New Law Increases Penalties For Labor Code Violations On Public Works Projects

       Beginning on January 1, 2012, the Labor Commissioner can levy remarkably harsher penalties against contractors working on public works projects who violate the Labor Code. The new law quadruples fines for not paying the prevailing wage and not timely producing certified payroll records. Moreover, the Labor Commissioner can designate a contractor ineligible to bid or work on public works projects.

       Currently, the Labor Commissioner can assess penalties against a public works contractor for failing to pay the prevailing wage. Under previous law, the Labor Commissioner had discretion to set the penalties at $10 to $50 per violation. Under the new law, the range of penalties has quadrupled to $40 to $200 per violation.

       Also, on a public works project, a contractor must submit its certified payroll reports to the Labor Commissioner within 10 days of a request. Under prior law, for every day the submission was late, the contractor was penalized $25 per employee. The new law increases the penalty to $100. For example, if a contractor employing 10 employees is late producing certified payroll records by only one day, the Labor Commissioner can penalize the contractor $1,000.

       Finally, in addition to fines, the new law permits the Labor Commissioner to designate a contractor ineligible to bid or work on a public project for up to 3 years.

       But that’s not all, the deck is further stacked against public works contractors. A unique California law, the Private Attorney General Act (also known as “PAGA”) permits an employee to sue his own employer for penalties under the Labor Code on behalf of all employees of the business. A portion of the penalties may be recovered by the plaintiff in addition to attorneys’ fees incurred in the case. With the penalties under the Labor Code quadrupled, plaintiffs’ attorneys now have an increased incentive to sue contractors on behalf on any employee who ever worked on a public works project.

       If you need assistance with wage compliance or have any labor or employment concerns, Marks, Finch, Thornton & Baird, LLP has a full service labor and employment group to assist you.