For Contractors Bidding on California
State and Local Public Projects
In addition to general California state and federal law applicable to performing work on private construction jobs, contractors bidding to prime contractors, developers or California state or local public agencies and performing work on California state or local public agency projects MUST COMPLY with ADDITIONAL laws governing award and performance of work on such projects.
Some laws to be aware of when bidding on and performing California public construction contracts are:
State Contractor License Laws: Business and Professions Code sections 7026 and 7028.15 specify that all contractors submitting bids must be properly licensed at the time bids are submitted (this includes all subcontractors). Labor Code section 1021 provides for penalties of $100 per worker employed per day for contracting without the properCalifornia State license.
Subletting and Subcontracting Law: Public Contract Code section 4100 et seq. (the Subletting and Subcontracting Fair Practices Act) requires that the prime contractor list in the bid proposal the name, location of the place of business and license number of each subcontractor, and prohibits the substitution of any listed subcontractor without the formal consent of the awarding authority.
Prevailing Wage Laws: Labor Code section 1771, 1773, 1773.1 require payment of not less than the per diem prevailing wage as determined by the State Department of Industrial Relations to all workers employed on public works. This wage includes employer payments for health and welfare, pension, vacation, travel time and subsistence pay and apprenticeship or other training programs authorized by section 3093. Contractors found in violation are subject to payment of all back wages found owing and penalties of up to $50 per worker per day and/or debarment pursuant to Labor Code section 1777.1.
Overtime pay: Labor Code section 1815 requires payment of overtime pay for all work in excess of 8 hours per day at not less than 1.5 times the basic rate of pay. Labor Code section 1813 assesses the payment of $25 per worker per day for violation of overtime requirements.
Itemized Wage Statement: Labor Code section 226 et seq. requires that all employers provide their employees with an itemized statement of the employees' payroll deductions. The itemized statement or "checkstub" must be provided with the employees' paychecks or if the employees are paid in cash, a written statement must be provided with the cash paid. Violations of section 226 subject the employer to a $100 per worker per day period penalty.
Unemployment Insurance: Unemployment Insurance Code sections 13090 and 2101 make it unlawful for an employer to fail to report information required by law to the Employment Development Department with false information. This sort of violation commonly occurs when a contractor fails to withhold payroll taxes from his employees and then fails to report wages paid to employees on the Employer's Quarterly Tax Returns. Violations of these statutes are crime and subject violators to substantial civil penalties.
Tax Withholding: Revenue and Taxation Codes sections 177299.8, 18682.6 and 24447 make it unlawful for an employer to fail to withhold taxes and fail to provide employees with the form W-2.
Anti-Kickback: Labor Code sections 1777 and 1778 prohibit the taking of any portion of the wages of any workman or working subcontractor in connection with services rendered on any public work. Such violation may constitute a felony.
Certified Payroll Records Required: Labor Code section 1776 requires that all contractors or subcontractors maintain and submit upon request of the public agency certified payroll records for all construction employees. Records must be furnished within 10 days of the public agency's request or the contractor or subcontractor is subject to $25 per worker per day penalty.
Workers Compensation Coverage Required: Labor Code section 1861 requires that each contractor to whom a public works contract is awarded maintain workers compensation insurance for all construction worker employed on the public works jobs and file a statement with the awarding body attesting to such coverage.
Apprentices on Public Works: Labor Code section 1777.5 requires all contractors and subcontractors on public works jobs to: (1) Notify in writing the local apprenticeship committee for each applicable craft of the contractor's public contract award within 10 days of contract award including information specified on the DAS 140 form (available from the California Division of Apprenticeship Standards); (2) Request dispatch of and employ state-registered apprentices in accordance with the required 1:5 ratio of apprentice to journeyman hours; and (3) Make apprenticeship contributions to either the local Apprenticeship Committee or the California Apprenticeship Council. Violations may result in being denied the right to bid on public works projects for one year and civil penalties of $100 per calendar day of non-compliance.
Immigration Law: For all contractors that violate the immigration law, civil penalties (depending on the violation) are from $250 to $10,000 per alien employed. In the event of a pattern, six months imprisonment is possible.
Minority and Women Business Opportunities: In accordance with Public Contract Code section 10108.5, contractors shall ensure that minority and women business enterprises have the maximum opportunity to participate in the performance of contracts and subcontracts.
Health and Safety Laws: Labor Code section 6400 et seq. requires that all employers furnish a safe and healthful place of employment; establish, implement and maintain an effective injury prevention program; and comply with all applicable occupational safety and health standards.
Strict compliance with all of the above public contracting laws benefit responsible contractors and the tax-paying public alike. Contractors are assured of a "level playing field" in which to bid. This results in the most responsible contractors bidding and performing public construction jobs and provides the highest quality product for each tax dollar spent.
For further information on contractor responsibilities on public works contracts, you may contact any of the state agencies listed below:
California Division of Apprenticeship Standards (DAS)
P.O. Box 420603
San Francisco, CA 94142
California Division of Labor Standards Enforcement (DLSE)
Public Works Unit
2031 Howe Avenue, Suite 100
Sacramento, CA 95825
California Division of Labor Statistics and Research (DLSR)
Prevailing Wage Unit
455 Golden Gate Ave, 8th Floor
San Francisco, CA 94102
California Division of Workers Compensation
Information & Assistance
455 Golden Gate Ave, 9th Floor
San Francisco, CA 94102
California Division of Occupational Safety & Health (DOSH)
Cal OSHA Consultation Services–Information
455 Golden Gate Ave, 10th Floor
San Francisco, CA 94102
California State Contractors License Board (CSLB)
9835 Goethe Road
Sacramento, CA 95827