BILL NUMBER: AB 551 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 29, 2011
AMENDED IN SENATE JUNE 15, 2011
INTRODUCED BY Assembly Member Campos
FEBRUARY 16, 2011
An act to amend Section Sections
1775, 1776, and 1777.1 of the Labor Code, relating to public
contracts.
LEGISLATIVE COUNSEL'S DIGEST
AB 551, as amended, Campos. Public contracts: prevailing wage
requirements: violations.
Existing law generally requires that not less than the general
prevailing rate of per diem wages, as specified, be paid to workers
employed on a public work, as defined. Existing law requires a
contractor or subcontractor to submit, to the state or political
subdivision on whose behalf a public work is being performed, a
penalty of not more than $50 per calendar day, and not less than $10
per calendar day except in certain cases of a good faith mistake
, as provided and determined by the Labor Commissioner, for
violations of these prevailing wage provisions.
This bill would increase that maximum penalty to $100
$200 for each calendar day and would increase
the minimum penalty except in certain cases of a good faith
mistake to no less than $40 for each calendar day. The bill
would also increase the penalty assessed to contractors and
subcontractors with prior violations from $20 to $80, and from $30 to
$120 for willful violations.
Existing law requires each contractor and subcontractor performing
work on a public work to keep accurate payroll records regarding his
or her employees. Existing law requires that these records contain
the information specified by the Division of Labor Standards
Enforcement, and provides that a contractor or subcontractor has 10
days in which to comply after receipt of a written notice requesting
the records, or is subject to forfeiting a penalty of $25 for each
calendar day for each worker until strict compliance is effectuated.
This bill would increase the amount of that penalty to $100 for
each calendar day for each worker.
Under existing law, whenever a contractor or subcontractor
performing a public works project is found by the Labor Commissioner
to be in violation of certain provisions of law relating to payment
of prevailing wages, with intent to defraud, or in willful violation
of those provisions of law, the contractor or subcontractor or a
firm, corporation, partnership, or association in which the
contractor or subcontractor has a substantial interest is ineligible
to bid on or to receive a public works contract for specified periods
of time.
This bill would revise that provision to instead make a contractor
or subcontractor on a public works project that is found to have
committed 2 or more separate willful violations within a 3-year
period ineligible for a period of up to 3 years to either bid on or
be awarded a contract or perform work as a subcontractor of a public
works project.
The bill would also require, whenever a contractor or
subcontractor performing work on a public works project has failed to
provide a timely response to a request by the Division of
Apprenticeship Labor Standards Enforcement, the Division of
Apprenticeship Standards, or the awarding body to produce certified
payroll records, the Labor Commissioner to notify the contractor or
subcontractor that he or she will be subject to debarment if the
certified payroll records are not produced within 30 days after
receipt of the written notice, and would make the contractor or
subcontractor ineligible to bid on or be awarded a contract or
perform work as a subcontractor on a public works project for a
period of not less than one year and no more than three years, except
as specified.
Existing law also requires the Labor Commissioner, not less than
semiannually, to publish and distribute to awarding bodies a list of
contractors who are ineligible to bid on or be awarded a public works
contract, or to perform work as a subcontractor on a public works
project.
This bill would instead require the Labor Commissioner to publish
the list described above on the commissioner's Web site, to notify
the Contractors' State License Board when the list is updated, and to
at least annually notify awarding bodies of the availability of the
list of debarred contractors, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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 one hundred two hundred dollars
($100) ($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 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 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.
SEC. 2. Section 1776 of the Labor Code is amended to read:
1776. (a) Each contractor and subcontractor shall keep accurate
payroll records, showing the name, address, social security number,
work classification, straight time and overtime hours worked each day
and week, and the actual per diem wages paid to each journeyman,
apprentice, worker, or other employee employed by him or her in
connection with the public work. Each payroll record shall contain or
be verified by a written declaration that it is made under penalty
of perjury, stating both of the following:
(1) The information contained in the payroll record is true and
correct.
(2) The employer has complied with the requirements of Sections
1771, 1811, and 1815 for any work performed by his or her employees
on the public works project.
