Department of Industrial Relations – Newsline Release 6-28-17

Public Works Contractor Registration Fee Increased, Small Project Exemption Effective July 1, 2017

Registration Fee Increase

On June 28, 2017, the California Department of Industrial Relations (DIR) in their “Newsline” informed the public of the 2017-2018 State Budget changes that will go into effect on July 1, 2017 and how these changes will impact the public works contractor community.

The annual registration fee required for bidding and working on California Public Works projects, which is due each year by June 30th, has increased from $300 to $400.  If the registration was done on or before June 30, 2017, the contractor would not be required to pay the increased amount.  Beginning June 1, 2019, contractors will have the option to renew their annual registration for up to three years at a time.

These changes are also requiring increased penalties for contractors and awarding agencies who hire unregistered contractors/subcontractors.

Penalties

Contractors who fail to register face penalties of up to $8,000, “in addition to any penalty or registration fee”.  CPW has asked the DIR to provide clarity as to whether the $8,000 is INCLUSIVE of the current $2,000 penalty or in ADDITION to the current penalty. Awarding agencies will now also be subject to penalties of $100 a day, up to a maximum of $10,000, for hiring an unregistered contractor for any public works project.

A Contractor who hires an unregistered subcontractor is also subject to penalties of up to $10,000.

Small Project Exemption – Contractors

This same Newsline release announced that “Contractors who work exclusively (emphasis ours) on small public works projects are not required to register as a public works contractor or file electronic certified payroll reports for those projects.”  The threshold for the exemption is $25,000 for new construction, alteration, demolition or repair and $15,000 for maintenance. We asked the DIR to provide clarification of what “exclusively” meant and have not received a response.

The California DIR issued a “clarification” two days later which stated, “Small project exemption means that contractors who work exclusively on small projects are not required to register as public works contractors or file electronic certified payroll reports for those projects.”  While there was NO clarification as to what “exclusively” means, they did provide additional information as to whether the amount is the prime contract or any subcontractor’s contract, stating, “Small project exemption is applied based on the amount of the entire project, not a contractor’s subcontracted amount of the project.”

The contractors will still be subject to payment of prevailing wage on these projects, as well as, maintaining certified payroll reports and providing them to the Labor Commissioner’s Office upon request. We will keep our CPW community updated when further clarification is provided by DIR.

Small Project Exemption – Awarding agencies

For these same projects, the awarding agencies are also not required to submit the notice of contract award through DIR;’s PWC-100 system.

Please feel free to call our prevailing wage consultants at (888) 500-5525 or email us with any questions.  We will keep you informed as clarification is received from the DIR.