Insight
Certified payroll in California
On a public works project, every contractor and every subcontractor files its own certified payroll. That sentence explains most penalties.
Public works in California carries an administrative burden that catches out contractors who are perfectly good at building things.
The rule that produces the most penalties is also the simplest: each contractor and each subcontractor files its own certified payroll records. A sub that assumed the prime was handling it is not compliant, and the penalty is the sub's.
Registration and thresholds
California Labor Code §1771.1 · Department of Industrial Relations
Contractors and subcontractors must register with the DIR before bidding on or performing public works, and file certified payroll records through the DIR's eCPR system.
Thresholds: projects over $25,000 for construction and over $15,000 for maintenance.
Records are filed weekly, for every week in which work was performed, on Form A-1-131 or an accepted equivalent.
Where contractors actually get caught
- Misclassification of work: paying a labourer's rate for work falling under a higher-rated classification. The most frequent and most expensive finding.
- Fringe benefit calculation. Prevailing wage is a total package; contributions to bona fide plans can offset it, but the arithmetic must be right and documented.
- Apprentice ratios. Apprentice rates apply only to properly registered apprentices in an approved programme.
- Using the wrong wage determination. The determination in force when the project was bid or awarded governs: an older project can run on older rates.
- Maintenance contracts, where the lower $15,000 threshold catches work that does not feel like a public works project.
Penalties accrue per worker, per day
Which is why a classification error running across a crew for a month becomes a large number quickly, and why awarding bodies can withhold contract payments until records are produced.
Repeated failures can lead to debarment from public works: a business-ending outcome for a contractor who depends on that work.