New Legislation to Affect Public Contracting and Prevailing Wage Laws

The Governor has recently signed into law SB 854, which mandates several changes in public contracting and prevailing wage laws. SB 854 took effect immediately; however, its provisions affecting public entities apply only as of 2015.

SB 854 has three different compliance dates in 2015, each identified below.

1. Contractor Registration Requirements. SB 854 amended the Labor Code to require all contractors bidding on public work to register with the Department of Industrial Relations (DIR) and to pay an annual fee. The registration requires contractors to provide the State with evidence of the contractors’ compliance with a number of statutory requirements. The registration requirement took effect on July 1, 2014.
2. Bid Proposal and Contract Award Prohibited. Under California Labor Code section 1771.1, as amended by SB 854, unless registered with the DIR, a contractor may not bid, nor be listed as a subcontractor, for any bid proposal submitted for public work on or after March 1, 2015. Similarly, a public entity cannot award a public work contract to a non-registered contractor, effective April 1, 2015.
3. New Contract and Project Reporting Requirements Imposed Upon Public Entities. SB 854 requires that bid invitations and public works contracts specify that a project is subject to compliance monitoring and enforcement by the DIR, that contractors and subcontractors must register in order to submit a bid and be awarded a contract. SB 854 also changes how requests for certified payrolls are treated and managed. These requirements apply to all public works contracts awarded on or after January 1, 2015. Thus, public entities should plan on revising their standard public works contracts, instructions to bidders, and front end / Division 0 and Division 1 specifications by the end of 2014.

For further information, please contact Richard D. Pio Roda at 510.808.2000 or rpioroda@meyersnave.com.