Doing business in California got a little tougher this summer with Gov. Jerry Brown’s approval of S.B. 854—a law requiring all contractors planning to bid on future public works jobs in the state to register with the California Department of Industrial Relations (DIR) and pay an annual registration fee that will be deposited into the newly created State Public Works Enforcement Fund. Monies deposited into the fund will be used to administer the new contractor registration requirements and to fund the DIR’s public works compliance monitoring, enforcement and administration. The new law also requires public works contractors to begin submitting their certified payroll records (CPR) electronically to the California Labor Commissioner. The requirement to submit electronic CPRs will be phased in gradually, applying to all public works contracts by Jan. 1, 2016.

Contractor Registration
Effective July 1, 2014, all contractors (including subcontractors) that intend to bid or perform work on California public works projects must register online with the DIR in order to be qualified to bid, be listed in a bid proposal or engage in the performance of any public works contract. The registration application can be found here.

The requirement to list only registered contractors on bids takes effect March 1, 2015. The requirement to only use registered contractors and subcontractors on public works projects applies to all projects awarded on or after April 1, 2015.

Annual Registration Fee
As part of the registration process, public works contractors doing business in California must pay an initial nonrefundable fee of $300 and an annual renewal fee on or before July 1 of each year thereafter. The registration fee may be adjusted in the future, but no more than annually. A contractor that fails to pay the renewal fee on or before the expiration of any prior period of registration shall be prohibited from bidding on or engaging in the performance of any public works contract until once again registered. If the failure to pay the renewal is inadvertent, the contractor may renew its registration retroactively by paying an additional penalty renewal fee equal to the amount of the renewal fee within 90 days.

In addition to paying a registration fee, contractors must:
  • have workers’ compensation coverage for any employees;
  • only use subcontractors that are registered public works contractors; 
  • have a state contractor’s license, if applicable to the trade; 
  • have no delinquent unpaid wage or penalty assessments due to any employee or agency; 
  • not be under debarment; and
  • not be in prior violation of the registration requirement once it becomes effective. However, first-time violators can avoid 12-month disqualification by paying an additional penalty.
Impact on the Bid Process
S.B. 854 provides that an inadvertent error in listing an unregistered subcontractor in a bid proposal shall not be grounds for filing a bid protest or for considering the bid non-responsive, provided that:
  • the subcontractor is registered prior to the bid opening;
  • within 24 hours after bid opening, the subcontractor is registered and has paid the penalty registration fee; or 
  • the subcontractor is replaced by another registered subcontractor.
The new law also provides that a subcontractor’s failure to be registered shall be grounds for the contractor, with the consent of the awarding body, to substitute a registered subcontractor in place of the unregistered subcontractor.

Electronic Submission of CPRs
S.B. 854 also requires contractors and subcontractors on all California public works projects to submit their certified payroll reports electronically to the labor commissioner, unless excused from doing so. The requirement applies immediately to projects that already have been under Compliance Monitoring Unit monitoring. It will apply to new projects awarded on or after April 1, 2015, or other projects as determined by the Labor Commissioner, and will apply to all projects, new or ongoing, on and after Jan. 1, 2016.

Because it is anticipated that at least a portion of the annual registration fee will be used to fund enforcement of California’s prevailing wage law on state public works projects, it behooves all public works contractors to take steps to ensure compliance on all projects in the Golden State.  


Carrie Bushman is a partner in the Sacramento labor and employment law firm Cook Brown LLP. For more information, email cbushman@cookbrown.com.