time. Ordered to third reading. |
| May 18, 2023 | From committee: Do pass. (Ayes 5. Noes 2. Page 1185.) (May 18). |
| May 12, 2023 | Set for hearing May 18. |
| May 8, 2023 | May 8 hearing: Placed on APPR suspense file. |
| May 1, 2023 | Set for hearing May 8. |
| Apr 26, 2023 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 1. Page 898.) (April 26). Re-referred to Com. on APPR. |
| Apr 13, 2023 | Set for hearing April 26. |
| Mar 27, 2023 | From committee with author's amendments. Read second time and amended. Re-referred to Com. on L., P.E. & R. |
| Mar 1, 2023 | Referred to Com. on L., P.E. & R. |
| Feb 21, 2023 | From printer. May be acted upon on or after March 20. |
| Feb 17, 2023 | Introduced. Read first time. To Com. on RLS. for assignment. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 1, 2023 | Do pass as amended. | Assembly Standing Committee on Appropriations |
Passed |
|
| Jun 28, 2023 | Do pass and be re-referred to the Committee on [Appropriations] | Assembly Standing Committee on Labor and Employment |
Passed |
|
| May 31, 2023 | Senate 3rd Reading SB830 Smallwood-Cuevas et | Senate Floor |
Passed |
|
| May 18, 2023 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| May 8, 2023 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Apr 26, 2023 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Labor, Public Employment and Retirement |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Alameda County Building and Construction Trades Council | * Support | Jun 28, 2023 |
| Associated Builders And Contractors Of California | ** Against | |
| California Association of Sheet Metal Air Conditioning Contractors | * Against Unless Amend | Jun 28, 2023 |
| California Labor Federation | * Support | Jun 28, 2023 |
| Construction Employer Association | * Against | Jun 28, 2023 |
| Western Electrical Contractors Association | ** Against | |
| Western States Council Of Sheet Metal Workers | * Support | Jun 28, 2023 |
SENATE THIRD READING
STR Bill Id:SB 830
Author:(Smallwood-Cuevas)
As Amended Ver:August 22, 2024
Majority vote
SUMMARY
Expands the definition of "public works," for the purpose of the payment of prevailing wages, for public works contracts advertised for bid or awarded on or after January 1, 2026, to also include custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning (HVAC) systems produced offsite and solely and specifically designed and engineered for installation in a public works project.
Major Provisions
- Requires a contractor or subcontractor engaging in a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with public works law requirements, as specified.
- Requires the third-party offsite fabrication facility to be considered a subcontractor solely for the purposes of this chapter.
- Clarifies that nothing in this paragraph shall cause any entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
- Requires certified copies of the payroll records for the offsite, custom fabrication of sheet metal ducts for public works projects, as specified, to be accompanied by a written time record of that work that shall be certified by each employee performing such work.
- Requires, beginning January 1, 2026, wages or penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility to be assessed jointly and severally against the contractor and the subcontractor installing such ducts, and allows the contractor and subcontractor to seek indemnity for those penalties from the offsite facility.
- Exempts from the requirement of being registered and qualified to perform public work, or work on specified affordable housing projects or developments, beginning January 1, 2026, out-of-state fabrication facilities that fabricate custom HVAC ducts for a contractor or subcontractor that is registered and qualified to perform work, or to perform work on specified affordable housing projects or developments.
- Requires, beginning January 1, 2026, the prevailing wage rate for public works projects to be not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located.
- Resolves chaptering out issues with AB 2705.
COMMENTS
According to DIR, the prevailing wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."[1]
On the federal level, under the Davis-Bacon Act[2], contractors and subcontractors who perform work on federally funded contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works must pay a prevailing wage to mechanics and laborers. The prevailing wage must be at least equal to locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The federal Department of Labor is responsible for determining prevailing wages, issuing regulations and standards to be observed by federal agencies that award or fund projects subject to Davis-Bacon labor standards, and overseeing consistent enforcement of the Davis-Bacon labor standards.[3]
The policy behind paying a prevailing wage is to ensure that contractors are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Prevailing wage creates a level playing field by requiring an across-the-board rate for all bidders on publically subsidized projects.
According to a joint report by the Illinois Economic Policy Institute and the Project for Middle Class Renewal, "the minimum compensation standard provided by prevailing wage ensures that all workers-regardless of age, race, ethnicity, sex, gender identification, sexual orientation, religious affiliation, marital status, and veteran status-are paid local market rates in the county where they are building a project."[4] Additionally this report found that state prevailing wage laws raise the incomes of underprivileged groups, reduce overall inequality without having negative impacts on participation in the trades, and reduce wage discrimination in construction.[5]
According to the Author
"Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.
[This bill] would follow the lead of other states by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products specifically designed and engineered for installation at a public works project is itself a public work."
In addition, the author points out that this bill will promote equity solutions and maximize benefits for underserved and marginalized communities because, "Prevailing wage laws contribute to the economic empowerment of marginalized communities by guaranteeing fair wages, helping workers escape poverty, reducing income inequality, and creating opportunities for improved living conditions and greater economic mobility."
Arguments in Support
The Western States Council of Sheet Metal Workers, in support, state, "Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by 'crowding' in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of 'construction work' in Labor Code section 1720.
[This bill] would update the language of [the Labor Code] to follow the lead of these other states and jurisdictions by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation at a public works project is itself a public work.
Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy."
Arguments in Opposition
The Construction Employer's Association, in opposition, states, "[This bill] is about limiting competition and reducing access to the public works market.
Strictly from a compliance standpoint, monitoring certified payroll (CPR) in an offsite fabrication setting would be exceedingly difficult. On any given day, workers may fabricate products for private works and public works projects, all for different regions, and each task may be subject to a different wage rate. The work itself will be performed at remote locations where prime contractors have no physical presence. At best, only larger, more sophisticated subcontractors may be equipped to compile this type of CPR. Compliance issues will be compounded by the fact that skilled and trained workforce (STW) criteria, where applicable, would now appear to apply to off-site fabrication. Between complex CPR requirements and STW, competition in this area will be further constrained as a result of [this bill].
Ultimately, [this bill] establishes a dangerous precedent that will restrict competition and have adverse consequences for affordable housing developers and public agencies and CEA implores you to please reconsider this measure."
FISCAL COMMENTS
According to the Assembly Appropriations Committee, (this fiscal analysis does not consider the most recent amendments to the bill):
- Costs of approximately $756,000 in the first year and $723,000 annually thereafter to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR's Office of the Director's Legal Unit hears appeals. Although DIR cannot estimate the number of fabrications that may become public works as a result of this bill, DIR anticipates additional complaints and resulting enforcement and appeal workload.
- Costs of an unknown, but potentially significant, amount to the state, due to higher labor expenses and prevailing wage compliance activities as an employer, to the extent custom fabrication of sheet metal ducts is used in affordable housing and other state construction projects. The magnitude of these costs depends on the number of applicable projects.
