California Code of Regulations › Title 8 - Industrial Relations › Division 1 - Department of Industrial Relations › Chapter 8 - Office of the Director › Subchapter 4 - Labor Compliance Programs › Article 3 - Reports and Audits › Section 16432 - Investigation Methods for Labor Compliance Program - Definitions and Minimum Requirements, Including Review, Confirmation and Audits of Payroll Records; on-Site Visits; and Early Resolution of Audits

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The primary function of the Labor
					 Compliance Program is to ensure that public works contractors comply with the
					 prevailing wage requirements found in the Public Works Chapter of the Labor
					 Code. This regulation is intended to establish minimum requirements which all
					 Labor Compliance Programs shall meet or exceed in carrying out that function.
					 Definitions found throughout this regulation are intended to provide Labor
					 Compliance Programs and representatives of the Department of Industrial
					 Relations and the Division of Labor Standards Enforcement with common
					 terminology as they each perform their respective roles in prevailing wage
					 enforcement in furtherance of the Labor Code provisions establishing Labor
					 Compliance Programs. This regulation is also intended to confirm that the
					 proactive investigation methods, as described in detail herein, only comprise
					 the minimum obligations required of Labor Compliance Programs to satisfy their
					 duty to the Director to operate a Labor Compliance Program as specified in
					 sections 16428 and
					 16434.
(b) Payroll records furnished by contractors
					 and subcontractors in accordance with section
					 16421(a)(3) above,
					 and in a format prescribed at section
					 16401 of Title 8 of the California
					 Code of Regulations, shall be reviewed by the Labor Compliance Program as
					 promptly as practicable after receipt thereof, but in no event more than 30
					 days after such receipt. "Review" for this purpose shall be defined as
					 inspection of the records furnished to determine if (1) all appropriate data
					 elements identified in Labor Code Section
					 1776(a)
					 have been reported; (2) certification forms have been completed and signed in
					 compliance with Labor Code Section
					 1776(b);
					 and (3) the correct prevailing wage rates have been reported as paid for each
					 classification of labor listed thereon, with confirmation of payment in the
					 manner and to the extent described in subpart (c) below.
(c) "Confirmation" of payroll records
					 furnished by contractors and subcontractors shall be defined as an independent
					 corroboration of reported prevailing wage payments. Confirmation may be
					 accomplished through worker interviews, examination of paychecks or paycheck
					 stubs, direct confirmation of payments from third party recipients of "Employer
					 Payments" (as defined at section
					 16000 of Title 8 of the California
					 Code of Regulations), or any other reasonable method of corroboration. For each
					 month in which a contractor or subcontractor reports having workers employed on
					 the public work, confirmation of furnished payroll records shall be undertaken
					 randomly for at least one worker for at least one weekly period within that
					 month. Confirmation shall also be undertaken whenever complaints from workers
					 or other interested persons or other circumstances or information reasonably
					 suggest to the Labor Compliance Program that payroll records furnished by a
					 contractor or subcontractor are inaccurate.
(d) Representatives of the Labor Compliance
					 Program shall conduct in-person inspections at the site or sites at which the
					 contract for public work is being performed ("On-Site Visits"). On-Site Visits
					 may be undertaken randomly or as deemed necessary by the Labor Compliance
					 Program, but shall be undertaken during each week that workers are present at
					 sites at which the contract for public work is being performed. All On-Site
					 Visits shall include visual inspection of (1) the copy of the determination(s)
					 of the Director of Industrial Relations of the prevailing wage rate of per diem
					 wages required to be posted at each job site in compliance with Labor Code
					 Section
					 1773.2, and
					 (2) the Notice of Labor Compliance Program
					 Approval required to be posted at the job site in accordance with section
					 16429 above, listing a telephone
					 number to call for inquiries, questions, or assistance with regard to the Labor
					 Compliance Program. On-Site Visits may include other activities deemed
					 necessary by the Labor Compliance Program to independently corroborate
					 prevailing wage payments reported on payroll records furnished by contractors
					 and subcontractors.
