Chapter 3: Caltrans Labor Compliance Program and Related Requirements

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• 3-1  Introduction to Caltrans’ Labor Compliance Program
• 3-2  Caltrans Labor Compliance Program Requirements
• 3-3  Roles and Responsibilities of the Labor Compliance Program
  • 3-3-1  Introduction
  • 3-3-2  Headquarters Labor Compliance
    • 3-3-2(a)  Headquarters Labor Compliance Staff
  • 3-3-3  Labor Compliance Roles for Construction Contracts
    • 3-3-3(a)  Resident Engineer
    • 3-3-3(b)  Construction District or Region Labor Compliance Office
  • 3-3-4  Labor Compliance Roles for Service Contracts
    • 3-3-4(a)  Contract Manager
• 3-4  Office Procedures
  • 3-4-1  Introduction
  • 3-4-2  Labor Compliance Activities
  • 3-4-3  Work Distribution
    • 3-4-3(a)  Construction Contracts
    • 3-4-3(b)  Service Contracts
• 3-5  Labor Compliance Reports
  • 3-5-1  DIR Annual Report
    • 3-5-1(a)  Report Summary Letter
    • 3-5-1(b)  Executed Prevailing Wage Summary
    • 3-5-1(c)  Completed and Closed Wage Cases
    • 3-5-1(d)  Prevailing Wage Violations and Restitution at the District Level
  • 3-5-2  Labor Compliance Enforcement Report
    • 3-5-2(a)  Federal-Aid Highway Construction Contractor’s Annual Equal Employment Opportunity Report

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3-1 Introduction to Caltrans’ Labor Compliance Program

The Caltrans Labor Compliance officers are responsible for training, assisting, monitoring, and enforcing prevailing wage requirements on all Caltrans projects throughout California to make sure that all contractors working on Caltrans public work projects do so in accordance with state and federal prevailing wage statues, and regulations. 

Caltrans performs this function under the authority of a DIR-approved Labor Compliance Program (LCP). Caltrans adheres to the statutory requirements set forth in the Section 1771.5 of the California Labor Code and operates in accordance with the federal requirements as established in the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act, and the Copeland “Anti-Kickback” Act.

Benefits of a Labor Compliance Program. The DIR cites several benefits of an official Labor Compliance Program, including:

• Integrity of competitive bidding process. A comprehensive Labor Compliance Program prevents underbidding by contractors, or contractors who use subcontractors, and who do not pay prevailing wages. It creates a level playing field for contractors bidding on district construction projects.
• Regeneration of funds to the community. Enforcement of prevailing wage laws strengthens the competitive bidding process for Caltrans construction projects. Competitive bidding encourages contractors to bid, which helps direct funds to communities.
• Improved labor relations. A Labor Compliance Program helps improve and promote responsible working conditions. Cooperation and communication with construction industry participants encourages long-term, positive labor and management relationships.
• Quality construction work. Payment of prevailing wages to workers employed on public works can attract the most skilled workers and help assure the highest quality of work on all projects.

3-2 Caltrans Labor Compliance Program Requirements

In accordance with the Labor Compliance Program (LCP) designation, Caltrans adheres to the statutory requirements defined in Labor Code Section 1771.5(b), et seq., in its monitoring and enforcement protocols.

The Caltrans LCP includes labor compliance standards required by state and federal laws and regulations, as well as policies and contract provisions including:

• Presentation of requirements at pre-job conference
• Payment of applicable general prevailing wage rates
• Employment of properly registered apprentices
• Job site interviews to verify proper classification for workers and payment of prevailing wage rates
• Withholding of contract payments and imposing penalties for noncompliance
• Preparation and submission of required LCP annual reports

Table 3-A, “Labor Compliance Program Requirements,” provides a summary of the LCP requirements under Labor Code Section 1771.5

TABLE 3‑A: LABOR COMPLIANCE PROGRAM REQUIREMENTS

3-3 Roles and Responsibilities of the Labor Compliance Program

3-3-1 Introduction

The Labor Compliance Program’s mission is to:

• Assure consistency throughout the state in enforcement of state and federal labor laws in contract bidding.
• Assure that employees working on Caltrans projects are paid contract-specified prevailing wages and that they are allowed to work in an equal employment environment free of harassment and discrimination.

