SB909 - Public works.

Enrolled August 28, 2026 Passed IN Senate August 26, 2026 Passed IN Assembly August 25, 2026 Amended IN Assembly August 17, 2026 Amended IN Assembly August 13, 2026 Amended IN Senate May 14, 2026 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 909 Introduced by Senator Smallwood-Cuevas January 26, 2026 An act to amend Sections 1725.5, 1771.3, 1775, 1776, and 1777.7 of the Labor Code, and to amend Section 2603 of the Public Contract Code, relating to public works. LEGISLATIVE COUNSEL'S DIGEST SB 909, Smallwood-Cuevas. Public works. Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages be paid to workers employed on public works and imposes misdemeanor penalties for a willful violation of this requirement. Existing law defines “public works” for the purposes of regulating public contracts as, among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for, in whole or in part, out of public funds. Existing law generally requires a contractor or subcontractor to be registered with the Department of Industrial Relations to be qualified to bid on, be listed in a bid proposal, or engage in the performance of any public work contract. Existing law requires a contractor or subcontractor to meet specific conditions to qualify for this registration, including that a contractor or subcontractor pay an initial application fee and an annual renewal fee set by the Director of Industrial Relations. Existing law authorizes the department to establish and adjust annual registration and renewal fees up to $800 by publishing the fees on the department’s internet website. This bill would increase the fee limit to $1,000. Existing law requires the Labor Commissioner to issue civil wage and penalty assessments to a contractor or subcontractor, or both, if, after an investigation, the commissioner determines there has been a violation of the laws regulating public works contractors, including the payment of prevailing wages. Existing law also authorizes the Labor Commissioner to assess specified civil penalties against a contractor or subcontractor for a violation of the skilled and trained workforce requirements, and authorizes reduction or waiver of a penalty for specified conditions. Existing law also sets a penalty schedule for subcontractors and contractors for, among other things, failing to pay the prevailing wage rate or failing to keep accurate payroll records, as specified. Existing law establishes the State Public Works Enforcement Fund and directs all registration fees and other moneys, such as fines, to be deposited into the fund, to be available upon appropriation, for, among other purposes, the reasonable costs of administering registration with the Department of Industrial Relations. Existing law authorizes the awarding body for a public works project to not require the payment of the general prevailing rate of per diem wages on public works projects of specified sizes and types of work, including construction projects of $25,000 or less, if the awarding body elects to initiate and enforce a labor compliance program containing specified requirements for every public works project under its authority, as specified. Existing law requires a labor compliance program, if the involvement of the Labor Commissioner has been limited to a determination of the actual amount of penalty or the forfeiture or underpayment of wages, and the matter has been resolved without litigation by or against the Labor Commissioner, to deposit penalties and forfeitures with the awarding body. This bill would increase certain penalties, as specified, and require all penalties received by the Labor Commissioner, as specified, to be deposited into the State Public Works Enforcement Fund. The bill would also add the reasonable costs of ensuring sufficient staffing levels in the Labor Commissioner’s office for public works project enforcement to the purposes of the fund. The bill would instead require an awarding body, if the involvement of the Labor Commissioner in a labor compliance program enforcement action has been limited and resolved, as specified, to deposit penalties with the awarding body that enforced the above-described provisions. The bill would make conforming changes and related findings and declarations. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. The Legislature finds and declares all of the following: (a) Public works construction projects are an essential component of California’s economy and ensure that citizens of the state have access to functional, high-quality, public infrastructure. According to the United States Census Bureau, as of August 2024, California’s public works construction market is valued at $46,000,000,000, up 37 percent over the last 10 years. (b) Despite the ongoing expansion of California’s construction sector and rising contractor revenues, wage theft still runs rampant in the construction industry. A recent University of California, Berkeley study found that wage theft by way of misclassifying workers and making payments under the table affects one in five construction workers. (c) The State of California currently boasts some of the strongest public works construction laws in the United States. However, a lack of prioritizing enforcement of our existing laws has led to an increased backlog of workers not receiving wages they are rightfully owed. Additionally, public works penalties that are intended to deter contractors from exploiting workers have remained unchanged since 2012. At the same time, the value of those penalties has decreased with the Consumer Price Index increasing 40 percent over the last 12 years. (d) In May 2024, the California State Auditor published an audit of the Department of Industrial Relations’ Division of Labor Standards Enforcement. Among the key findings, the California State Auditor found that the Labor Commissioner’s office was not providing timely adjudication of wage claims for workers primarily because of insufficient staffing to process those claims. (e) Between 2017 and 2023, the Labor Commissioner’s office had 47,000 backlogged wage claims and struggled to collect wage judgments from employers. For workers who chose to utilize the Labor Commissioner’s wage claim unit to attempt to collect owed wages, the adjudication unit was successful in collecting the