Publicly funded construction sites in California must comply with workers' compensation requirements and labor laws, according to a California Department of Industrial Relations (DIR) Labor Enforcement Task Force (LETF) announcement.
This initiative targets the proliferation of California's "'underground economy' as it pertains to public construction," said Colin McCarthy, principal attorney for Lanak & Hanna (Orange, CA).
An underground economy is any business that operates without the necessary licensing and does not pay taxes or carry the required insurance or worker's compensation coverage, according to DIR. It also may force its employees to work in unsafe conditions.
General contractors, subcontractors and suppliers will not be immune from increased investigations, McCarthy said. Subcontractors and material suppliers will [not] have more hoops to jump through; they just need to understand that if they are present at a project site being investigated by the LETF, it is critical that the entirety of their operation be in full compliance with California law.
"This program provides a good reminder that [subcontractors and suppliers] must comply with a litany of safety and regulatory rules and regulations, including jobsite safety requirements, proper licensure and insurance, payments and taxes," he added. The LETF will consider payment of prevailing wages and the project site in general to ensure rules and regulations are being followed.
Subcontractors and suppliers should have proper documentation available for the LETF investigation team if they participate in public construction projects in California, McCarthy advised. In addition, they must understand the breadth of LETF investigations and remain current in all of their paperwork.
"Most subcontractors and material suppliers may simply think of labor compliance and prevailing wages when they think of the DIR," McCarthy said. "They are not necessarily thinking about jobsite safety, licensure, or tax and insurance issues. This program should serve as an important reminder that subcontractors and material suppliers need to be current in all of these areas—not just payment."
-Bryan Mason, editorial associate