Receiving & Responding to a Civil Wage and Penalty Assessments

Prevailing Wage Laws

The division of labor standards enforcement or otherwise referred to as the DLSE, monitors public works projects in California for contractors compliance with California’s prevailing wage laws. Some examples of non-compliance with prevailing wage laws are underpayment of prevailing wage, misclassification of workers resulting in underpayments, overtime violations and apprenticeship violations. 

Civil Wage and Penalty Assessment (CWPA)

If the DLSE determines that there was a violation of the prevailing wage laws, it will issue a civil wage and penalty assessment, otherwise referred to as a CWPA, to the contractor and its surety. If it’s a subcontractor who is accused of underpaying its workers, the CWPA will also be issued to the prime contractor and its surety. If you’re the prime contractor, you will want to pay close attention to the CWPA and the deadlines. As you and potentially your surety are equally responsible for paying the wages and potentially the penalties owed by your subcontractor. 

Oftentimes, the CWPA will not be your first notice of an investigation. Generally, the DLSE will send out a request for payroll records. Once you get the request for payroll records, you want to proactively gather all of the documentation that can support the hours worked, the wages paid and the type of work that was identified in the certified payroll reports. These additional documents could be the worker’s itemized wage statements, copies of canceled checks, sign-in sheets, or individual timesheets. Other information that could be helpful includes daily reports, Inspector logs, photos and videos. These are important, especially when you’re defending against a claim of misclassified work. 

CWPA Deadlines

Once you are served with a CWPA, there are several deadlines that are triggered by the date of the notice. First, if you believe that there is a basis for disputing the alleged wages owed and/or penalties, you may submit a request for a settlement meeting within 30 days of service of the CWPA. This is often the best opportunity for you to present your defenses to the CWPA and reach a settlement. So be sure to be prepared with all of your documentation that supports your position. 

You should not go to a settlement meeting without a lawyer. You want somebody who’s experienced in handling these waiver claims before the DLSE. The next deadline that is triggered by the CWPA is you have 60 days from the date of service to submit what’s called a request for review. Once you submit your request, a hearing officer will be appointed who will essentially be the judge and jury at the formal hearing. The formal hearing is essentially a trial where each side gets to present their case. Submission of the request for review also triggers your right to review the evidence the DLSE has put together based on the CWPA. The 60-day deadline to submit a request for review is very important as well because failure to submit a request can result in a judgment in the full amount of the CWPA, wages, and penalties being entered against the subcontractor at hand or the prime contractor. Another key deadline to keep in mind is the deadline for depositing the full amount of the CWPA in order to avoid liquidated damages. Under Labor Code section 17 42.1, after 60 days of service of the CWPA, the subcontractor, the prime contractor and the surety shall be liable for liquidated damages in an amount equal to the unpaid wages if unpaid wages are found to be due. This basically means that the subcontractor or prime contractor and surety could be ending up on the hook for double the amount of the wages identified in the CWPA, on top of the wages and the penalties found to be due. 

Maintaining Accurate Records

Maintaining accurate records throughout the process is the key in fighting a CWPA. For example, have each employee sign in and out every single day at the beginning and end of their shifts and also as well for meal breaks. If you’re the prime contractor, you may in addition want to keep your own separate sign-in sheets for all the workers on the project, in addition to requiring your subcontractors to maintain their own sign-in sheets. Other documentation showing the number of workers, the scope of work, and the typical hours worked are all useful in defending against a wage claim. 

The more documentation you have showing the actual hours worked and actual wages paid to the worker, in addition to what work has been performed, the better position you will be in when responding to the CWPA and negotiating a quick settlement with no or reduced penalties. Also having detailed and accurate documentation, if you’re the prime contractor, helps while you closely monitor your subcontractor’s documentation and puts you in a better position to avoid having a CWPA issued against you or your subcontractors in the first place. 

My recommendation is once you receive notice of a CWPA, contact an experienced lawyer to help you negotiate the best outcome for you.