The Labor Code requires public agencies that award contracts on public projects (Awarding Body(ies)) to ensure that the workers employed on those public works projects, except as specified, are paid the general prevailing rate of per diem wages, determined by the Director of Industrial Relations. The Awarding Bodies may engage a third party company to initiate and enforce a labor compliance program on such public works projects.
Senate Bill 1303 (SB 1303) provides requirements for engaging such third parties. SB 1303 specifically defines a “Private Labor Compliance Entity” as a third-party company that is hired by an Awarding Body to perform labor compliance and enforcement activities on public works projects on its behalf.
A Private Labor Compliance Entity is prohibited from providing labor compliance and enforcement activities on behalf of an Awarding Body if it has a Conflict of Interest. Prior to entering a contract for a public works project, a Private Labor Compliance Entity must disclose a potential Conflict of Interest to the Awarding Body or submit a signed declaration under penalty of perjury verifying that none exists. A “conflict of interest” exists when a Private Labor Compliance Entity performs labor compliance work under contract for both an Awarding Body, and a contractor who is bidding a public works project for the same Awarding Body.
SB 1303 requires a Private Labor Compliance Entity, prior to withholding funds from a public works contractor for an alleged violation, to confer with the negotiating parties of the applicable agreements to review relevant public works law and prohibits it from withholding an amount that exceeds the alleged underpayments and penalty assessments.
SB 1303 requires a Private Labor Compliance Entity seeking to withhold funds from a public works contractor or subcontractor on behalf of an Awarding Body to provide a venue for a public works contractor or subcontractor to review and respond to evidence of alleged violations, within twenty (20) days of a written request for review by the contractor or subcontractor.
If a Private Labor Compliance Entity violates SB 1303, the contract with the Awarding Body is null and void, and the Private Labor Compliance Entity would be subject to a penalty by the Awarding Body of not less than one thousand dollars ($1,000), including reasonable attorney’s fees, subject matter expert costs, and expenses.
SB 1303 authorizes, among others, a joint labor-management committee to initiate a private right of action against certain entities, when the court is required to award reasonable attorney’s fees and costs, as specified.
SB 1303 does not apply to The Department of Transportation, The City of Los Angeles, The Los Angeles Unified School District or The County of Sacramento operating labor compliance programs approved and monitored by the Department of Industrial Relations pursuant to section 1771.5.
(SB 1303 adds section 1771.8 to the Labor Code)