3-3-2 Headquarters Labor Compliance

This section delineates the roles and responsibilities of the Labor Compliance staff and labor compliance requirements on all Caltrans projects. The information in this section provides details on how to properly monitor and enforce labor compliance requirements.

3-3-2(a) Headquarters Labor Compliance Staff:

• Performs oversight and provides guidance, training, and tools for all districts and divisions on Labor Compliance Program requirements
• Processes all wage cases for districts
• Conducts enforcement activities, such as audits and complaint processing, for service contracts

3-3-3 Labor Compliance Roles for Construction Contracts

3-3-3(a) Resident Engineer

• With support staff, has a working knowledge of the contract labor standards.
• Bears responsibility for the enforcement of the labor contract provisions at the project level.
• Delegates to Labor Compliance district or region office responsibilities to monitor and enforce prevailing wages.
• Follows requirements outlined in Section 8-102A, “Employment Practices,” of the Construction Manual.

3-3-3(b) Construction District or Region Labor Compliance Office

• Administers and monitors the labor compliance requirements for construction contracts.
• Enforces the prevailing wage requirements for all major and minor construction contracts.
• Interprets and enforces all public works contract labor provisions including:
  • DIR registration
  • Prevailing wages
  • Apprenticeship programs
• Assists the resident engineer with contract interpretation and enforcement of labor laws using:
  • Weekly certified payroll
  • Fringe benefit statements
  • Federal and state prevailing wages
  • Employee interviews
  • External inquiries and complaints
  • Engineer’s daily reports
• Conducts a pre-job conference to discuss labor compliance requirements.
• Collects, reviews, confirms, and audits payrolls.
• Withholds contractor payments.
  • Construction contracts will use the estimates desk to withhold funds on a Projected Pay Estimate
  • For Minor B and emergency construction contracts paid by a receiver and invoice process, an invoice dispute note is required
• Enforces the contract special provisions for prevailing wages for all major and minor construction contracts.
• Interprets and enforces public works contract provisions on prevailing wages and apprenticeship programs.
• Investigates possible contractor violations by comparing wage rates on payrolls, hours, and classifications paid to actual hours and classifications worked and checking on approved Division of Apprenticeship Standards (DAS) apprentice agreements.
• When a possible labor compliance violation is identified, such as from an employee complaint or a certified payroll showing underpayments to employees, the district Labor Compliance office conducts a source document audit, interviews employees, and determines if it is appropriate to initiate formal action against a contractor. If formal action is considered necessary, writes up a labor compliance wage case and submits it to the Labor Compliance unit at headquarters. Contractors may request administrative hearings and appeal processes for alleged violations.
• District Labor Compliance office gets guidance and training from headquarters, as needed.

3-3-4 Labor Compliance Roles for Service Contracts

3-3-4(a) Contract Manager

• Assists Division of Procurements and Contracts (DPAC) in determining prevailing wage requirements when writing contracts
• Contacts DPAC for any bidder inquiries regarding labor compliance requirements during bid process
• Conducts pre-job conferences to discuss labor compliance requirements
• Documents workers’ activity and tasks
• Conducts employee interviews using Caltrans’ employee interview forms
• Reviews all invoices and certified payroll records received from contractors, and initials and dates them after review
• Confirms appropriate wages are paid and classifications are used by the contractor for the type of work performed
• Withholds contractor payments when there are prevailing wage violations, using STD 209, “Invoice Dispute Notification”
• Tracks all labor compliance activities
• Refers prevailing wage complaints to the Labor Compliance unit at headquarters
• Processes Public Records Act requests in accordance with regulations and Caltrans policies and procedures
• Seeks guidance and training at headquarters on questions and resources

3-4 Office Procedures

3-4-1 Introduction

This section outlines Labor Compliance office procedures, including the work that must be performed, and how the work is distributed and filed. The details of these procedures may vary depending on the district or regional location.

