On March 17, 2017, the Department of Industrial Relations (DIR) submitted Budget Trailer Bill 502. Budget Trailer Bill 502 would provide changes to the existing contractor registration requirements, as well as changes to the requirement for agencies to provide the DIR with notice of pending public works projects, as initially required by SB 854. SB 854 established the requirement that all public works contractors register with the DIR, and also established a prevailing wage monitoring and enforcement mechanisms. See our previous article on the changes here.

Budget Trailer bill 502 proposes to increase the registration dollar thresholds that were set in SB 854. Contractor registration would be required for new construction that is $25,000, previously $1,000, and $15,000 for maintenance projects. The Budget Trailer bill would also create new civil penalties that would be imposed by the State Labor Commissioner. Any contractors or subcontractors that do not register with the DIR will be fined $100 per day, with a limit of $8,000. Additional fines of $100 per day, up to $10,000, would apply to any contractors who employ unregistered subcontractors. This could also result in the loss of registration for the current fiscal year and disqualification from registering in the following year. Moreover, a first time violation would not result in the loss of registration if it was unintentional.

In addition to changes in penalties, if a contractor or subcontractor is found to be unregistered then the State Labor Commissioner will now be required to issue a stop order. The stop order would require the contractor or subcontractor to stop work on all public works until they have registered with the DIR. If a stop order is issued it will be effective immediately, but will be subject to appeal. Any and all parties, including the contractor, subcontractor, or the public agency may appeal. Moreover, if the stop order is disregarded then the bill introduces a new criminal penalty. The criminal penalty would be a misdemeanor punishable by a maximum of 60 days in jail or a fine not exceeding $10,000.

There are also changes in the requirement for furnishing records of registration to the State Labor Commissioner. If a contractor or subcontractor is working on a project that exceeds the minimum threshold requirements, $25,000 for new construction and $15,000 for maintenance, then they must maintain registration records for at least three years after work in completed on a project. This requirement applies to all contracts, new or ongoing, on or after January 1, 2016.

Finally, Budget Trailer bill 502 also provides public agencies with additional time to report eligible public works projects to DIR. Agencies will now have 30 days from contract award instead of five days to provide the DIR with notice of new public works projects . Also, agencies will have to report the registration number in addition to the name of the contractor. If agencies fail to provide the notice required, or enter into a contract with an unregistered contractor or subcontractor, then they will be subject to a fine of $100 per day with a limit of $10,000 per project. Moreover, if a public agency is found to have violations on two or more public works projects, it will become ineligible for state funding for a construction project for a year.