Any similar costs incurred by local agencies are likely non-reimbursable by the state, as such provisions likely do not result in a higher level of service to the public and trigger creation of a state-mandated local program.
VOTES
SENATE FLOOR: 30-9-1
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Roth
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Kalra, Flora, Chen, Haney, Ortega, Reyes, Ward
ASM APPROPRIATIONS: 12-3-1
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Weber, Wilson
NO: Megan Dahle, Dixon, Sanchez
ABS, ABST OR NV: Soria
UPDATED
VERSION: August 22, 2024
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2733 FN: 0004431
California Department of Industrial Relations Webpage. Frequently asked uestions-Prevailing Wage. March 2023. ↑
Pub. Law 107-217-Aug. 21, 2002 ↑
U.S. Department of Labor: Wage and Hour Division Webpage. Davis-Bacon and Related Acts, March 2023. ↑
Illinois Economic Policy Institute and Project for Middle Class Renewal. State Prevailing Wage Laws Reduce Racial Income Gaps in Construction, February 2018. ↑
Ibid. ↑
SENATE THIRD READING
STR Bill Id:SB 830
Author:(Smallwood-Cuevas)
As Amended Ver:August 15, 2024
Majority vote
SUMMARY
Expands the definition of "public works," for the purpose of the payment of prevailing wages, for public works contracts advertised for bid or awarded on or after January 1, 2026, to also include custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning (HVAC) systems produced offsite and solely and specifically designed and engineered for installation in a public works project.
Major Provisions
- Requires a contractor or subcontractor engaging in a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with public works law requirements, as specified.
- Requires the third-party offsite fabrication facility to be considered a subcontractor solely for the purposes of this chapter.
- Clarifies that nothing in this paragraph shall cause any entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
- Requires certified copies of the payroll records for the offsite, custom fabrication of sheet metal ducts for public works projects, as specified, to be accompanied by a written time record of that work that shall be certified by each employee performing such work.
- Requires, beginning January 1, 2026, wages or penalties due pursuant to a violation of prevailing wage requirements for offsite, custom fabrication of sheet metal ducts at an out-of-state fabrication facility to be assessed jointly and severally against the contractor and the subcontractor installing such ducts, and allows the contractor and subcontractor to seek indemnity for those penalties from the offsite facility.
- Exempts from the requirement of being registered and qualified to perform public work, or work on specified affordable housing projects or developments, beginning January 1, 2026, out-of-state fabrication facilities that fabricate custom HVAC ducts for a contractor or subcontractor that is registered and qualified to perform work, or to perform work on specified affordable housing projects or developments.
- Requires, beginning January 1, 2026, the prevailing wage rate for public works projects to be not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work project is located.
COMMENTS
According to DIR, the prevailing wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."[1]
On the federal level, under the Davis-Bacon Act[2], contractors and subcontractors who perform work on federally funded contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works must pay a prevailing wage to mechanics and laborers. The prevailing wage must be at least equal to locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The federal Department of Labor is responsible for determining prevailing wages, issuing regulations and standards to be observed by federal agencies that award or fund projects subject to Davis-Bacon labor standards, and overseeing consistent enforcement of the Davis-Bacon labor standards.[3]
The policy behind paying a prevailing wage is to ensure that contractors are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Prevailing wage creates a level playing field by requiring an across-the-board rate for all bidders on publically subsidized projects.
According to a joint report by the Illinois Economic Policy Institute and the Project for Middle Class Renewal, "the minimum compensation standard provided by prevailing wage ensures that all workers-regardless of age, race, ethnicity, sex, gender identification, sexual orientation, religious affiliation, marital status, and veteran status-are paid local market rates in the county where they are building a project."[4] Additionally this report found that state prevailing wage laws raise the incomes of underprivileged groups, reduce overall inequality without having negative impacts on participation in the trades, and reduce wage discrimination in construction.[5]
According to the Author
"Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.
[This bill] would follow the lead of other states by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products specifically designed and engineered for installation at a public works project is itself a public work."
In addition, the author points out that this bill will promote equity solutions and maximize benefits for underserved and marginalized communities because, "Prevailing wage laws contribute to the economic empowerment of marginalized communities by guaranteeing fair wages, helping workers escape poverty, reducing income inequality, and creating opportunities for improved living conditions and greater economic mobility."
Arguments in Support
The Western States Council of Sheet Metal Workers, in support, state, "Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by 'crowding' in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of 'construction work' in Labor Code section 1720.
[This bill] would update the language of [the Labor Code] to follow the lead of these other states and jurisdictions by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation at a public works project is itself a public work.
Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy."
Arguments in Opposition
The Construction Employer's Association, in opposition, states, "[This bill] is about limiting competition and reducing access to the public works market.
Strictly from a compliance standpoint, monitoring certified payroll (CPR) in an offsite fabrication setting would be exceedingly difficult. On any given day, workers may fabricate products for private works and public works projects, all for different regions, and each task may be subject to a different wage rate. The work itself will be performed at remote locations where prime contractors have no physical presence. At best, only larger, more sophisticated subcontractors may be equipped to compile this type of CPR. Compliance issues will be compounded by the fact that skilled and trained workforce (STW) criteria, where applicable, would now appear to apply to off-site fabrication. Between complex CPR requirements and STW, competition in this area will be further constrained as a result of [this bill].
Ultimately, [this bill] establishes a dangerous precedent that will restrict competition and have adverse consequences for affordable housing developers and public agencies and CEA implores you to please reconsider this measure."
FISCAL COMMENTS
According to the Assembly Appropriations Committee (this fiscal analysis does not consider the most recent amendments to the bill):
- Costs of approximately $756,000 in the first year and $723,000 annually thereafter to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR's Office of the Director's Legal Unit hears appeals. Although DIR cannot estimate the number of fabrications that may become public works as a result of this bill, DIR anticipates additional complaints and resulting enforcement and appeal workload.
- Costs of an unknown, but potentially significant, amount to the state, due to higher labor expenses and prevailing wage compliance activities as an employer, to the extent custom fabrication of sheet metal ducts is used in affordable housing and other state construction projects. The magnitude of these costs depends on the number of applicable projects.
Any similar costs incurred by local agencies are likely non-reimbursable by the state, as such provisions likely do not result in a higher level of service to the public and trigger creation of a state-mandated local program.
