California’s prevailing wage law, set forth in the California Labor Code, provides that each worker employed by contractors or subcontractors on a public works project must be paid not less than the general prevailing wage rate for work of a similar character in the locality in which the work is performed. Prevailing wages are significantly higher than the minimum wage.
California legislature has recently passed laws that expand the scope of available remedies and time periods for enforcement as well as access to certain information in certified payroll records.
Previously, only the Labor Commissioner could obtain liquidated damages equal to the amount of unpaid wages owed and civil penalties, in addition to unpaid wages to workers for violations of the prevailing wage laws against an employer.
Under the new law, which amends Labor Code sections 1194.2 and 1197.1, in civil actions brought by joint labor-management committees against an employer for violations of prevailing wage laws, a court may award liquidated damages in addition to civil and criminal penalties, as well as the payment of unpaid wages, plus interest. In addition, the new law provides that a prevailing joint labor-management committee is entitled to its reasonable attorneys’ fees and costs incurred in bringing the action. As expected in California, there is no corresponding provision that entitles prevailing employers to an award of attorneys’ fees and costs.
In addition, the statute of limitations for issuing an assessment or commencement of an enforcement action against employer contractors for violations of the prevailing wage law has increased. The Labor Commissioner now has 18 months to issue a civil wage and penalty assessment to a contractor, a subcontractor, or both. The time limit of the assessment is 18 months after the filing of a valid notice of completion , or after acceptance of the public work, whichever occurred last. The deadline for a joint labor management committee to commence a civil lawsuit against an employer for violations of the prevailing wage laws is identical, 18 months from the filing of a completion notice or from acceptance of the public work, whichever occurred last.
Finally, California Labor Code Section 1776 requires contractors to maintain accurate payroll records relating to public works projects and to submit copies of certified payroll records upon request. The records produced to a joint labor-management committee were required to be redacted to remove names and social security numbers. Under the new law, only the redaction of social security numbers is required.
Liabilities for failure to comply with the prevailing wage laws include:
- 1) payment of unpaid wages;
- 2) liquidated damages;
- 3) penalties;
- 4) debarment for willful violations;
- 5) criminal liability; and
- 6) private actions by workers.
The contractor and subcontractor are jointly and severally liable for all amounts due – meaning that the Labor Commissioner can collect the amount due from the contractor, subcontractor or both.
Employer Contractors Responsibilities
Employers in the construction industry should:
- 1) determine at the onset if their construction contracts are subject to the prevailing wage;
- 2) ensure that workers are properly classified;
- 3) determine and pay appropriate prevailing wage rates and overtime rates to all workers; and
- 4) maintain and furnish appropriate records.
Vickie Grasu is a partner resident in the firm’s Los Angeles office focusing her practice on Labor and Employment litigation and administrative proceedings. Ms. Grasu has represented contractors, trade sub-contractors, construction managers and engineers in actions involving tort liability, breach of contract, and construction defect actions.