The Electronic Certified Payroll Reporting Requirement Will Resume 8/1/2016
There are some very important changes being implemented by SB 854 for California contractors on January 1st, 2015. We understand that keeping up with new regulations and laws is a challenge so we have compiled this list of the 17 most important things you need to know about SB 854.
- Contractors wanting to bid or perform work on public jobs must pay a $300 registration fee to the DIR. This registration must be renewed annually
- SB 854 requires that contractors must have workers compensation coverage for all employees and may only use subcontractors who are registered public works contractors
- Contractors must have Contractors State License Board license if applicable to trade
- SB 854 states that contractors must have NO delinquent unpaid wage or penalty assessments owed to any employee of enforcement agency
- Contractors must not be under federal or state debarment
- Contractors must not be in prior violation of this registration requirement once it becomes effective. However for the first violation in a 12 month period, a contractor may still qualify for registration by paying an additional penalty
- SB 854 will ensure a list of registered contractors and subcontractors will be posted on the DIR website so that finding registered bodies to work with will be easier
- All contractors and subcontractors must furnish electronic certified payroll records directly to the Labor Commissioner (aka Division of Labor Standards Enforcement)
- The inadvertent listing of an unregistered subcontractor on a bid will not invalidate the bid
- A contract with an unregistered contractors or subcontractors is subject to cancellation but previous work is not void
- Unregistered bodies can be replaced with registered contractors and subcontractors
- There is a 90 day grace period after registration expires within which a late fee may be paid to renew registration
- Starting January 1st 2016 ALL public works projects over $1000 must submit certified payrolls to the DIR
- The requirement to use registered contractors and subcontractors begins March 1st 2015. This applies to all jobs bid after April 1st 2015
- Agencies are required to use CMU, Labor Compliance Programs or Project Labor Agreements
- Awarding bodies are required to submit PWC-100 for ALL public works projects
- ALL contractors and subcontractors are required to submit Certified Payroll Records in XML format
To find out how our new software LCPcertified can help you click HERE
To register in accordance with the new requirements of SB 854 click HERE
QUESTIONS AND ANSWERS FROM OUR SB 854 WORKSHOPS
Subcontractor to electrical contractors – bid on projects for agencies – how do we determine if a project is prevailing wage?
A: If working for a public agency – prison, firehouse, school, etc – if over $1000, triggers prevailing wage under Labor Code 1774. If someone says they’re exempt, have a reason to question that; charter cities may have different thresholds on dollar amount determination.
If Agency or Contractor insists that it’s not prevailing wage, get that in writing. So then you have that to show if ever have audit, etc.
What is DIR going to do at the ground level to enforce compliance?
A: Right now focusing enforcement not to go after those that make mistakes, helping honest workers and only going after the “bad actors.”
Orange County DA is the one that has perfected the process; DIR currently working with Riverside, San Bernardino, Santa Barbara counties to get their DAs the same. If public agencies don’t comply with the law, the law is going to get stricter.
How do you track those that cheat the system (shaving fringes or vacation benefits)?
A: First, the state will be aware of every project now because every subcontractor has to submit payroll electronically – and if no PWC 100 – the agency will get push back. Most honest contractors will push the agency to get the project in the system. Now there will be more data to do compliance.
Have to have baseline data coming in to notice any discrepancies. We are now getting more transparent in what is happening in the field and what is being submitted.
We have multiple locations, if we want to bid on a CA public works project, would we need to have our San Diego office register separately?
A: It depends on how your legal entity is structured. If it’s the same XYZ Inc in multiple states with one tax ID, you’re good. If you’re a conglomerate overseeing multiple companies, they each entity would need to re-register to work in CA.
Some General Contractors have requested to have the CPRs submitted directly to them, however others I have put into LCPcertified, have not asked for them. Do I now need to go back through and resubmit the old CPRs?
A: All projects awarded on/before April 1 will require the upload requirement; then if on a job still going by Jan 1, 2016, we would ask that CPRs continue to be uploaded to that point.
I have some that are CPRs in LCPcertified, but no one has requested them. So even if they haven’t requested them and it’s an open job, I need to go back and resubmit?
A: If it’s a job already going, no. If starts after April 1, then have to start submitting directly to state.
If project was awarded but not signed off by City Attorney til after April 1, does it still need to be submitted to the state in April?
A: If project is prior to April 1, then answer is no.
How willing is the DIR to negotiate the fines?
A: Depends – if you get the $200 fine, that’s really saying you willfully violated the statute. Code 1725 has thresholds within it, and if fines were caught early there can be mitigation.
If an honest mistake, and caught and fixed quickly, sometimes they will waive it. But more likely you will be accessed $40 a day per worker. However if you ignore it and continue full job, there isn’t a lot of sympathy.