VOTES
SENATE FLOOR: 30-9-1
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Roth
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Kalra, Flora, Chen, Haney, Ortega, Reyes, Ward
ASM APPROPRIATIONS: 12-3-1
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Weber, Wilson
NO: Megan Dahle, Dixon, Sanchez
ABS, ABST OR NV: Soria
UPDATED
VERSION: August 15, 2024
CONSULTANT: Erin Hickey / L. & E. / (916) 319-2091 FN: 0003832
California Department of Industrial Relations Webpage. Frequently asked uestions-Prevailing Wage. March 2023. ↑
Pub. Law 107-217-Aug. 21, 2002 ↑
U.S. Department of Labor: Wage and Hour Division Webpage. Davis-Bacon and Related Acts, March 2023. ↑
Illinois Economic Policy Institute and Project for Middle Class Renewal. State Prevailing Wage Laws Reduce Racial Income Gaps in Construction, February 2018. ↑
Ibid. ↑
SENATE THIRD READING
STR Bill Id:SB 830
Author:(Smallwood-Cuevas)
As Amended Ver:September 1, 2023
Majority vote
SUMMARY
Expands the definition of "public works," for the purpose of the payment of prevailing wages, for public works contracts advertised for bid or awarded on or after July 1, 2024, to also include, custom fabrication of sheet metal ducts for heating, ventilation, and air conditioning systems produced offsite and solely and specifically designed and engineered for installation in a public works project.
Major Provisions
- Requires a contractor engaging in a third-party, permanent, and offsite fabrication facility to fabricate custom sheet metal ducts for a public works project to enter into a written subcontract agreement with the offsite fabrication facility that requires compliance with the requirements of this chapter, as specified.
- Requires the third-party offsite fabrication facility to be considered a subcontractor solely for the purposes of this chapter.
- Clarifies that nothing in this paragraph shall cause any entity to be treated as a contractor or subcontractor for any purpose other than the application of this chapter.
- Requires certified copies of the payroll records for the offsite, custom fabrication of sheet metal ducts for public works projects, as specified, to be accompanied by a written time record of that work that shall be certified by each employee performing such work.
COMMENTS
According to DIR, the prevailing wage rate relies upon such factors as "the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing."[1]
On the federal level, under the Davis-Bacon Act[2], contractors and subcontractors who perform work on federally funded contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works must pay a prevailing wage to mechanics and laborers. The prevailing wage must be at least equal to locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The federal Department of Labor is responsible for determining prevailing wages, issuing regulations and standards to be observed by federal agencies that award or fund projects subject to Davis-Bacon labor standards, and overseeing consistent enforcement of the Davis-Bacon labor standards.[3]
The policy behind paying a prevailing wage is to ensure that contractors are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Prevailing wage creates a level playing field by requiring an across-the-board rate for all bidders on publically subsidized projects.
According to a joint report by the Illinois Economic Policy Institute and the Project for Middle Class Renewal, "the minimum compensation standard provided by prevailing wage ensures that all workers-regardless of age, race, ethnicity, sex, gender identification, sexual orientation, religious affiliation, marital status, and veteran status-are paid local market rates in the county where they are building a project."[4] Additionally this report found that state prevailing wage laws raise the incomes of underprivileged groups, reduce overall inequality without having negative impacts on participation in the trades, and reduce wage discrimination in construction.[5]
According to the Author
"Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.
[This bill] would follow the lead of other states by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products specifically designed and engineered for installation at a public works project is itself a public work."
In addition, the author points out that this bill will promote equity solutions and maximize benefits for underserved and marginalized communities because, "Prevailing wage laws contribute to the economic empowerment of marginalized communities by guaranteeing fair wages, helping workers escape poverty, reducing income inequality, and creating opportunities for improved living conditions and greater economic mobility."
Arguments in Support
The Western States Council of Sheet Metal Workers, in support, state, "Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by 'crowding' in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of 'construction work' in Labor Code section 1720.
[This bill] would update the language of Labor Code Section 1720 to follow the lead of these other states and jurisdictions by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation at a public works project is itself a public work.
Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy."
Arguments in Opposition
The Construction Employer's Association, in opposition, states, "[This bill] is about limiting competition and reducing access to the public works market.
Strictly from a compliance standpoint, monitoring certified payroll (CPR) in an offsite fabrication setting would be exceedingly difficult. On any given day, workers may fabricate products for private works and public works projects, all for different regions, and each task may be subject to a different wage rate. The work itself will be performed at remote locations where prime contractors have no physical presence. At best, only larger, more sophisticated subcontractors may be equipped to compile this type of CPR. Compliance issues will be compounded by the fact that skilled and trained workforce (STW) criteria, where applicable, would now appear to apply to off-site fabrication. Between complex CPR requirements and STW, competition in this area will be further constrained as a result of [this bill].
Ultimately, [this bill] establishes a dangerous precedent that will restrict competition and have adverse consequences for affordable housing developers and public agencies and CEA implores you to please reconsider this measure."
FISCAL COMMENTS
According to the Assembly Appropriations Committee:
- Costs of approximately $756,000 in the first year and $723,000 annually thereafter to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR's Office of the Director's Legal Unit hears appeals. Although DIR cannot estimate the number of fabrications that may become public works as a result of this bill, DIR anticipates additional complaints and resulting enforcement and appeal workload.
- Costs of an unknown, but potentially significant, amount to the state, due to higher labor expenses and prevailing wage compliance activities as an employer, to the extent custom fabrication of sheet metal ducts is used in affordable housing and other state construction projects. The magnitude of these costs depends on the number of applicable projects.
Any similar costs incurred by local agencies are likely non-reimbursable by the state, as such provisions likely do not result in a higher level of service to the public and trigger creation of a state-mandated local program.
VOTES
SENATE FLOOR: 30-9-1
YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dodd, Durazo, Eggman, Glazer, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener
NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk
ABS, ABST OR NV: Roth
ASM LABOR AND EMPLOYMENT: 7-0-0
YES: Kalra, Flora, Chen, Haney, Ortega, Reyes, Ward
ASM APPROPRIATIONS: 12-3-1
YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Mathis, Papan, Pellerin, Weber, Wilson
NO: Megan Dahle, Dixon, Sanchez
ABS, ABST OR NV: Soria
UPDATED
VERSION: September 1, 2023
CONSULTANT: Martin Vindiola / L. & E. / (916) 319-2091 FN: 0001541
California Department of Industrial Relations Webpage. Frequently asked questions-Prevailing Wage. March 2023. ↑
Pub. Law 107-217-Aug. 21, 2002 ↑
U.S. Department of Labor: Wage and Hour Division Webpage. Davis-Bacon and Related Acts, March 2023. ↑
Illinois Economic Policy Institute and Project for Middle Class Renewal. State Prevailing Wage Laws Reduce Racial Income Gaps in Construction, February 2018. ↑
Ibid. ↑
Date of Hearing: August 23, 2023
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Chris Holden, Chair
SBPCA Bill Id:SB 830
Author:(Smallwood-Cuevas) – As Amended Ver:March 27, 2023
Policy Committee: | Labor and Employment | Vote: | 7 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill expands the definition of public works, for which prevailing wage must be paid to workers, to include an offsite, custom fabrication of sheet metal ducts or similar sheet metal products for use in heating, ventilation, and air conditioning systems and installation in a public works project done under contract and paid for in whole or in part out of public funds.
This bill also specifies that the general prevailing rate of per diem wages for work is based on the locality in which the public work project is “located,” instead of “performed.”
