Public Works: How to Get Started and Common Mistakes to Avoid

Public works projects are the construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds. For a full definition of public works refer to Labor Code section 1720.

If you work or bid on a public works project, then you are considered a public works contractor. The term "public works contractor" includes subcontractors. According to the Department of Industrial Relations (DIR), all public works contractors must fulfill four key responsibilities.

While those key responsibilities are enforced by DIR, CSLB wants to highlight common complaints that originate from public works projects, complaints that are centered on contractors failing to pay the accurate prevailing wage, and prime contractors failing to pay subcontractors and/or material suppliers.

The first problem commonly seen by CSLB is contractors who are not paying employees the correct prevailing wages. All workers employed on public works projects must be paid a prevailing wage rate. That rate is determined by the type of work being performed and the location of the project.

Failure to pay workers, falsification of payroll records, misclassification of workers, or underreporting hours worked can result in license suspension or revocation (BPC § 7110 & L.C.§1774).

Consequences may include paying restitution of wages owed, plus interest and liquidated damages, monetary penalties, debarment of up to three years, criminal prosecution, or reimbursement of investigation costs to DIR, and up to $5,000 in fines from CSLB.

Another common complaint made to CSLB regarding public works projects, is the failure to pay material suppliers or subcontractors. Failing to pay for materials provided or work performed by subcontractors when you have the capacity to pay or when you have received sufficient funds to do so can result in disciplinary action (BPC § 7120).

The violations mentioned above are often a result of underbidding a public works project, which is why it's important that the bid you submit includes all necessary work.

If unknown work at the time of bid is discovered during the contracting activity you will need to submit necessary "change orders" and have them approved by the awarding entity in order to receive payment.

Failing to complete a job for the contracted amount could lead to disciplinary action against your license (BPC § 7113).

If you're just getting started with your license, or if you want to start bidding public works projects, it would be smart for you to brush up on these laws.

A great resource is the 2019 California Contractors License Law & Reference Book online, or order your copy here. Or, by checking out the DIR website at www.dir.ca.gov.