New Tax, Registration, Regulations For Public Works Contractors
California’s Department of Industrial Relations (DIR) recently announced that they are establishing a new public works program to replace the Compliance Monitoring Unit and Labor Compliance Program requirements for bond-funded and other public works projects. The legislation became effective July 1st, of this year, it launched a new set of regulations for public works contractors and subcontractors, using the DIR’s new online application, and a new tax disguised as a fee of $300, “effective this year” and paid “thereafter.”
These new regulations were designed to deal with general contractors and their subs, but as they will, things happened in Sacramento, including Caltrans contract compliance officers reportedly ruling that the contractor rules should also apply to permitted motor carrier truckers, who don’t have contractor licenses (or even want them) to haul equipment and materials at, on and off public works sites.
Apparently, both Caltrans Labor Compliance and DIR Division of Labor Standards and Enforcement staff has been telling our members they have to register and pay this new fee to work on any public works job. Here’s the rub…if they try to register they can’t because they don’t meet the requirements because they aren’t contractors or subcontractors by definition, including the state contractor’s license code. Contractors may own trucks and hire truck drivers and need a license and bond and even a motor carrier permit, but motor carriers do not need a contractor’s license or bond (with the exception of truck brokers).
CCTA has tackled this issue head-on – see the association’s letter to the DIR asking for clarifications on opposite page for the details.
How it Happened
The new rules were enacted due to passage of Senate Bill 854, a “trailer” bill passed along with the state budget and signed by Gov. Brown on June 20th of this year with an emergency provision which means it takes effect when it is signed and in this case that was immediately.
The new program will cover all publicly funded projects in the state rather than just selected categories of projects. The Labor Commissioner’s Office will continue to monitor and enforce prevailing wage requirements, just with a different source of revenue – a nonrefundable $300 “fee” required when a public works contractor registers on the DIR web site where the process starts at: (https://efiling.dir.ca.gov/PWCR/ActionServlet?action=displayPWCRegistrationForm)
While the registration opened July 1, these provisions will not apply to any bid proposal submitted before March 1, 2015 and any contract for public work entered into on or after April 1, 2015.
Once registration becomes mandatory, contractors will also be subject to penalties for bidding or working on public works without being registered and awarding agencies must use only the contractors registered with the state from a list of registered contractors on its Internet Web site.
The registration tax is just the beginning as the new law requires an annual renewal each July 1st and there will be another and likely higher renewal fee each year thereafter.
In addition to information about your company and its qualifications, requirements include that you maintain workers’ compensation coverage for all employees and only hire subcontractors who are registered public works contractors. They also require information on your Contractors State License Board number(s).
In addition, contractors must not be debarred from working on public works by the state or federal government and have no delinquent wage or penalty assessments due to any enforcement agency or employee. Also see story on page 19, New Presidential Order Affects Contractors.
Protections for Contractors
There are surprisingly some protections built in for contractors, including:
- A contract with an unregistered contractor or subcontractor is subject to cancellation but is not void as to past work.
- A contractor whose registration has lapsed will have a 90-day grace period to pay a late fee and renew.
- An inadvertent listing of unregistered subcontractor on a bid will not necessarily invalidate that bid as unregistered contractors or subcontractors can be replaced with one who is registered.
- Contractors won’t be in violation for working on a private job that is later determined to be “public work” (for example, public funds wind up in the project).
CCTA will be keeping an eye on this process and we will report back to you on our progress in getting DIR to back off the trucking industry.
In related news, also effective July 1, a prime contractor will be required to include the license number of a listed subcontractor when submitting a bid on any public work in California.
This is in addition to the name and location of the place of business of the subcontractor which is already required by current law. Public agencies are required to provide in the specifications or in the general conditions under which bids will be received that any person making a bid shall include a listed subcontractor’s license number.
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