3-4-2 Labor Compliance Activities

Typical Labor Compliance officer (LCO) activities include:

• Providing technical assistance to the local agencies as well as divisions other than Construction.
• Monitoring compliance with apprentice requirements in accordance with Labor Code 1777.5 and confirming contractor compliance with contract-mandated apprentice ratios.
• Collecting and reviewing employee interviews to verify prevailing wage compliance.
• Conducting investigations of possible prevailing wage rate violations. Investigations may include auditing the contractor’s source documents to verify the accuracy of payrolls.
• Working with contractors for restitution of wages due if underpayments are identified through payroll review and confirmation or a source document audit.
• Investigating prevailing wage complaints by contractors, employees, labor unions, and joint labor management committees.
• Preparing and submitting wage violation cases, after contractor fails to resolve identified violations, to the headquarters Division of Construction Labor Compliance unit.
• Compiling federally mandated reports.
• For Public Records Act requests, receiving, reviewing, and responding within 10 days to requests for documents, and redact certified payroll records personally identifying information as needed

3-4-3 Work Distribution

3-4-3(a) Construction Contracts

For the Construction Division, the LCO is responsible for the distribution of work among the Labor Compliance personnel. Suggested methods to consider for distribution are:

• Federal versus state projects
• North versus South projects, for Central Region only
• Types of contracts: construction, emergency, Minor B
• Districts, for regions only
• Routes
• Senior engineers or resident engineers
• Rotational, as received
• Contract numbers

Any method must take into consideration the size, dollar value, duration, type of work, and number of subcontractors. The chosen method must result in a fair and equitable distribution among the Labor Compliance staff.

3-4-3(b) Service Contracts

For service contracts, the contract manager is responsible for the contract; however, some districts or divisions may have staff assigned to assist the contract manager process invoices and monitor prevailing wages.

3-5 Labor Compliance Reports

3-5-1 DIR Annual Report

This Labor Compliance Program Annual report is due Aug. 31 following the end of every fiscal year. This report to the DIR director summarizes the year’s awarded projects subject to prevailing wages and those that are not, completed wage cases, and restitution collected at the district level. Headquarters labor compliance staff are responsible to prepare and submit the report.

Because this report is a compilation of data from various departments and divisions, headquarters begins reaching out in mid-July, but no later than the beginning of August.

This report is published in PDF format and archived on the Caltrans Labor Compliance website under the DIR Annual Reports section.

The Microsoft Word template of this report is filed on the Caltrans internal network shared drive. Use the previous year’s report to update for the current year’s report.

The DIR annual report has four major sections:

1. Report summary letter
2. Executed prevailing wage summary for the year
3. Completed and closed wage cases for the fiscal year
4. Prevailing wage violations and restitution at the district level for the fiscal year

3-5-1(a) Report Summary Letter

To prepare the summary letter:

• Update the letterhead date
• Update each of the bullet points:
  • Number of awarded contracts subject to prevailing wage requirements, and their values
  • Number of awarded contracts not subject to prevailing wage requirements, and their values
  • Number of closed wage cases
  • Number of wage violations, number of employees involved, and restitution amounts.

3-5-1(b) Executed Prevailing Wage Summary

• This data is requested from the Policy Branch of DPAC
• It is broken into two major sections:
  • Contracts requiring prevailing wages
    • Construction contracts greater than or equal to $25,000
    • Alteration, demolition, installation, repair, and maintenance contracts greater than or equal to $15,000
  • Contracts exempt from prevailing wage regulations
    • Construction contracts less than $25,000
    • Alteration, demolition, installation, repair and maintenance contracts less than $15,000
• Update the report spreadsheet with the number of awarded contracts by contract type and their cumulative dollar amounts. Be particularly careful not to double-count between the same contract types, such as emergency contracts requiring prevailing wage versus those that are exempt.

