Labor Compliance Enforcement in California.pdf

Discover California's labor compliance enforcement landscape. Navigate regulations & agencies for workplace compliance in just one read.

1. Labor Compliance
Enforcement in California:
Overview

2. A question that is often asked is why must we abide by all of these requirements. Well, not only is it
outlined by the state of California in their labor codes, but there are also a handful of groups and
agencies who enforce labor compliance on Public Works projects. Today we are going to be giving you
an overview on Labor Compliance Enforcement and why it is imperative your company prioritizes
compliance efforts.
California Labor Codes:
Labor codes establish the foundation of fair labor rights and requirements contractors working on public
works construction projects must comply with. They address aspects such as prevailing wages, hour
provisions, apprentice ratio requirements, training contributions payment to approved apprenticeship
programs, and more... Read Labor Codes 1700-1800 as this encompasses the requirements mentioned
above. It is so important for contractors to be knowledgeable about these laws. Some of the
requirements laid out in these labor codes are extremely time sensitive so it is strongly recommended to
understand the requirements before bidding on CA public works projects. Claiming you were unaware of
said requirements is not a defense and you still risk getting penalized for non compliance.

3. Division of Labor Standards
Enforcement (DLSE):
The Division of Labor Standards Enforcement plays a crucial role in enforcing labor laws in
California. Their state investigators not only enforce labor compliance regulations but also
advocate for workers rights ensuring that all employees on public projects are paid and
treated fairly according to the law. From on site interviews to behind the scenes investigations
with detailed review of contractor documentation, they serve as a reminder of the states
commitment to upholding labor compliance standards. This compliance enforcement entity
is instrumental in preventing exploitation and fostering a culture of openness and
accountability, within the industry. If your project is undergoing an investigation, you will
receive a records request letter to which you have 10 days to respond and submit the
requested documentation. There is a late penalty of $100 per day for late submission. Should
anything come back as non complaint in the investigation, a Civil Wage Penalty Assessment
will be issued outlining the penalties applicable to your company and project.The DLSE has a
Public Works Manual available on the DIR's website which can help you gain additional
insight on how they operate and the requirements that fall under California Public Works
projects.

4. Labor Compliance Monitors (LCM):
The proactive stance adopted by Labor Compliance Monitors is for adherence
to the project’s requirements. By mandating subcontractors to provide all
documentation for assessment, LCMs ensure that compliance is not just a box
to tick but an ongoing endeavor. This diligent oversight not only assists in
avoiding penalties but also cultivates a collaborative atmosphere where
compliance is a mutual objective. LCM’s typically work for/with the Awarding
Body or Prime contractor and can withhold payment until the subcontractor
fixes their documentation and submits everything requested in a compliant
manner. There are aspects to where a prime contractor can be jointly liable to
their subcontractors for non compliance, which is why the role of the LCM is so
important. You will likely see monthly RFIs (request for information) on projects
with Labor Compliance Monitors. This is a way for them to communicate your
status and request anything they need in order to release payment.

5. Labor Enforcement Task Force (LETF):
The Labor Enforcement Task Force is a group of state and federal agencies (including
the DLSE previously mentioned) who inspect and combat the underground economy.
Their investigation process typically lasts about an hour. Investigations include review of
your records as well as employer and employee interviews. Any refusal to their
inspection will urge them to obtain an inspection warrant. Anyone is able to submit a
complaint to the LETF with leads on labor law violations and can opt to stay
anonymous. The underground economy consists of wage theft, tax evasion, under-the-
table compensation, unsafe work environments, and more. The purpose of the LETF is
also to include a fair, compliant, and safe environment for employees and hold
employers accountable for not following the law.

6. Labor Compliance Systems:
The emergence of digital systems for managing compliance has transformed how
contractors produce and submit labor compliance documentation. Platforms such as
LCPTRACKER and ELATIONS not only offer a secure means of submitting your data, but
also feature warnings or flags built into the system to warn you of discrepancies. These
warnings will not allow you to submit the document until the discrepancies are corrected.
Labor compliance systems can also help streamline a Labor Compliance Monitor’s job as
all subcontractor information is automatically available to review and organized in one
place. It is up to the Awarding Body or Prime contractor whether or not to enforce use of
a digital system, this should be located in your project's contract. If there is any mention of
a digital system, you will be required to use the system for your project. We've included
this section on our overview because these systems act as a slight compliance monitor
and if contractors do not follow through with the project/system requirements, then
payment can be withheld. Luckily, most if not all of these systems have user manuals to
help walk you through how to use their system. Here at Prevailing Wisdom, we’ve worked
in a long list of these systems and help produce and submit our client’s documents in the
required portals to streamline the submission process.

7. Conclusion:
In summary, compliance is required on California public works projects to
ensure fair compensation, treatment, and transparency. There are a number of
enforcement groups whose job is to ensure contractors are abiding by these
requirements. Not knowing and not doing the research before signing a
California public works project agreement will not protect you from non-
compliance penalties. Operating in a non-compliant manner may catch up
with you eventually and the penalties can be quite costly. To ensure you get
paid on time, and to ensure a smooth investigation process, research your
projects requirements, read the labor codes, talk to your prime for clarification,
ask for labor compliance requirements/information pre-bid. This industry is not
simple by any means, however researching and understanding what you are
signing up for can help set you and your team up for success.
Read more: How to Calculate CA State Commercial Prevailing Wage Rates