California prevailing wage law is a set of California state laws governing the requirement of contractors working on public works projects to pay their laborers, workers and mechanics prevailing wage rates determined by the Director of the Department of Industrial Relations. They are intended to promote the welfare of wage earners in the California construction industry.

California Labor Code History

California prevailing wage law was first established in 1931, the same year as the federal Davis-Bacon Act. This law was designed to ensure that the government would be unable to use its purchasing power to undermine the wages of its citizens as well as establish a precedent by paying the wages prevailing in a locality for each occupation hired by government contractors on publicly funded projects. (Assembly Committee on Labor and Employment 2015 Assembly Bill 852 preamble)

Over the years the definition of what constitutes “public works” has been amended, and additional requirements pertaining to apprentice usage, overtime requirements and contractor registration have been included in California prevailing wage law.

California Labor Code Purpose

“The California Labor Code promotes and develops the welfare of the wage earners of California, to improve their working conditions and to advance their opportunities for profitable employment.” (Department of Industrial Relations 2013)

California Prevailing Wage Provisions

California prevailing wage law provisions require that each contract over $1,000 (Labor Code § 1771) must pay prevailing wages to workers (Labor Code § 1723) employed by contractors engaging in the execution of any public works (Labor Code § 1720-1720.9) project.

The California Code of Regulations establishes that the Director of the Department of the Industrial Relations is the authority who governs the coverage of prevailing wage law and prevailing wage rate by locality and occupation. Judicial review can supersede the Department’s determination.

Prevailing wage law in California has developed over time into a web of rules and regulations designed to combat: wage fraud in the construction industry; unfair competition in the bidding process; a shrinking workforce of skilled construction workers in California and America at large; a shrinking pool of construction apprentices; among many other issues.

California Labor Code and Related Codes

California Labor Codes § 1720-1784 govern Scope and Operation, Right of Action and Wages under California prevailing wage law. Codes § 1810-1815 covers working hours and overtime and § 1860-1861 covers workers compensation.

California Code of Regulations – Chapter 8 – Office of the Director – Sub chapter 3 –Payment of Prevailing Wages on Public Works covers additional legislation regarding prevailing wages on public works too. Link.

California Code of Regulations – Chapter 2 – California Apprenticeship Council – Sub chapter 2 – Apprenticeship – Article 10 – Required Apprentices on Public Works Contracts covers additional legislation regarding apprenticeship requirements on public works too. Link.

Specific awarding body bylaws or public funding stipulations may contain their own prevailing wage legislation.

e.g. Proposition 84 (Safe Drinking Water, etc. Bond Act of 2006) grants contain legislation enacting “Labor Compliance Programs” to be established by the project owner to oversee labor compliance activity on projects using these funds.

e.g. Awarding bodies with “Project Labor Agreements” in place (often referred to as PLAs) require their General Contractor partners to agree to numerous supplemental terms before awarding public works contracts.

California Labor Code Prevailing Wages

The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area. The required minimum prevailing wage rates are calculated by the Office of Policy, Research and Legislation and published twice a year, February 22nd and August 22nd and can be found on this website, https://www.dir.ca.gov/OPRL/dprewagedetermination.htm.
These rates are often rates taken from established Collective Bargaining Agreements (CBAs) of locally organized labor.

California Labor Code Coverage – Type of Project

“Construction, alteration, demolition, installation or repair work”

Labor Code § 1720-1720.9 defines the term “public works”. Typically, the general rule of thumb to know if a contract should contain prevailing wage clauses and stipulations is to ask,
“Is this project ‘construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds‘?”
This definition covers most construction related activities but is also expanded to cover: pre-construction work, carpet laying in public buildings, modular furniture installation, tree-removal in certain circumstances and post-construction clean-up operations. The list is quite long and will be discussed in greater detail in a future Blog post.

“Paid for in whole or in part by public funds”

To understand if a project has “been paid for in whole or in part out of public funds” requires review of Labor Code § 1720 (b). Money, or the equivalent of money paid by the state or political subdivision used to support a project which meets the terms established above is going to be considered public works. But this isn’t the only public payment method recognized under California law. State assistance in construction can trigger a project to become public works; transfer of a public asset “for less than fair market price”; and “fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state”; loans or credits given which are to be repaid on a contingent basis.

California Labor Code Coverage – Workers

Labor Code § 1772 provides that workers employed “by contractors or subcontractors in the execution of any contract for public work” are deemed to be so employed. Labor Code § 1723 defines a worker as including “a laborer, worker, or mechanic.”

If a worker is engaging in a contracted activity on the site of work of a public works project then they are going to be typically be covered under prevailing wage law. But this definition is not inclusive enough on its own. On-hauling of materials [if they are immediately incorporated into the flow of construction], the off-hauling of refuse, and certain crafts’ commuting travel time compensation can all be considered public works on a case-by-case basis too. Ready-mix concrete delivery is also covered works per Assembly Bill 219’s addition of Labor Code§ 1720.9.

California Labor Code Coverage – Worker Exceptions

Exceptions to this coverage include volunteers, public agency’s own forces, some janitorial work, guards and landscape maintenance workers at sheltered workshops. Labor Code § 1720.4 provides that the prevailing wage laws do not apply to work performed by a “volunteer.”

“Volunteer” is defined as “an individual who performs work for civic, charitable, or humanitarian reasons, for a public agency or corporation qualified … as a tax-exempt organization, without promise, expectation, or receipt of any compensation for work performed.”

Labor Code § 1771 expressly provides that the prevailing wage requirement is “not applicable to work carried out by a public agency with its own forces.”

The janitorial exception to prevailing wage requirements applies to “routine and recurring janitorial services, such as washing, vacuuming, litter removal, etc. at a public facility.” (Division of Labor Standards Enforcement Public Works Manual May 2018)

Guards are exempt due to the “protection of the sort provided by guards, watchmen, or other security forces” (8 CCR § 16000) being considered akin to the recurring and routine nature of maintenance work.

Still Have Questions

Contact Legion Consulting for California Labor Code compliance assistance. Reviewing or fortifying contract language, tailored training seminars, complete project document management, compliance audits. Legion Consulting is your best choice for a compliant project. Call us today.