(e) An Audit,
					 as defined herein, shall be prepared by the Labor Compliance Program whenever
					 the Labor Compliance Program has determined that there has been a violation of
					 the Public Works Chapter of the Labor Code resulting in the underpayment of
					 wages. An "Audit" for this purpose shall be defined as a written summary
					 reflecting prevailing wage deficiencies for each underpaid worker, and
					 including any penalties to be assessed under Labor Code Sections
					 1775 and
					 1813, as
					 determined by the Labor Compliance Program after consideration of the best
					 information available as to actual hours worked, amounts paid, and
					 classifications of workers employed in connection with the public work. Such
					 available information may include, but is not limited to, worker interviews,
					 complaints from workers or other interested persons, all time cards, cancelled
					 checks, cash receipts, trust fund forms, books, documents, schedules, forms,
					 reports, receipts or other evidences which reflect job assignments, work
					 schedules by days and hours, and the disbursement by way of cash, check, or in
					 whatever form or manner, of funds to a person(s) by job classification and/or
					 skill pursuant to a public works project. An Audit is sufficiently detailed
					 when it enables the Labor Commissioner, if requested to determine the amount of
					 forfeiture under section
					 16437, to draw reasonable
					 conclusions as to compliance with the requirements of the Public Works Chapter
					 of the Labor Code, and to enable accurate computation of underpayments of wages
					 to workers and of applicable penalties and forfeitures. An Audit using the
					 forms in Appendix B, when accompanied by a brief narrative identifying the Bid
					 Advertisement Date of the contract for public work and summarizing the nature
					 of the violation and the basis upon which the determination of underpayment was
					 made, presumptively demonstrates sufficiency. Records supporting an Audit shall
					 be maintained by the Labor Compliance Program to satisfy its burden of coming
					 forward with evidence in administrative review proceedings under Labor Code
					 Section
					 1742 and the
					 Prevailing Wage Hearing Regulations found at sections
					 17201-17270 of Title 8 of the
					 California Code of Regulations.
(f)
					 After the Labor Compliance Program has determined that violations of the
					 prevailing wage laws have resulted in the underpayment of wages and an audit
					 has been prepared, notification shall be provided to the contractor and
					 affected subcontractor of an opportunity to resolve the wage deficiency prior
					 to a determination of the amount of forfeiture by the Labor Commissioner
					 pursuant to these regulations. The contractor and affected subcontractor shall
					 be provided at least 10 days following such notification to submit exculpatory
					 information consistent with the "good faith mistake" factors set forth in Labor
					 Code Section
					 1775(a)(2)(A)(i)
					 and (ii). If, based upon the contractor's submission, the Labor Compliance
					 Program reasonably concludes that the failure to pay the correct wages was a
					 good faith mistake, and has no knowledge that the contractor and affected
					 subcontractor have a prior record of failing to meet their prevailing wage
					 obligations, the Labor Compliance Program shall not be required to request the
					 Labor Commissioner for a determination of the amount of penalties to be
					 assessed under Labor Code Section
					 1775 if the
					 underpayment of wages to workers is promptly corrected and proof of such
					 payment is submitted to the Labor Compliance Program. For each instance in
					 which a wage deficiency is resolved in accordance with this regulation, the
					 Labor Compliance Program shall maintain a written record of the failure of the
					 contractor or subcontractor to meet its prevailing wage obligation. The record
					 shall identify the public works project, the contractor or affected
					 subcontractor involved, and the gross amount of wages paid to workers to
					 resolve the prevailing wage deficiency; and the record shall also include a
					 copy of the Audit prepared pursuant to subpart (e) above along with any
					 exculpatory information submitted to the Labor Compliance Program by the
					 affected contractor or subcontractor.
1. New
						section and Appendix filed 2-20-92; operative 3-23-92 (Register 92, No.
						13).
2. Amendment of section, NOTE and Appendix B filed 10-19-2004;
						operative 11-18-2004 (Register 2004, No. 43).
3. Repealer and new
						section heading, section and Appendix B and amendment of NOTE filed 12-22-2008;
						operative 1-21-2009 (Register 2008, No. 52).
Note: Authority cited: Section
						  1773.5, Labor
						  Code. Reference: Sections
						  1742,
						  1771.5,
						  1773.1,
						  1773.2,
						  1775,
						  1776 and
						  1813, Labor
						  Code.