Beware of New Extended Time Limitations On Prevailing Wages

For those who perform public works, or who perform private works that are subject to the prevailing wage laws, the recently enacted Assembly Bill 1336 is going to drastically change the way you do business. This statute amended provisions of the Labor Code pertaining to prevailing wage claims by the Labor Commissioner or Joint Labor-Management Committees that are authorized to bring an action, and also made some changes to the laws reflecting the privacy rights of employees when prevailing wage records are made public.

The changes in the Labor Code sections pertaining to the timing of bringing a Civil Wage and Penalty Assessment ("CWPA") will become effective on January 1, 2014. The statute does not specifically state it is retroactive, but we must assume that the Labor Commissioner may argue that it extends the statute of limitations even on ongoing projects. We will probably have to fight that battle at some point for some of our clients.

The current statute of limitations to bring a CWPA has been for a substantial period of time, six months from the recording of a Notice of Completion, but if retention is still being held, one could be liable under a CWPA up to the amount of retention being held after the six month expiration until one year following completion. Typically, after a Notice of Completion is actually issued (which on a public works project is often times long after actual completion has occurred), retention is paid in less than six months so the extension is rarely applicable.

Under the new law, the CWPA must be served not later than 18 months after the recording of a valid Notice of Completion in the office of the County Recorder of the County in which the public work was performed, or 18 months after the acceptance of the public work, whichever occurs last. Thus, contractors will have the worry of any potential wage violations of their subcontractors hanging over their heads for 18 months rather than six or 12 months. This change is monumental. Many contractors who have concerns over compliance by their subcontractors will hold portions of the retention until after the time to bring an action by the Labor Commissioner has run, and now that time is greatly extended.

Another change in the law made in the statutes is the obliteration of information on prevailing wage documents subject to public disclosure to prevent disclosure of an individual's name, address and social security number; an exception applies where the records are being made available for inspection to a multi-employer trust fund under Federal law, then the information should be left intact except the social security number would be obliterated up to the last four digits of the social security number to allow for the proper allocation of the employee benefits and pensions to the workers. There are other exceptions to the law and if you are subject to a Request for Information, you should seek the aid and advice of counsel. Typically, a private contractor is not required to turn over its payroll records directly for inspection to any third party other than the owner for whom they are contracting or the Division of Labor Standards Enforcement. However, those entities may have obligations to turn over the documents.

When dealing with prevailing wage projects, contractors have to be that much more diligent in policing the proper payment of certified payroll given this change in the law.