(b) The payroll records enumerated under subdivision (a) shall be
certified and shall be available for inspection at all reasonable
hours at the principal office of the contractor on the following
basis:
(1) A certified copy of an employee's payroll record shall be made
available for inspection or furnished to the employee or his or her
authorized representative on request.
(2) A certified copy of all payroll records enumerated in
subdivision (a) shall be made available for inspection or furnished
upon request to a representative of the body awarding the contract,
the Division of Labor Standards Enforcement, and the Division of
Apprenticeship Standards of the Department of Industrial Relations.
(3) A certified copy of all payroll records enumerated in
subdivision (a) shall be made available upon request by the public
for inspection or for copies thereof. However, a request by the
public shall be made through either the body awarding the contract,
the Division of Apprenticeship Standards, or the Division of Labor
Standards Enforcement. If the requested payroll records have not been
provided pursuant to paragraph (2), the requesting party shall,
prior to being provided the records, reimburse the costs of
preparation by the contractor, subcontractors, and the entity through
which the request was made. The public may not be given access to
the records at the principal office of the contractor.
(c) The certified payroll records shall be on forms provided by
the Division of Labor Standards Enforcement or shall contain the same
information as the forms provided by the division. The payroll
records may consist of printouts of payroll data that are maintained
as computer records, if the printouts contain the same information as
the forms provided by the division and the printouts are verified in
the manner specified in subdivision (a).
(d) A contractor or subcontractor shall file a certified copy of
the records enumerated in subdivision (a) with the entity that
requested the records within 10 days after receipt of a written
request.
(e) Any copy of records made available for inspection as copies
and furnished upon request to the public or any public agency by the
awarding body, the Division of Apprenticeship Standards, or the
Division of Labor Standards Enforcement shall be marked or
obliterated to prevent disclosure of an individual's name, address,
and social security number. The name and address of the contractor
awarded the contract or the subcontractor performing the contract
shall not be marked or obliterated. Any copy of records made
available for inspection by, or furnished to, a joint
labor-management committee established pursuant to the federal Labor
Management Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall be
marked or obliterated only to prevent disclosure of an individual's
name and social security number. A joint labor management committee
may maintain an action in a court of competent jurisdiction against
an employer who fails to comply with Section 1774. The court may
award restitution to an employee for unpaid wages and may award the
joint labor management committee reasonable attorney's fees and costs
incurred in maintaining the action. An action under this subdivision
may not be based on the employer's misclassification of the craft of
a worker on its certified payroll records. Nothing in this
subdivision limits any other available remedies for a violation of
this chapter.
(f) The contractor shall inform the body awarding the contract of
the location of the records enumerated under subdivision (a),
including the street address, city, and county, and shall, within
five working days, provide a notice of a change of location and
address.
(g) The contractor or subcontractor has 10 days in which to comply
subsequent to receipt of a written notice requesting the records
enumerated in subdivision (a). In the event that the contractor or
subcontractor fails to comply within the 10-day period, he or she
shall, as a penalty to the state or political subdivision on whose
behalf the contract is made or awarded, forfeit one hundred dollars
($100) for each calendar day, or portion thereof, for each worker,
until strict compliance is effectuated. Upon the request of the
Division of Apprenticeship Standards or the Division of Labor
Standards Enforcement, these penalties shall be withheld from
progress payments then due. A contractor is not subject to a penalty
assessment pursuant to this section due to the failure of a
subcontractor to comply with this section.
(h) The body awarding the contract shall cause to be inserted in
the contract stipulations to effectuate this section.
(i) The director shall adopt rules consistent with the California
Public Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1 of the Government Code) and the Information
Practices Act of 1977 (Title 1.8 (commencing with Section 1798) of
Part 4 of Division 3 of the Civil Code) governing the release of
these records, including the establishment of reasonable fees to be
charged for reproducing copies of records required by this section.
SEC. 3. Section 1777.1 of the Labor Code is amended to read:
1777.1. (a) Whenever a contractor or subcontractor performing a
public works project pursuant to this chapter is found by the Labor
Commissioner to be in violation of this chapter with intent to
defraud, except Section 1777.5, the contractor or subcontractor or a
firm, corporation, partnership, or association in which the
contractor or subcontractor has any interest is ineligible for a
period of not less than one year or more than three years to do
either of the following:
(1) Bid on or be awarded a contract for a public works project.
