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The California Department of Industrial Relations (DIR) recently announced a number of new measures intended to ensure better worker compensation and contractor compliance, with a focus on ensuring the protection of prevailing wage for workers.

Prevailing wage laws require that contractors on public works jobs have to pay the majority of their workers no less than the local prevailing wage rate. Since these laws are in place to protect individual workers, they can be very precisely focused. As Levelset’s Alex Benarroche notes, “Prevailing wage laws are strict liability laws. Any violation, for any reason, can make the breaching party liable.”

Alex Benarroche

Alex Benarroche

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In January 2022, the DIR announced its new Labor Enforcement Task Force (LETF). The task force is intended to lead an initiative to make sure publicly funded construction sites are ensuring that contractors are correctly handling prevailing wage laws, workforce requirements, and apprenticeship standards.

This initiative isn’t coming out of thin air: California Governor Gavin Newsom signed an assembly bill in 2021 that made a significant commitment to handling the issue, appropriating $30 million for the DIR’s “strategic enforcement focused on construction, alteration and repair projects.”

According to labor leaders in the state, the plans should go off without a hitch. California DIR spokeswoman Jeanne-Mairie Duval noted that contractors shouldn’t have anything to fear as long as they’re in the right, saying that “Construction contractors working on publicly funded work sites will experience no negative impact, as long as they are complying with the requirements.”

The move doesn’t come without connections to the larger construction world, of course — in fact, the state has had issues with payment on these types of projects before.

A December 2021 case handled by the California DIR resulted in the state’s Labor Commissioner’s Office collecting $2,631,876 in wages and $37,672 in apprenticeship training funds to compensate 100 workers for unpaid wages. According to the department, general contractor TOBO Construction failed to properly pay workers on a project at El Camino Community College in Torrance, California.

At the time, California Labor Commissioner Lilia García-Brower was decisive in her position on the case, saying “Contractors on publicly funded construction projects must pay workers a prevailing wage.”

California is far from alone in taking aggressive steps to ensure workers’ fair compensation, too.

In September 2021, New York Governor Kathy Hochul signed a new law into effect that made prime contractors liable for actions by subcontractors of any tier when it comes to wage and benefit violations — which includes the same issues that California’s new task force is focused on.

New laws such as these greatly increase contractors’ exposure to liability for the projects they work on, and greatly incentivize contractors to ensure that payment is happening correctly throughout the contracting chain of any given project — but they importantly ensure that workers are getting paid what they deserve.

“Particularly for day laborers or for employees of small contractors, if their wages aren’t paid in full on a project, or if the company goes under and doesn’t pay them, there might not be any avenue of recourse,” said lawyer Aaron Brotman, a member of the Construction Services Practice Group at Cole Schotz. “What this law does is provide the general contractor or prime contractor as the avenue of recourse.”

That avenue of recourse is significant from state to state, as well. As Levelset’s Alex Benarroche pointed out, a recent case in Massachusetts established that contractors working on public works projects in the state could be required to pay three times the amount of unpaid wages if found guilty of violating prevailing wage laws in the state.

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