The following Q&A were from a recent Best Best & Krieger LLP free webinar “SB 96: Department of Industrial Relations’ New Prevailing Wage Penalties.” The webinar was presented as part of an ongoing series.

Q:   What dollar amount for a project triggers the filing of form PWC-100?

A:   Under SB 96, the dollar amount that triggers the filing is:

1. $25,000 if the project involves construction, alteration, installation, demolition or repair, and
2. $15,000 if the project involves maintenance.

Projects under these amounts are exempt from the filing requirement.

Q:   Please explain the responsive/responsibility distinction.

A:   “Responsive” means that the bid does everything the bid instructions require. “Responsible” means that the bidder is qualified to perform the work. “Responsiveness” is almost always determined just by reviewing the bid form. “Responsibility” may be determined outside the bid, such as by checking references. A bidder determined to be not responsible has a right to a hearing, but there is no right to a hearing for a non-responsive bid. In the context of the webinar, an unregistered contractor is not qualified to perform public work. The bid might be rejected as non-responsive or not responsible (or both), depending on the circumstances. However, if the bid form requires listing a registration number, and the bidder fails to do so, the bid is not responsive.

Q:   What if the original scope of work changes, and an unlisted sub is brought on to the project after award? Or the percentage of sub work increases past 0.5 percent?

A:   All subcontractors performing work on a project must be registered. If there is a change order for extra work that requires hiring a new subcontractor, then that subcontractor must be registered before performing any work. All unlisted subcontractors must be registered; a subcontractor that is performing less than 0.5 percent must still be registered, even if not listed. There is no requirement to re-list subcontractors or to re-file the Form PWC-100.

Q:   What if the original contract amount is below the $25,000/$15,000 threshold, but change orders increase the project cost above it? Can we retroactively register?

A:   There is no requirement to retroactively register. However, keep in mind that the threshold amounts are based on the overall project. Public agencies should not split a project to come under the threshold and then change order for the subsequent work.

Q:   PWC-100 form: Does it apply to a pre-SB 96 award, such as an older, former redevelopment agency project approved years ago but only now being built? Is a PWC-100 required?

A:   The PWC-100 requirement pre-dates SB 96. It is an existing requirement; only the penalties for noncompliance are new. Starting Jan. 1, contractors will be required to file certified payroll records electronically even on projects that pre-date the registration program. As a practical matter, to file electronically, there must be a Form PWC-100 in Department of Industrial Relation’s files. So, yes, the PWC-100 will need to be filed. (As an aside, if the project involves former redevelopment agency funds used for affordable housing, then you may want to check with your legal counsel as to whether the funds are subject to an exception under Labor Code 1720(c).)

Q:   Is it a best practice to get payroll ahead of time if the project amount is under the exemption threshold?

A:   It is a business decision for staff. Some agencies require copies of certified payroll records to be submitted with payment requests. Keep in mind that DIR may issue an order stopping your contractor’s work if the contractor is not paying prevailing wages.

Q:   Are all inspectors subject to prevailing wage? Why on the “public works” slide is inspection included?

A:   Labor Code section 1720(a) states that “public works” includes construction, and that construction includes “work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work.” To the extent inspectors are performing work that is part of a construction project, including during the preconstruction phase, the work may be subject to prevailing wage.

Q:   Are maintenance jobs performed by prison crews subject to prevailing wage? I’m asking about clearing trees for fire prevention.

A:   Clearing trees would generally be a prevailing wage project. However, in at least one other circumstance, DIR has found that a specific statutory wage scheme applies instead of prevailing wage. Because the California Conservation Corps serves a specific job-training purpose and has established wages, DIR found that the CCC is not subject to prevailing wage. Your legal counsel should assess whether there is a law, regulation, policy, etc. establishing the wage rates for the prison crews and whether this program takes precedence over prevailing wage requirements.

Q:   Do you recommend that public agencies require contractors to sign a certification, either at the time of the payment request or at end of project, that all work was performed by a prime contractor and subs who held current DIR-registrations?

A:   Public agencies cannot allow any unregistered subcontractors to perform work. Requiring verification/certification to accompany payroll requests may be a good way to help ensure that all subs are registered.

Q:   Outside of the ways to mitigate risk through contracting and pre-bidding measures, what other responsibilities is the agency held to?

A:   An exhaustive list of duties is beyond the scope of this posting, but there are a few key points. Under Labor Code section 1726, public agencies shall “take cognizance” of prevailing wage violations committed in the execution of their contracts and “promptly report” any suspected violations to the Labor Commissioner. The agency may also withhold contract payments. Additionally, under section 1726, a public agency has a duty not to affirmatively misrepresent that a project is subject to prevailing wage and a duty to notify a contractor of any DIR determination that the work covered by a contract is subject to prevailing wage. In terms of certified payroll records, the public agency has a duty under Labor Code section 1776 to respond to public records requests for the certified payroll records by requesting the records from the contractor. If the contractor fails to provide the records within 10 days, the Labor Commissioner may order the agency to withhold funds that are due to the contractor. Records disclosed may need to be redacted.

Q:   Since there’s no prior violation for the $2,000 penalty registration, does that mean it can only be waived once?

A:   Yes. Multiple violations may result in a contractor being debarred from performing public works.

Q:   Does the requirement that all work on the job be done by registered subs apply to a sub whose work is under 0.5 percent of the contract amount?

A:   Yes. The registration requirement applies to all subcontractors performing public work, even if the subcontractor is not listed in the bid.

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