(2) Perform work as a subcontractor on a public works project.
(b) Whenever a contractor or subcontractor performing a public
works project pursuant to this chapter is found by the Labor
Commissioner to have committed two or more separate willful
violations of this chapter, except Section 1777.5, within a
three-year period, the contractor or subcontractor or a firm,
corporation, partnership, or association in which the contractor or
subcontractor has any interest is ineligible for a period up to three
years to do either of the following:
(1) Bid on or be awarded a contract for a public works project.
(2) Perform work as a subcontractor on a public works project.
(c) Whenever a contractor or subcontractor performing a public
works project has failed to provide a timely response to a request by
the Division of Labor Standards Enforcement, the Division of
Apprenticeship Standards, or the awarding body to produce certified
payroll records pursuant to Section 1776, the Labor Commissioner
shall notify the contractor or subcontractor that, in addition to any
other penalties provided by law, the contractor or subcontractor
will be subject to debarment under this section if the certified
payroll records are not produced within 30 days after receipt of the
written notice. If the commissioner finds that the contractor or
subcontractor has failed to comply with Section 1776 by that
deadline, unless the commissioner finds that the failure to comply
was due to circumstances outside the contractor's or subcontractor's
control, the contractor or subcontractor or a firm, corporation,
partnership, or association in which the contractor or subcontractor
has any interest is ineligible for a period of not less than one year
and not more than three years to do either of the following:
(1) Bid on or be awarded a contract for a public works project.
(2) Perform work as a subcontractor on a public works project.
(d) A willful violation occurs when the contractor or
subcontractor knew or reasonably should have known of his or her
obligations under the public works law and deliberately fails or
refuses to comply with its provisions.
(e) The Labor Commissioner shall publish on the commissioner's Web
site a list of contractors who 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 this chapter. The
list shall contain the name of the contractor, the Contractors'
State License Board license number of the contractor, and the
effective period of debarment of the contractor. Contractors shall be
added to the list upon issuance of a debarment order and the
commissioner shall also notify the Contractors' State License Board
when the list is updated. At least annually, the commissioner shall
notify awarding bodies of the availability of the list of debarred
contractors. The commissioner shall also place advertisements in
construction industry publications targeted to the contractors and
subcontractors, chosen by the commissioner, that state the effective
period of the debarment and the reason for debarment. The
advertisements shall appear one time for each debarment of a
contractor in each publication chosen by the commissioner. The
debarred contractor or subcontractor shall be liable to the
commissioner for the reasonable cost of the advertisements, not to
exceed five thousand dollars ($5,000). The amount paid to the
commissioner for the advertisements shall be credited against the
contractor's or subcontractor's obligation to pay civil fines or
penalties for the same willful violation of this chapter.
(f) For purposes of this section, "contractor or subcontractor"
means a firm, corporation, partnership, or association and its
responsible managing officer, as well as any supervisors, managers,
and officers found by the Labor Commissioner to be personally and
substantially responsible for the willful violation of this chapter.
(g) For the purposes of this section, the term "any interest"
means an interest in the entity bidding or performing work on the
public works project, whether as an owner, partner, officer, manager,
employee, agent, consultant, or representative. "Any interest"
includes, but is not limited to, all instances where the debarred
contractor or subcontractor receives payments, whether cash or any
other form of compensation, from any entity bidding or performing
work on the public works project, or enters into any contracts or
agreements with the entity bidding or performing work on the public
works project for services performed or to be performed for contracts
that have been or will be assigned or sublet, or for vehicles,
tools, equipment, or supplies that have been or will be sold, rented,
or leased during the period from the initiation of the debarment
proceedings until the end of the term of the debarment period. "Any
interest" does not include shares held in a publicly traded
corporation if the shares were not received as compensation after the
initiation of debarment from an entity bidding or performing work on
a public works project.
(h) For the purposes of this section, the term "entity" is defined
as a company, limited liability company, association, partnership,
sole proprietorship, limited liability partnership, corporation,
business trust, or organization.
(i) The Labor Commissioner shall adopt rules and regulations for
the administration and enforcement of this section.