FISCAL EFFECT:
- Costs of approximately $756,000 in the first year and $723,000 annually thereafter to the Department of Industrial Relations (DIR) for increased oversight of new public works projects (Labor Enforcement and Compliance Fund). The Division of Labor Standards Enforcement investigates complaints and imposes penalties, while DIR’s Office of the Director’s Legal Unit hears appeals. Although DIR cannot estimate the number of fabrications that may become public works as a result of this bill, DIR anticipates additional complaints and resulting enforcement and appeal workload.
- Costs of an unknown, but potentially significant, amount to the state, due to higher labor expenses and prevailing wage compliance activities as an employer, to the extent custom fabrication of sheet metal ducts is used in affordable housing and other state construction projects. The magnitude of these costs depends on the number of applicable projects.
Any similar costs incurred by local agencies are likely non-reimbursable by the state, as such provisions likely do not result in a higher level of service to the public and trigger creation of a state-mandated local program.
COMMENTS:
- Purpose. According to the author:
Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.
- Support and Opposition. This bill is sponsored by the Western States Council of Sheet Metal Workers, which argues “This bill closes a loophole to prevailing wage requirements that was unnecessarily created by [DIR]” and follows the lead of other states, including New Jersey, Massachusetts, and Washington to require prevailing wage for offsite, non-standard, custom fabrication. This bill is also supported by other labor organizations.
This bill is opposed by various contractor associations, including the Construction Employers’ Association (CEA), which notes “30% to 50% of all sheet metal fabrication is now performed off site” and argues “SB 830 will increase costs for public works and non-public works prevailing projects e.g. affordable housing and make it more difficult for new and emerging contractors to enter the public works market.” However, CEA notes it would remove opposition to this bill if “practical concerns” are addressed, such as requiring signed time cards with certified payroll reports for offsite work.
- Background.
Prevailing Wage for Public Works. Existing law requires payment of prevailing wage to all workers employed on a public works project valued over $1,000, such as publicly funded construction, alteration, demolition, installation, maintenance, or repair work done under contract. The prevailing wage rate is determined by DIR and generally based on the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft or classification within a locality. Requiring an across-the-board rate ensures bidders are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation.
Custom Fabrication of Metal Ducts. The sponsor of this bill notes:
In 2014, the California appellate court upheld a [DIR] determination that custom fabrication of metal ducts is not subject to prevailing wage where constructed at a permanent fabrication facility, even though it would be subject to prevailing wage where the exact same work was performed on site or at a temporary offsite facility. The court found that a custom fabrication facility is a subcontractor within the meaning of the prevailing wage law and does not qualify for the material supplier exemption, because it was custom work. However, the Court, nonetheless found that [DIR’s] determination…was not arbitrary and capricious in light of the fact that the California statute was silent on this issue…
This bill provides that offsite, custom fabrication of sheet metal ducts or similar sheet metal products for use in heating, ventilation, and air conditioning systems and installation in a public works project is itself included in the definition of public works.
- Related Legislation. AB 338 (Aguiar-Curry) expands the definition of public works to include publicly funded fuel reduction work that is done under contract as part of a fire mitigation project. AB 338 is pending in the Senate Appropriations Committee.
Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081
Date of Hearing: June 28, 2023
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Ash Kalra, Chair
SBPCA Bill Id:SB 830
Author:(Smallwood-Cuevas) – As Amended Ver:March 27, 2023
SENATE VOTE: 30-9
SUBJECT: Public works
SUMMARY: Expands the definition of "public works," for the purpose of the payment of prevailing wages, to also include, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced offsite and solely and specifically designed and engineered for installation in a public works project.
EXISTING LAW:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a "public works" project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Lab. Code, § 1771.)
- Defines public works, to include among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except as specified. (Lab. Code, § 1720 (a).)
- Defines “paid for in whole or in part out of public funds” as, among other things, fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations normally required in the execution of a contract that are paid, reduced, charged at less than fair market value, waived or forgiven. (Lab. Code, § 1720 (b).)
- Requires that the applicable general prevailing rate of per diem wages be paid to workers employed on public works projects in California. This rate is determined by the Director of the Department of Industrial Relations (DIR) for each locality in which the public work is to be performed and for each craft, classification, or type of worker needed to execute the public works project. (Lab. Code, § 1773.)
- Provides that a willful violation of laws relating to the payment of prevailing wages on public works is a misdemeanor. (Lab. Code, § 1777.)
FISCAL EFFECT: According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $756,000, and $723,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
- To the extent the State uses custom fabrication of sheet metal ducts in affordable housing and other construction projects, it would face increased costs from (1) higher labor expenses, and (2) prevailing wage compliance activities. The magnitude is unknown and would differ from year to year.
COMMENTS: According to the author, “Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.
[This bill] would follow the lead of other states by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products specifically designed and engineered for installation at a public works project is itself a public work.”
In addition, the author points out that this bill will promote equity solutions and maximize benefits for underserved and marginalized communities because, “Prevailing wage laws contribute to the economic empowerment of marginalized communities by guaranteeing fair wages, helping workers escape poverty, reducing income inequality, and creating opportunities for improved living conditions and greater economic mobility.”
Prevailing Wages in the Construction Industry
According to DIR, the prevailing wage rate relies upon such factors as “the particular craft, classification or type of work within the locality and in the nearest labor market area (if majorities of such workers are paid at a single rate). If there is no single rate paid to a majority, then the single or modal rate being paid to the greater number of workers is prevailing.”[1]
On the federal level, under the Davis-Bacon Act[2], contractors and subcontractors who perform work on federally funded contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works must pay a prevailing wage to mechanics and laborers. The prevailing wage must be at least equal to locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The federal Department of Labor is responsible for determining prevailing wages, issuing regulations and standards to be observed by federal agencies that award or fund projects subject to Davis-Bacon labor standards, and overseeing consistent enforcement of the Davis-Bacon labor standards.[3]
The policy behind paying a prevailing wage is to ensure that contractors are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Prevailing wage creates a level playing field by requiring an across-the-board rate for all bidders on publically subsidized projects.
According to a joint report by the Illinois Economic Policy Institute and the Project for Middle Class Renewal, “the minimum compensation standard provided by prevailing wage ensures that all workers-regardless of age, race, ethnicity, sex, gender identification, sexual orientation, religious affiliation, marital status, and veteran status-are paid local market rates in the county where they are building a project.”[4] Additionally this report found that state prevailing wage laws raise the incomes of underprivileged groups, reduce overall inequality without having negative impacts on participation in the trades, and reduce wage discrimination in construction.[5]
Arguments in Support
The Western States Council of Sheet Metal Workers, in support, state, “Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by ‘crowding’ in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of ‘construction work’ in Labor Code section 1720.
[This bill] would update the language of Labor Code Section 1720 to follow the lead of these other states and jurisdictions by specifying that offsite custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation at a public works project is itself a public work.
Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.”
Arguments in Opposition
The Construction Employer’s Association, in opposition, states, “[This bill] is about limiting competition and reducing access to the public works market.
Strictly from a compliance standpoint, monitoring certified payroll (CPR) in an offsite fabrication setting would be exceedingly difficult. On any given day, workers may fabricate products for private works and public works projects, all for different regions, and each task may be subject to a different wage rate. The work itself will be performed at remote locations where prime contractors have no physical presence. At best, only larger, more sophisticated subcontractors may be equipped to compile this type of CPR. Compliance issues will be compounded by the fact that skilled and trained workforce (STW) criteria, where applicable, would now appear to apply to off-site fabrication. Between complex CPR requirements and STW, competition in this area will be further constrained as a result of [this bill].
Ultimately, [this bill] establishes a dangerous precedent that will restrict competition and have adverse consequences for affordable housing developers and public agencies and CEA implores you to please reconsider this measure.”
Related & Prior Legislation
AB 338 (Aguiar-Curry) of 2023 would expand the definition of "public works," for the purpose of the payment of prevailing wages, beginning on January 1, 2025, to also include fuel reduction work paid for in whole or in part by public funds performed as part of a fire mitigation project, including, but not limited to, residential chipping, rural road fuel breaks, fire breaks, and vegetation management. This bill is currently pending a hearing in the Senate Labor Public Employment and Retirement Committee.
AB 587 (R. Rivas) of 2023 requires any copy of records made available for inspection by, or furnished to, a multiemployer Taft-Hartley trust fund or joint-labor management committee, to be on forms provided by the Division of Labor Standards Enforcement (DLSE) or have the same information as the forms provided by DLSE. Additionally, this bill would clarify that electronic certified payroll records cannot be used to satisfy payroll record requests made by Taft-Hartley trust funds and joint labor-management committees. This bill is pending a hearing in the Senate Appropriations Committee.
AB 1717 (Aguiar-Curry) of 2022 would have expanded the definition of "public works," for the purpose of the payment of prevailing wages, beginning on January 1, 2024, to also include fuel reduction work paid for in whole or in part by public funds performed as part of a fire mitigation project, including, but not limited to, residential chipping, rural road fuel breaks, fire breaks, and vegetation management. This bill was vetoed by Governor Newsom.
AB 1851 (R. Rivas) Chapter 764, Statutes of 2022, expanded the definition of "public works," for the purpose of the payment of prevailing wages, to also include the on-hauling of materials used for paving, grading, and fill onto a public works site.
AB 1886 (Cooper) of 2022 would have expanded the definition of public works for the purpose of the payment of prevailing wages to include street sweeping maintenance performed for the preservation, protection, and keeping of any publicly owned or publicly operated street, road, or highway done under contract and paid for in whole or in part out of public funds. This bill failed passage on the Assembly Floor.
AB 2231 (Kalra) Chapter 346, Statutes of 2020, defined a public subsidy as de minimis for the purpose of paying the prevailing wage in private projects if it is both less than $600,000 and less than 2% of the total project cost for bids advertised or contracts awarded after July 1, 2021. If the subsidy is for a residential project consisting entirely of single family dwellings, the subsidy is de minimis so long as it is less than 2 % of the total project cost.
AB 2765 (O’Donnell) Chapter 355, Statutes of 2020, expanded the definition of "public works," for the purpose of the payment of prevailing wages, to also include any construction, alteration, demolition, installation, or repair work done under private contract on a project for a charter school, as defined, when it is paid for, in whole or in part, with the proceeds of conduit revenue bonds issued on or after January 1, 2021.
AB 1768 (Carrillo) Chapter 719, Statutes of 2019, expanded the definition of "public works" to include work performed during construction site assessments and feasibility studies, and specifies that preconstruction work is a part of "public works," regardless of whether any further construction work is conducted.
AB 1066 (Aguiar-Curry) Chapter 616, Statutes of 2017, expanded the meaning of the term “public works” to include specific types of tree removal work.
AB 852 (Burke) Chapter 745, Statutes of 2015, expanded the definition of public works projects to include any construction, alteration, demolition, installation, or repair work done under private contract on a project for a general acute care hospital funded in whole or in part by conduit revenue bonds.
AB 26 (Bonilla) Chapter 864, Statutes of 2014, expanded the definition of “public works” to include work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work, and work performed during the post-construction phases of construction, including, but not limited to, all cleanup work at the jobsite.
AB 514 (Roger Hernández) Chapter 676, Statutes of 2011, expanded the definition of “public works” to include the hauling of refuse, as defined, from a public works site to an outside disposal location.
REGISTERED SUPPORT / OPPOSITION:
Support
Western States Council Sheet Metal, Air, Rail and Transportation (Sponsor)
California Labor Federation
Western States Council of Sheet Metal Workers
Oppose
Associated Builders and Contractors of California
Construction Employers' Association
Western Electrical Contractors Association
Analysis Prepared by: Martin Vindiola / L. & E. /
California Department of Industrial Relations Webpage. Frequently asked questions-Prevailing Wage. March 2023. ↑
Pub. Law 107-217-Aug. 21, 2002 ↑
U.S. Department of Labor: Wage and Hour Division Webpage. Davis-Bacon and Related Acts, March 2023. ↑
Illinois Economic Policy Institute and Project for Middle Class Renewal. State Prevailing Wage Laws Reduce Racial Income Gaps in Construction, February 2018. ↑
Ibid. ↑
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | SB 830 |
THIRD READING
Bill No: SB 830
Author: Smallwood-Cuevas (D), et al.
Amended: 3/27/23
Vote: 21
SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 4/26/23
AYES: Cortese, Durazo, Laird, Smallwood-Cuevas
NOES: Wilk
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/18/23
AYES: Portantino, Ashby, Bradford, Wahab, Wiener
NOES: Jones, Seyarto
SUBJECT: Public works
SOURCE: Western States Council of Sheet Metal Workers
DIGEST:
This bill expands the definition of “public works” to make custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced offsite and solely and specifically designed and engineered for installation in a particular public works project subject to the payment of prevailing wages.
ANALYSIS:
Existing law:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a "public works" project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771)
- Defines "public work" to include, among other things, construction, alteration, demolition, installation or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. [Labor Code §1720(a)]
- Specifies that for prevailing wage purposes, “construction” includes work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. [Labor Code §1720(a)]
- Defines “paid for in whole or in part out of public funds” as, among other things, “Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations normally required in the execution of a contract that are paid, reduced, charged at less than fair market value, waived or forgiven.” [Labor Code §1720(b)]
- Requires that the applicable general prevailing rate of per diem wages be determined by the Director of the Department of Industrial Relations (DIR) for each locality in which the public work is to be performed and for each craft, classification, or type of worker needed to execute the public works project. (Labor Code §1773)
- Provides that private residential projects built on private property are not subject to the requirements of public works provisions, unless the projects are built pursuant to an agreement with a state agency, redevelopment agency, or local public housing authority. [Labor Code §1720(c)(1)]
- Authorizes the Labor Commissioner, or their designee, to issue civil wage and penalty assessments on a contractor or subcontractor, or both, that fails to pay prevailing wages in connection with a public work. (Labor Code §1741)
This bill:
- Expands the definition of “public works,” thereby requiring the payment of prevailing wages for this work, to include offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a public works project.
