Changes to Construction Law in 2012: Prevailing Wage Violation Penalties; Off-Haul Trucking

This is the third in a series on Changes to the Construction Law 2012 by Kevin Jeffery, Graniterock Legal Counsel.

For years, the construction industry had endured uncertainty as to whether the off-haul of construction materials from a public works project was covered by the California prevailing wage law (PWL). As this Rock Blog has reported, in October 2011, the legislature ended this uncertainty and made clear that all off-hauling of “soil, sand, gravel, rocks, concrete, asphalt, excavation materials and construction debris” is in fact covered by the prevailing wage law. 

Assembly Bill 514, which amended the PWL effective January 1, 2012, defined each of those common construction materials to be “refuse,” and the hauling of refuse is covered by the PWL.  It no longer matters where the material is going, who owns it, whether it will be recycled, or whether removal is required for the execution of the contract.  That material is now considered refuse by legal definition. As the date of this post, the DIR still has not established prevailing wage rates for independent owner-operator trucking, and until that occurs even refuse hauled by true independent owner-operators will not require the payment of prevailing wages. 

The legislature also passed a series of enhanced penalties for violations of the PWL. The governor signed Assembly Bill 551, also effective January 1, 2012, which impacted both failures to pay prevailing wages and failures to provide certified payroll records upon the request of a state enforcement agency.

The bill increased the maximum penalty for failure to pay prevailing wages on a public works project from $50 to $200 per worker, per day, and increased the minimum penalty from $10 to $40 per worker, per day. The bill also increased the penalty for failure to comply with a written request for certified payroll records from the Division of Labor Standards Enforcement (DLSE) from $25 per worker, per day to $100 per worker, per day. In addition, the bill amended the PWL to provide that a contractor’s or subcontractor’s failure to comply with a DLSE request for certified payroll records for more than 30 days can result in “debarment” of the contractor or subcontractor for a period of one year to three years. Debarment under the PWL prohibits a contractor or subcontractor from bidding on or being awarded a contract for a public works project in California, or from performing work on a public works project in the State.