How do you award a CA project to one of the non-registered Primes on the bidder’s list?
A: You will have the ability to drive the agency to do the right thing – notify them of the non-registered contractors. You can submit a complaint to the DIR and say this Prime was awarded this contract without being registered with the state.
Wanted to confirm, Deborah said 10 working days to submit the paperwork.
A: 1776 says allow 10 working days to submit CPR. DIR may send second notice, but it will have the language in 30 days you could be debarred.
DAS 142, we as electrical sub, we get calls to perform emergency services. So have an issue providing 72 hour notice for apprenticeship, what do we do to comply with DAS 142 language?
A: you do the best you can to try to comply with the DAS 142 for dispatch of award. Still submit the paperwork, even if you may not have the timeframe, but you’re showing that you are making a diligent effort to comply.
We do asbestos and lead inspections, is there a craft code for it?
A: Need to ask the legal units. But for asbestos, if you are doing the testing without cutting into any structures, won’t be covered by prevailing wage and won’t be required to be registered.
Does a contractor need to register if we are not bidding, but hired to work under a contractor who bid?
A: If working on a public works bid, if there is a requirement for that contractor to list you as one of the subcontractors, you will need to be registered for bids going out on/after March 1st.
If landscape maintenance is covered by prevailing wage, then why do most public agencies have the clause that they have the right to open the bid privately?
A: That’s a public rights contract code. If the dollar value of the project is small enough, they don’t have to comply with the public bid process.
1722.1 labor code – if you are subject to the public works statute, you are subject to registration.
For JOC, Job Order Contracts, does DAS 140/142 and the PWC 100 go by the main total JOC contract amount between the awarding body and the contractor, or is it by the NTP or list to proceed amount that is issued by the awarding body?
A: Anytime talking about the PWC 100, going to say give us your best information. What they anticipate that job to be under the JOC master agreements, if going to be over $30,000 that could trigger the apprenticeship requirements. Play it safe and abide by code 1775 and the DAS 140 notice.
If we are the subcontractors and our approved bid is less than $30,000, but the overall contract is more than $30,000, would we be required to have apprentices on the job?
A: Yes. It’s going to be based off that prime contract value.
What if a contractor fails to renew registration during a project and does not renew within 90 days grace period, and has had violation in past 12 months?
A: They will not be allowed to register. If already paid the $2,000 penalty, and had a violation within that time period, will not be able to register. It would be like dealing with a debarred contractor.
What does it mean for a contract to be subject to cancellation, not voidable, or unlawful in the event that the agency or contractor fails to comply?
A: 1771.1 of labor code, starts the 24 hour clock for that subcontractor to register, and they will be subject to the $2,000 penalty and the $300 registration fee. If they can meet the good-standing clause of the project, then they can continue on the project.
The contract won’t be automatically rejected by being non-responsive. There will be a 24 hour window where the Prime can tell the sub that they can fix it by registering and paying the money.
At this time, are contractors required to electronically submit to the DIR eCPR for state and federal projects with CalTrans?
A: CalTrans is an exception, we will not be accepting CPRs after April 1 for those projects.
Does an owner/operator have to pay himself for a public works job, normally he is on a salary?
A: Does an owner/operator have to pay prevailing wages? Yes. 1774 says all workmen have to be paid a prevailing wage. We’re going to look at the value of your contract, fixed costs, all other expenses, profit lost, and then if you severely underbid the project, there will be penalties.
We registered and paid in March 2014, and have not received our registration number, how do we get this?
A: If you paid by credit card, you can use the search function and put in your name and it will show up.
Is the registration still valid through June 1, 2015?
A: Yes, if paid by credit card, registration occurs upon confirmation of payment. If by company check, can take up to 8 weeks.
We are an awarding agency, we understand that maintenance is covered by prevailing wage, we have difficulty finding what is covered?
A: Refer to Title 8 of the CA code of regulations, section 16000 and it defines what maintenance is, and specifically includes landscaping. Or look at Coverage Determinations, which is on the DIR website.
A lot of questions DIR is getting regards pest control. If you are a stand-alone company and all you do is pest control that is not subject to prevailing wages. However, if need to cut into material that will trigger prevailing wage.
If the agency finds an error in payroll reports, does the contractor have the ability to change the payroll report or submit a correction?
A: Yes, as soon as you find there may be an error, fix it. You will have an amended certified payroll record.
You will be able to submit a superseded CPR for the same week, into the eCPR system. We are going live with our new system April 17th.
Do we pay all total fringe amount if we pay for health insurance and vacation to our employees?