- Specifies that for public works projects, prevailing rate of per diem wages must be paid for work in the locality in which the public work project is located (striking the existing reference to where it is performed).
Background
This bill proposes to address a matter that has been the subject of debate both within DIR and in the courts. At issue is the question of whether or not off-site, custom fabrication of sheet metal ducts or similar sheet metal products that are made specifically and solely for a particular public works project (that is already subject to the payment of prevailing wages for other work) should be subject to the payment of prevailing wages – even though they are not fabricated at the construction site or construction yard.
What began in 2008 as a DIR public works coverage determination (finding that this works was considered public work for purposes of prevailing wages) that was later appealed and reversed, leading one of the parties to take the matter to court. On August 27, 2014, the First District Court of Appeal in Sheet Metal Workers’ International Association, Local 104 v. Duncan (2014) 229 Cal.App.4th 192 affirmed the May 3, 2010 decision by the DIR finding that the off-site fabrication of sheet metal components was not subject to prevailing wages. The court noted, among other things that, “Offsite fabrication is not covered by the prevailing wage law if it takes place at a permanent, offsite manufacturing facility and the location and existence of that facility is determined wholly without regard to the particular public works project.”
This bill brings the matter to the Legislature to resolve the question of whether or not off-site, custom fabrication of sheet metal ducts or similar sheet metal products for HVAC systems produced exclusively for that public works project should be considered “public works” and subject to the payment of prevailing wages by specifically adding this type of work to the definition of “public works.”
Comments
Need for this bill? According to the author, “Traditionally, fabrication of custom sheet metal ducts for heating, ventilation and air conditioning systems took place at the jobsite. Technological advances in computer modeling of blueprints and prefabrication practices now allows the fabrication of custom sheet metal ducts to be performed either onsite or offsite. Offsite custom-fabricated duct work is unique because it requires integration with the specific blueprints for the project and can be used only on the project for which it is constructed. This work is nonstandard and custom-made for a particular project. Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by “crowding” in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of “construction work” in Labor Code section 1720. Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.”
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $756,000, and $723,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
- To the extent the State uses custom fabrication of sheet metal ducts in affordable housing and other construction projects, it would face increased costs from (1) higher labor expenses, and (2) prevailing wage compliance activities. The magnitude is unknown and would differ from year to year.
SUPPORT: (Verified 5/19/23)
Western States Council of Sheet Metal Workers (source)
OPPOSITION: (Verified 5/19/23)
Associated Builders and Contractors of California
Construction Employers’ Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT: The sponsor of the measure, the Western States Council of Sheet Metal Workers, write, “It is important to note that the Department of Industrial Relations determination was upheld as not arbitrary and capricious; it was not determined by the court to be the only possible interpretation. In contrast, other states and jurisdictions including New Jersey, Massachusetts, the State of Washington and the City of Philadelphia have recognized the project specific nature of custom fabrication and have either issued determinations or passed legislation to require prevailing wage for offsite, non-standard, custom fabrication for public works construction projects.”
Furthermore, they argue, “The purpose of prevailing wage laws is to ensure that public investments do not undermine local wages and do not provide an incentive for employers to rely on poorly trained, low wage workers. It also creates a level playing field in the bidding process ensuring that contractors compete on quality rather than on who can pay their workers the least amount of money.” Additionally, “The application of prevailing wage requirements to public work projects also ensures that public investments support job development for disadvantaged workers by requiring the employment of apprentices.” They conclude, “As long as developers are designed to encourage hiring the cheapest workers, offsite fabricators that invest in apprenticeships and training will never be able to compete with contractors that hire cheap labor off the street. Because of this, a decision not to apply prevailing wage to custom fabrication is, in fact, a de facto policy to support the creation of low wage, no-benefit jobs.”
ARGUMENTS IN OPPOSITION: The Construction Employers’ Association is opposed to the measure, noting that, “The prevailing wage rate for a sheet metal worker in San Francisco is approximately $107 per hour, versus approximately $88 per hour in Fresno. The average non-union manufacturing rate in California is approximately $30 per hour. Per SB 830, workers who assemble products for the “execution of a contract” in San Francisco will be entitled to $107 per hour, regardless of if the fabrication work is performed in Fresno, or if it’s done non-union. The substantial cost increases necessitated by this measure will be borne by public agencies and ultimately taxpayers. Further, to the extent that SB 830 pushes manufacturing to other states and countries, where California has no jurisdiction, California’s economy and workforce will suffer”
Regarding enforcement, CEA argues, “There is no practical way for public entities or prime contractors to enforce prevailing wage requirements for off-site fabrication. First, California cannot force SB 830 requirements for work performed outside of the state, nor is it clear that the state can mandate that someone in Boise or Tijuana receive California prevailing wages. Were California to create an artificial barrier to entry for products manufactured out-of-state, because workers in those states are not paid California prevailing wages, the law would likely run afoul of the Dormant Commerce Clause which is intended to prevent the imposition of protectionist state policies that favor state business at the expense of out-of-state business.
Additionally, they argue, “because fabrication shops typically fabricate products for public and private works concurrently, it would be difficult for subcontractors to track payroll.” They argue this will lead to disputes that will ultimately delay payments by general contractors to subcontractors because of joint and several liability. Further, they argue, “although SB 830 would seemingly level the playing field between signatory sheet metal contractors, who are obligated to pay a higher shop rate pursuant to their collective bargaining agreements, and non-union sheet metal subcontractors who are bound to a shop rate, the effect would likely be quite different. Invariably, union workers used to receiving higher public works wages would elect not to perform private work, so all of that work would go non-union. In effect, the union signatory sheet metal industry would cede the private market.”
Additional opposition from the Western Electrical Contractors Association notes that, the logic proposed for this expansion “will eventually apply to ALL construction materials utilized on a public works project.” WECA believes this change is misguided and will add complexity for manufacturers and additional cost to taxpayers who “foot the bill” for public construction.
Prepared by: Alma Perez-Schwab / L., P.E. & R. / (916) 651-1556
5/20/23 13:09:45
**** END ****
SENATE COMMITTEE ON
Senator Anthony Portantino, Chair
2023 - 2024 Regular Session
SB 830 (Smallwood-Cuevas) - Public works
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
SB 830 would subject to the payment of prevailing wages custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced offsite and solely and specifically designed and engineered for installation in a particular public works project.
Fiscal Impact:
- The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $756,000, and $723,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
- To the extent the State uses custom fabrication of sheet metal ducts in affordable housing and other construction projects, it would face increased costs from (1) higher labor expenses, and (2) prevailing wage compliance activities. The magnitude is unknown and would differ from year to year.