3-5-1(c) Completed and Closed Wage Cases

This data is requested from the Enforcement Unit of the Labor Compliance Office at headquarters:

• Closed wage case data for the fiscal year
• Prime contractor list and associated subcontractor data

3-5-1(d) Prevailing Wage Violations and Restitution at the District Level

This data is available from Labor Compliance Office records at headquarters. It is requested monthly throughout the year from Labor Compliance staff in each district. For additional details on how this information is collected, refer to Chapter 22, Section 22-2, “Restitution at the District Level Monthly Report,” of this manual.

The data is broken down by month and is a compilation of district data for the number of violations, number of affected employees, and the restitution amounts collected.

3-5-2 Labor Compliance Enforcement Report

Form FHWA-1494, “Semi-annual Labor Compliance Enforcement Report,” covers the period of either April 1 through September 30 or October 1 through March 31. Submit reports to the Labor Compliance unit for federally funded projects and include federally funded local agency projects.

Capture the Form 1494 information as listed below:

1. Reporting period.
2. Number of prime contracts awarded.
1. Any explanation or comment considered necessary to a proper understanding of the report. A separate sheet may list the number of contracts awarded.
3. Total dollar amount of prime contracts awarded.
4. Number of contractors and subcontractors against whom complaints were received. This includes verbal, written, or from interviews.
5. Number of investigations completed.
1. Investigations include a complete and detailed investigation into the administration of labor standards provisions. Routine payroll checks should not be included.
6. Number of contractors and subcontractors found to be in violation.
1. The results of the investigations reported in Item 5. A contractor and subcontractor should not be counted more than once in a single investigation if they have violated more than one act, or if more than one contract is included in the investigation.
7. Amount of wages found due.
1. Wages due employees of the contractors and subcontractors reported in Item 6 of Form FHWA-1494. Separate the dollar amounts by:
1. Violations of the Davis-Bacon and Related Acts for straight time.
2. Violations of the Contract Work Hours and Safety Standards Act for overtime.

8. Amount of back wages paid.
1. Back wages paid to employees of the contractor and subcontractor reported in item 6. Separate the dollar amount by:
1. Violations of the Davis-Bacon and Related Acts, for straight time
2. Violations of the Contract Work Hours and Safety Standards Act, for overtime.

9. Number of employees due wage restitution under Davis-Bacon and Related Acts and Contract Work Hours and Safety Standards Act.
1. Number of employees to whom the wages were paid in Item 8. Wages paid to employees as a result of an investigation are counted only once even if paid under both Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act.
10. Amount of liquidated damages assessed under the Contract Work Hours and Safety Standards Act. This is the federal overtime penalty.
1. If the Labor Compliance district database is in use, query for federal projects awarded between the dates needed for the report and get the number and the amount of money involved. It is important to have the data collected promptly. The LCO needs accurate and updated tools to track the number of contracts, investigations, cases, and money involved for gathering statistics for annual reporting. It is headquarters’ responsibility to request all data from districts, prepare the report, and submit the report.

3-5-2(a) Federal-Aid Highway Construction Contractor’s Annual Equal Employment Opportunity Report

The prime contractor and all subcontractors that perform work in excess of $10,000 during the last full week of July on federally financed projects must submit Form FHWA-1391, “Federal-Aid Highway Construction Contractors Annual EEO Report.” This form must be completed and returned to the LCO. If the LCO does not receive these forms by the date specified on the memorandum issued by headquarters, an Equal Employment Opportunity (EEO) deduction must be taken on the August progress pay estimate for missing documents, and the deduction should be held until the forms are received. This form is located at:

https://www.fhwa.dot.gov/eforms/

Instructions for filling out this form are located at:

http://www.localassistanceblog.com/wp-content/uploads/2019/07/2019-FHWA-1391-Instructions-for-LPA.pdf

Caltrans project files that must contain Form FHWA-1391:

Notify all prime contractors by letter around July 1 of each year for details on federally financed projects under construction during the last full week of July. Attach a copy of form FHWA-1391 with the contract number, federal aid number, and the week ending on the form before mailing.

The LCO should make sure the forms are complete and accurate before submittal to Caltrans’ Division of Civil Rights.