A: Title 8, section 16000 talks about employee contributions. Prevailing wages cut into three components: basic hourly rate, fringe benefit rate, training fund contribution, and then total hourly rate.
You can take credit for the health insurance used, not the full credit if working on multiple projects.
The DIR used to have a system called MyLCM, but is now called eCPR. It will be the repository for all certified payroll resulting from public works.
First phase is to create the electronic form and upload to the state’s site. The second phase will be a direct upload to the state.
Does SAGE have the appropriate interface with LCPtracker or state?
A: LCPtracker has had SAGE working in the past, but right now best process is through our DPI service.
If you’re a prime contractor, and given a contract and required to solicit additional contractors, so are you the awarding body?
A: You are not the awarding body for the purposes of submitting a PWC 100. But do have an obligation to let your subcontractors know they have an obligation to comply with prevailing wage, and submit payrolls to the DIR.
Are trucking companies/owners required to be registered?
A: The actual subcontractor, trucking company, would need to be registered. Owners/operators are not exempt from prevailing wage.
Will the trucker still be required to submit electronic CPR?
A: Yes, they will need to submit electronic payroll as well.
Is the subcontractor required to submit the CPR or is it going to go through the prime and the GC?
A: In the first phase through the DIR, it will only be a functionality for subcontractors. The next phase, but don’t know when the DIR will release this, will be that the prime or GC can submit everything in a package.
Is the awarding agency going to have access to the eCPR data to print it?
A: If you’re submitting it to the agency, they should be able to view and print it.
If submitting directly to DIR, will the agency be able to have full access to the entire CPR – fringe benefits, training contributions, etc – all that they need to do their own due diligence.
A: As of today, that function is not available, but the plan is to make that into the next phase of the DIR development.
What is the roll out going to be next week?
A: Target is for the first week of May to be able to submit pdfs to the state. The change to registration fees will begin in mid-May. DIR is currently working with LCPtracker on the XML upload directly to the state.
I have 4 companies under a parent PCS, would all of those need to be registered or just under the parent company?
A: If they have separate CSLB numbers, they are separate entities and need to be registered separately. If it’s only one CSLB number, and the other companies are smaller branches of the parent company, then it will just be one registration.
Between April 2015 and January 2016, nothing is required to be submitted online?
A: Any project that bids as of March 1, 2015, will be required to be submitted online this year. If working on a project currently that will continue through January 2016, then you will need to start submitting electronically starting next year.
What if our insurance information renewed or changed, how do we update that information?
A: You need to update with the CSLB website and then use that when you’re registering. But if you’re registering your old policy information, use whatever will match the current CSLB information.
Certified payroll beginning 4/1/2015, what do we need to upload? Is it weekly certified payroll?
A: Question is do I need to submit my certified payroll weekly to the DIR? Is there a timeframe of when the DIR wants it submitted in a timely manner?
You can do them on a weekly basis, unless you want to accumulate them and submit on a monthly basis. With the new system, there will be a button where you can choose your week end date.
At what point is a subcontractor considered delinquent on a payroll submission?
A: It depends on how active the agency wants to be in enforcing the codes. Has to do with the policy of the agency. We usually give the contractors a 2 week window to submit the weekly payrolls, so there will be a slight lag.
There hasn’t been a rule that covers that put into the procedures yet.
If we have received notice of investigation from the DIR and submitted everything to them, when do I hear back that it is closed? It has been 2 months.
A: You should hear back whether the case is closed or not. It depends on the notice of completion date to determine when the investigation will happen after the notice. They have 18 months to investigate.
You can also call the assigned deputy on the notice to let them know what’s going on.
When a union contractor, do we follow the union rates or the prevailing wage rates, and can we be penalized for using the union rate even though it is higher than the prevailing wage?
A: Prevailing wage is a minimum wage statute. So if you have a union agreement to pay more, that’s a contractual obligation. The DIR wouldn’t be involved in that. But if you have a union bargaining agreement that says you can pay someone less than the prevailing wage rate that is not going to be allowed. Think of the DIR rates as a minimum wage rate.
Why do you not get a receipt when registering online? We should be emailed a receipt for our records.
A: Yes, the confirmation number will be what you receive when you register on the website. For receipt, you would need to look at your card provider.
Will prime contractors and subcontractors both need to upload certified payroll to the state? As a prime, I want to be able to review the submissions of the sub.
A: There will be a future implementation of that ability.
How can a prime contractor be responsible if we can’t see the information submitted?
A: You’re responsible right now and it’s not being uploaded. So if you want to be diligent, you’re going to need to request a copy from your subcontractors.
In May, the options are using the existing pdf form, use LCPtracker to streamline it to go across to the state, or you can go into the i-form and manually key it in.