Background:
Current law requires that not less than the general prevailing wage rate of per diem wages, as determined by DIR, be paid to all workers employed on a “public works” projects. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area. The determination of whether a project is deemed a "public work" is important because the Labor Code requires (except for projects of $1,000 or less) that the prevailing wage be paid to all workers employed on public works projects.
In general, the term "public works" is defined to include construction, alteration, demolition, installation or repair work done under contract and "paid for in whole or in part out of public funds." About twenty years ago, there was much administrative and legislative action over what constituted the term "paid for in whole or in part out of public funds." These debates culminated in the enactment of SB 975 (Alarcón, Chapter 938, Statutes of 2001), which codified a definition of "paid for in whole or in part out of public funds" as well as exempted certain affordable housing, residential and private development projects, as specified. Currently, “paid for in whole or in part out of public funds” is defined as, among other things, “fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations normally required in the execution of a contract that are paid, reduced, charged at less than fair market value, waived or forgiven.”
Proposed Law:
This bill would do the following:
- Expand the definition of “public works,” thereby requiring the payment of prevailing wages for this work, to include offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a public works project.
- Specify that for public works projects, prevailing rate of per diem wages must be paid for work in the locality in which the public work project is located (striking the existing reference to where it is performed).
Related Legislation:
AB 1851 (Rivas, Chapter 764, Statutes of 2022) expanded the definition of “public works” to include on-hauling of materials used for paving, grading, and fill onto a public works site and requires workers performing this work to be subject to prevailing wage requirements.
Staff Comments:
The bill would to address a matter that has been the subject of debate both within DIR and in the courts. At issue is the question of whether or not off-site, custom fabrication of sheet metal ducts or similar sheet metal products that are made specifically and solely for a particular public works project (that is already subject to the payment of prevailing wages for other work) should be subject to the payment of prevailing wages – even though they are not fabricated at the construction site or construction yard.
Any local government costs resulting from the mandate in this measure are not state-reimbursable because the mandate only involves the definition of a crime or the penalty for conviction of a crime.
-- END --
SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT
Senator Dave Cortese, Chair
2023 - 2024 Regular
Bill No: SB 830 Hearing Date: April 26, 2023
Author: | Smallwood-Cuevas | ||
Version: | March 27, 2023 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Alma Perez-Schwab | ||
SUBJECT: Public works
KEY ISSUE
Should custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced offsite and solely and specifically designed and engineered for installation in a particular public works project be subject to the payment of prevailing wages?
ANALYSIS
Existing law:
- Requires that not less than the general prevailing rate of per diem wages be paid to all workers employed on a "public works" project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771)
- Defines "public work" to include, among other things, construction, alteration, demolition, installation or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. [Labor Code §1720(a)]
- Specifies that for prevailing wage purposes, “construction” includes work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite.
[Labor Code §1720(a)]
- Defines “paid for in whole or in part out of public funds” as, among other things, “Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations normally required in the execution of a contract that are paid, reduced, charged at less than fair market value, waived or forgiven.” [Labor Code §1720(b)]
- Requires that the applicable general prevailing rate of per diem wages be determined by the Director of the Department of Industrial Relations (DIR) for each locality in which the public work is to be performed and for each craft, classification, or type of worker needed to execute the public works project. (Labor Code §1773)
- Provides that private residential projects built on private property are not subject to the requirements of public works provisions, unless the projects are built pursuant to an agreement with a state agency, redevelopment agency, or local public housing authority. [Labor Code §1720(c)(1)]
- Authorizes the Labor Commissioner, or their designee, to issue civil wage and penalty assessments on a contractor or subcontractor, or both, that fails to pay prevailing wages in connection with a public work. (Labor Code §1741)
This bill:
- Expands the definition of “public works,” thereby requiring the payment of prevailing wages for this work, to include offsite, custom fabrication of sheet metal ducts or similar sheet metal products for heating, ventilation, and air conditioning systems produced as a nonstandard item solely and specifically designed and engineered for installation in a public works project.
- Specifies that for public works projects, prevailing rate of per diem wages must be paid for work in the locality in which the public work project is located (striking the existing reference to where it is performed).
COMMENTS
1. Background: Sheet Metal Workers’ International Association, Local 104 v. Duncan
The bill proposes to address a matter that has been the subject of debate both within DIR and in the courts. At issue is the question of whether or not off-site, custom fabrication of sheet metal ducts or similar sheet metal products that are made specifically and solely for a particular public works project (that is already subject to the payment of prevailing wages for other work) should be subject to the payment of prevailing wages – even though they are not fabricated at the construction site or construction yard.
On November 13, 2008, the Director of the Department of Industrial Relations (DIR) issued a public works coverage determination in Public Works Case No. 2007-008 Russ Will Mechanical, Inc. – Off-site Fabrication of HVAC Components, finding that, under the facts of the case, certain off-site fabrication work performed in the permanent shop of the on-site heating, ventilating and air conditioning (HVAC) subcontractor was done in the execution of a contract for public work within the meaning of Labor Code section 1772 and was therefore subject to prevailing wage requirements. On December 18, 2008, the subcontractors, Russ Will Mechanical, Inc., filed a notice of administrative appeal of the determination. On May 3, 2010, after review and consideration, DIR Director John Duncan granted the appeal and the determination was reversed. Among other things, the final DIR decision noted that, “In past determinations finding such work to be covered, the off-site fabrication was performed at a temporary yard established specially for the project in question, not in a subcontractor's own permanent shop.”[1]
The Sheet Metal Workers’ International Association, Local 104 filed a petition for a writ of mandate in the superior court against DIR and its director challenging the department’s coverage decision. The union argued that, unlike a material supplier that is exempt from the prevailing wage law, the employees at Russ Will's offsite facility fabricated customized sheet metal items in accordance with the specifications in the project's contract documents. According to Local 104, because the custom fabrication was an integral part of the project and was performed in the execution of a public works contract, the work should have been covered by the prevailing wage law.
On August 27, 2014, the First District Court of Appeal in Sheet Metal Workers’ International Association, Local 104 v. Duncan (2014) 229 Cal.App.4th 192 affirmed the May 3, 2010 decision by the DIR finding that the off-site fabrication of sheet metal components was not subject to prevailing wages. The court noted the following:
Offsite fabrication is not covered by the prevailing wage law if it takes place at a permanent, offsite manufacturing facility and the location and existence of that facility is determined wholly without regard to the particular public works project. Because the offsite fabrication at issue here was conducted at Russ Will’s permanent offsite facility, and that facility’s location and continuance in operation were determined wholly without regard to the project, the work was not done “in the execution” of the contract within the meaning of section 1772.[2]
As noted in the DIR determination in the original appeal, “the role of the Department is limited to interpreting and enforcing the Labor Code as enacted by the legislature. It would be an improper usurpation of the legislative function for the Department to impose its own social and economic policy judgments under the guise of statutory interpretation. See, State Building Trades, supra, 162 Cal.App.4th at p. 324 ["These are issues of high public policy. To choose between them, or to strike a balance between them, is the essential function of the Legislature, not a court.”]” Therefore, this bill brings the matter to the Legislature to resolve the question of whether or not off-site, custom fabrication of sheet metal ducts or similar sheet metal products for HVAC systems produced exclusively for that public works project should be considered “public works” and subject to the payment of prevailing wages.
