Reminder: Update Your California Skilled and Trained Workforce Compliance Procedures for 2020

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As we begin the new year, it is a good time to look at requirements that change from year to year. In this article we look at certain public works requirements in California. Many public works contractors are already aware that over the last few years, California has enacted legislation authorizing different project delivery methods and in the process began incorporating escalated requirements, as a percentage of the workforce, a “Skilled and Trained” ("S&T") workforce requirement. This S&T workforce requirement mandates that contractors working on specific types of projects authorized by the applicable delivery method, employ a certain percentage of apprenticeship program graduates for those engaged in construction apprenticeship occupations. The primary project delivery methods included in the S&T workforce requirements are Lease-leaseback for school projects, Best Value, and Design-Build.

According to California law, all workers employed in an apprentice occupation working on covered projects must be either a “skilled journeyperson” or an apprentice that is registered in an approved apprenticeship program. A “skilled journeyperson” is defined by statute as a worker who either: (i) Graduated from an apprentice program for the applicable occupation that was approved by the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations (“Chief”), or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor; or, (ii) has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the Chief. Starting January 1, the workforce S&T percentage requirement increased to 60%.

General contractors working on these qualified projects must submit monthly reports which demonstrate compliance with the S&T workforce requirements. If a general contractor fails to submit a monthly report, the awarding body can withhold payment until a complete report is submitted. However, if the general contractor’s failure to submit a complete report is due to a subcontractor’s failure to submit the required information, the awarding body will be limited to withholding an amount up to 150% of the value of the monthly billing for that subcontractor. Similarly, if the monthly report demonstrates non-compliance by the general contractor or any of its subcontractors, the awarding body will again be limited to withholding an amount up to 150% of the value of the monthly billing for the non-compliant contractor or subcontractor. There are other penalties and requirements which can be determined by reviewing the applicable law and regulations governing the project. Be aware, general contractors will be liable for penalties issued against their subcontractors if the general contractor had knowledge of the subcontractor’s failure to comply or if the general contractor fails to comply with statutory requirements.

It is necessary that general contractors and subcontractors understand their obligations on S&T workforce projects, and have procedures in place for compliance. The start of the new year is an excellent time to review your current procedures for compliance and to assure you will be in compliance with the 2020 requirements. We predict in the future that the California legislature is likely to expand the law to cover more projects as well as the lowering of the dollar value threshold of a project for which these S&T workforce requirements will be imposed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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