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New Law Imposes Potential Penalties for Contracts Subject to Prevailing Wages

Client Alert

Effective immediately, local government agencies may be forced to pay penalties for failing to comply with new requirements to ensure compliance with prevailing wage laws.  These changes are part of SB 96, which was signed into law on June 27, 2017.

The new requirements are triggered whenever the agency enters into a public works contract, as defined by the Labor Code, and:

  • The contract is for more than $25,000 and is for construction, alteration, demolition, installation, or repair work; or
  • The contract is for more than $15,000 and is for maintenance work.

If an agency is entering into one of these contracts, it must satisfy the following requirements:

  • The agency may not enter into a contract with a contractor or subcontractor that is not registered with the DIR.  A contractor’s registration status can be checked here.
  • The agency must notify the DIR of the contract, by filing Form PWC-100, within 30 days of awarding the contract, or before the start of the project, whichever is earlier (previously, agencies had 5 days to notify the DIR). Form PWC-100 can be filed electronically, here.
  • The agency must withhold final payment to the contractor until at least 30 days after notifying the DIR of the contract.

Failure to comply with any of these requirements may subject the city to a penalty of $100 per day, up to a total of $10,000.  If the Labor Commissioner determines that the agency willfully violated one of these regulations for 2 or more contracts within a 12-month period, the agency will be ineligible to receive state funding or financial assistance for any construction project for one year.

For further information, please contact Tiffany Israel or Brian Wright Bushman from Aleshire & Wynder, LLP’s Contracts and Public Works Practice Group at (949) 223-1170.

Disclaimer:  Aleshire & Wynder, LLP legal alerts are not intended as legal advice.  Additional facts or future developments may affect subjects contained herein.  Please seek legal advice before acting or relying upon any information in this communication.