2. Need for this bill?
According to the author, “Traditionally, fabrication of custom sheet metal ducts for heating, ventilation and air conditioning systems took place at the jobsite. Technological advances in computer modeling of blueprints and prefabrication practices now allows the fabrication of custom sheet metal ducts to be performed either onsite or offsite. Offsite custom-fabricated duct work is unique because it requires integration with the specific blueprints for the project and can be used only on the project for which it is constructed. This work is nonstandard and custom-made for a particular project. Offsite fabrication increases safety, productivity, and efficiency by facilitating the use of permanently installed, computer guided plasma cutters and by allowing project planners to schedule construction activities taking place at secondary and primary sites at each stage of construction. This reduces delays caused by “crowding” in the corridors and other spaces at a jobsite.
Offsite custom fabrication, however, has also been used to increase developer and contractor profits by evading prevailing wage requirements based on a technical legal interpretation that offsite work does not fall under the definition of “construction work” in Labor Code section 1720. Allowing custom fabrication to evade prevailing wage requirements incentives developers to construct significant parts of the project outside of the local area using low paid, low-skilled workers who do not have the protection that workers performing the exact same work have when it is performed directly on the project site. This provides windfall profits to developers at the expense of local workers and the local economy.”
3. Proponent Arguments:
The sponsors of the measure, the Western States Council of Sheet Metal Workers, write, “It is important to note that the Department of Industrial Relations determination was upheld as not arbitrary and capricious; it was not determined by the court to be the only possible interpretation. In contrast, other states and jurisdictions including New Jersey, Massachusetts, the State of Washington and the City of Philadelphia have recognized the project specific nature of custom fabrication and have either issued determinations or passed legislation to require prevailing wage for offsite, non-standard, custom fabrication for public works construction projects.” They argue that this bill would update Labor Code Section 1720 to follow the lead of these other states and jurisdictions.
Furthermore, they argue, “The purpose of prevailing wage laws is to ensure that public investments do not undermine local wages and do not provide an incentive for employers to rely on poorly trained, low wage workers. It also creates a level playing field in the bidding process ensuring that contractors compete on quality rather than on who can pay their workers the least amount of money.” Additionally, “The application of prevailing wage requirements to public work projects also ensures that public investments support job development for disadvantaged workers by requiring the employment of apprentices.”
They offer as an example, that “the California Department of Apprenticeship Standards requires every apprenticeship program to include an equal opportunity program with an affirmative action plan to recruit women and minority applicants. These requirements apply to custom fabrication work performed on a project site or at a temporary offsite facility, but the Duncan decision created a loophole eliminating these requirements from applying when the exact same work is performed at a permanent fabrication facility.”
In conclusion, they argue that, “As long as developers are designed to encourage hiring the cheapest workers, offsite fabricators that invest in apprenticeships and training will never be able to compete with contractors that hire cheap labor off the street. Because of this, a decision not to apply prevailing wage to custom fabrication is, in fact, a de facto policy to support the creation of low wage, no-benefit jobs.”
4. Opponent Arguments:
The Construction Employers’ Association is opposed to the measure, arguing that “in addition to running counter to both published case law and the Davis-Bacon Act, the measure is unimplementable, likely unconstitutional, will lead to dramatic cost increases for public works projects, and should have the unintended consequence of pushing fabrication to other states and countries where California has no jurisdiction.”
Regarding costs, CEA argues, “The prevailing wage rate for a sheet metal worker in San Francisco is approximately $107 per hour, versus approximately $88 per hour in Fresno. The average non-union manufacturing rate in California is approximately $30 per hour. Per SB 830, workers who assemble products for the “execution of a contract” in San Francisco will be entitled to $107 per hour, regardless of if the fabrication work is performed in Fresno, or if it’s done non-union. The substantial cost increases necessitated by this measure will be borne by public agencies and ultimately taxpayers. Further, to the extent that SB 830 pushes manufacturing to other states and countries, where California has no jurisdiction, California’s economy and workforce will suffer”
Regarding enforcement, CEA argues, “There is no practical way for public entities or prime contractors to enforce prevailing wage requirements for off-site fabrication. First, California cannot force SB 830 requirements for work performed outside of the state, nor is it clear that the state can mandate that someone in Boise or Tijuana receive California prevailing wages. Were California to create an artificial barrier to entry for products manufactured out-of-state, because workers in those states are not paid California prevailing wages, the law would likely run afoul of the Dormant Commerce Clause which is intended to prevent the imposition of protectionist state policies that favor state business at the expense of out-of-state business.
Additionally, they argue, “because fabrication shops typically fabricate products for public and private works concurrently, it would be difficult for subcontractors to track payroll. Presumably these shops would need to have a public works wage rate and a private wage rate because no private developer would select parts from a manufacturer with an hourly wage rate of $107. As a result, it would be difficult to resolve worker disputes concerning hourly wages because workers are not confined to a single public works location, e.g. a physical construction site. These disputes will ultimately delay payments by general contractors to subcontractors because of joint and several liability.”
Further, although SB 830 would seemingly level the playing field between signatory sheet metal contractors, who are obligated to pay a higher shop rate pursuant to their collective bargaining agreements, and non-union sheet metal subcontractors who are bound to a shop rate, the effect would likely be quite different. Invariably, union workers used to receiving higher public works wages would elect not to perform private work, so all of that work would go non-union. In effect, the union signatory sheet metal industry would cede the private market.”
Additional opposition from the Western Electrical Contractors Association notes that, the logic proposed for this expansion “will eventually apply to ALL construction materials utilized on a public works project.” WECA believes this change is misguided and will add complexity for manufacturers and additional cost to taxpayers who “foot the bill” for public construction.
5. Prior Legislation:
AB 1851 (Rivas, Chapter 764, Statutes of 2022) expanded the definition of “public works” to include on-hauling of materials used for paving, grading, and fill onto a public works site and requires workers performing this work to be subject to prevailing wage requirements.
SUPPORT
Western State Council of Sheet Metal Workers (Sponsor)
OPPOSITION
Construction Employers’ Association
Western Electrical Contractors Association
-- END --
Discussed in Hearing
1MIN
Assembly Floor
18MIN
Assembly Standing Committee on Labor and Employment
3MIN
Senate Floor
17MIN
Senate Standing Committee on Labor, Public Employment and Retirement
Bill Author
Bill Co-Author(s):
