Published date: 06/18/2021

So, you won yourself a bid on a publicly funded project, but not just any publicly funded project… You won yourself construction work in the state of California.

California is known for things like the Golden Gate Bridge, year-round sunny weather, and, of course, being the state with one of the most stringent prevailing wage and certified payroll reporting requirements.

If you’ve already secured a California public project or are considering taking one on, it might not be a bad idea to give this Q&A article on the state’s compliance fundamentals a good once-over.  

Let’s get started…

What is California prevailing wage?

Similar to the federal Davis-Bacon requirement, California prevailing wage legislation mandates the payment of local prevailing wages on public works projects.

This means any time state funds are involved in construction, alteration, or repair work done on public buildings or any other public works, California prevailing wage and certified payroll requirements apply.

You can also check out this quick video explaining California prevailing wage in less than 2 minutes.

Who needs to comply with this law?

If you’re an awarding body or contractor on a project that is fully or partially funded by state funds, you need to comply with California prevailing wage requirements.

Again, much like Davis-Bacon covered work, if you’re an awarding body or public agency (these terms are sometimes used interchangeably), you’re responsible for enforcing compliance by making sure contractors are paying their workers prevailing wages. This entails collecting and verifying certified payroll reports (CPRs) and other required compliance documentation from contractors, among other responsibilities.

On the flip side, the contractors are the ones needing to produce CPRs, demonstrating that they are paying the proper prevailing wages. Subcontractors must submit their CPRs to their primes, who in turn need to collect and review the reports (as well as produce CPRs for any of their own employees). Ultimately, primes are responsible for monitoring the compliance of their subs.   

What is the difference between California prevailing wage and Davis-Bacon requirements?

Generally speaking, California prevailing wage law is more stringent than its federal counterpart. For example, California has a lower threshold for triggering prevailing wages. This means construction projects with a prime contract of $1,000 or more will be subject to the compliance requirements; hereas on the federal level, the project needs to meet a higher threshold of $2,000 before Davis-Bacon requirements kick in.

There are other aspects where California prevailing wage and federal Davis-Bacon don’t necessarily align. If you are working on a project that is backed by both federal and California state funds, be sure to familiarize yourself with both requirements because you need to know if and when to comply with state, federal, or both. As you can imagine, this can get tricky, really quickly. To get a solid foundation of California prevailing wage and Davis-Bacon compliance, check out our LCPtracker Academy courses on these topics.

What is a certified payroll report?

A CPR is an official compliance document that is required on local-, state-, and/or federal-funded projects. It details the worker’s information, type of work performed, wages, benefits, and hours worked. On California prevailing wage projects, the form typically used is form A-1-131.

How and where do I submit certified payroll reports?

Just like on federal projects covered by Davis-Bacon, contractors generally submit CPRs to the prime contractor, and the prime then submits to the awarding body overseeing the project. The prime contractor and/or awarding body will then have their own requirements on how they collect CPRs. Some will require contractors to submit certified payroll reports through an electronic system like LCPtracker Pro; other primes will collect them via more traditional methods, like postal mail, email, or hand delivery.

Remember how California has more stringent requirements? The submission process is one area where the state requires an extra step. In addition to the submission requirements above, CPRs also have to be electronically submitted in XML format via the California Department of Industrial Relations’ web portal.

Are there consequences for submitting incomplete or inaccurate information on CPRs?

Yes, there are. They are similar to the consequences that you face on Davis-Bacon covered projects when you submit incomplete or inaccurate CPRs – or fail to submit them altogether. Check out the details here

What is the most efficient way to help ensure California prevailing wage and certified payroll requirements are being met?

Technology is your best bet. There are electronic systems available that will help do the heavy lifting for you and help with monitoring and managing compliance on public projects.

For prime contractors and public agencies on California projects, LCPtracker Professional helps manage labor compliance and certified payroll reporting for all contractors on their projects.

For contractors who are not responsible for other subcontractors’ compliance, LCPcertified helps manage certified payroll reports for their own employees.

And the best part – both systems have the XML report format that is required by the DIR.

For a guided tour of either of these electronic systems or any of LCPtracker’s products, please complete this form to connect with one of our product specialists.

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