entire amount owed to employees in only 12 percent of cases from 2018 to November 2023, inclusive. (f) According to the California State Auditor, lack of staffing, high vacancy rates, and low salaries offered to employees in the Labor Commissioner’s office are the primary reasons that the state has struggled to process wage claims and ensure workers experiencing wage theft are paid what they have already earned. The California State Auditor estimated that the Labor Commissioner’s office needs at least 892 full-time positions to resolve backlogged wage claims and provide appropriate supervisory coverage. As of May 2024, the Labor Commissioner’s adjudication unit had only 315 authorized positions. That number of positions is 577 short of the California State Auditor’s estimated need. (g) Currently, state efforts to enforce public works requirements are funded by the State Public Works Enforcement Fund. That fund is a special fund that receives revenues from an annual registration fee paid by all contractors that wish to bid on public works contracts. Despite the current stream of funding, additional resources are desperately needed to ensure the state’s public works enforcement capabilities are as robust as the labor protections that currently exist in statute. (h) It is the intent of the Legislature to ensure strong state enforcement of public works laws by ensuring that existing penalties for public works violations are utilized in a manner that leads to further enforcement of the state’s public works labor laws. SEC. 2. Section 1725.5 of the Labor Code, as amended by Section 22 of Chapter 52 of the Statutes of 2024, is amended to read: 1725.5. A contractor shall be registered pursuant to this section to be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any public work contract that is subject to the requirements of this chapter. For the purposes of this section, “contractor” includes a subcontractor as defined by Section 1722.1. (a) To qualify for registration under this section, a contractor shall do all of the following: (1) (A) Register with the Department of Industrial Relations in the manner prescribed by the department and pay an initial nonrefundable application fee to qualify for registration under this section and an annual renewal fee on or before July 1 of each year thereafter. The director may establish and adjust annual registration and renewal fees, of up to one thousand dollars ($1,000), by publishing the fees on the department’s internet website, and those actions shall not be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code). Any action taken to establish or adjust annual registration and renewal fees in excess of one thousand dollars ($1,000) shall be subject to the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) and the director shall thereafter publish those fees to the department’s internet website. The initial registration and renewal fees may be adjusted no more than annually by the director to support the costs specified in Section 1771.3. (B) A contractor may register or renew according to this subdivision in annual increments up to three years from the date of registration. Contractors who wish to do so will be required to prepay the applicable nonrefundable application or renewal fees to qualify for the number of years for which they wish to preregister. (2) Provide evidence, disclosures, or releases as are necessary to establish all of the following: (A) Workers’ compensation coverage that meets the requirements of Division 4 (commencing with Section 3200) and includes sufficient coverage for any worker whom the contractor employs to perform work that is subject to prevailing wage requirements other than a contractor who is separately registered under this section. Coverage may be evidenced by a current and valid certificate of workers’ compensation insurance or certification of self-insurance required under Section 7125 of the Business and Professions Code. (B) If applicable, the contractor is licensed in accordance with Chapter 9 (commencing with Section 7000) of the Business and Professions Code. (C) The contractor does not have any delinquent liability to an employee or the state for any assessment of back wages or related damages, interest, fines, or penalties pursuant to any final judgment, order, or determination by a court or any federal, state, or local administrative agency, including a confirmed arbitration award. However, for purposes of this paragraph, the contractor shall not be disqualified for any judgment, order, or determination that is under appeal, provided that the contractor has secured the payment of any amount eventually found due through a bond or other appropriate means. (D) The contractor is not currently debarred under Section 1777.1 or under any other federal or state law providing for the debarment of contractors from public works. (E) The contractor has not bid on a public works contract, been listed in a bid proposal, or engaged in the performance of a contract for public works without being lawfully registered in accordance with this section, within the preceding 12 months or since the effective date of the requirements set forth in subdivision (e), whichever is earlier, and also has not been awarded a contract for, or engaged in the performance of, work on projects or developments without being lawfully registered in accordance with Section 1725.6, within the preceding 12 months. If a contractor is found to be in violation of the requirements of this paragraph, the period of disqualification shall be waived if both of the following are true: (i) The contractor has not previously been found to be in violation of the requirements of this paragraph within the preceding 12 months. (ii) The contractor pays an additional nonrefundable penalty registration fee of two thousand dollars ($2,000). (b) Fees received pursuant to this section shall be deposited in the State Public Works Enforcement Fund established by Section 1771.3 and shall be used only for the purposes specified in that section. (c) A contractor who fails to pay the renewal fee required under paragraph (1) of subdivision (a) on or before the expiration of any prior period of registration shall be prohibited from bidding on or engaging in the performance of any contract for public work until once again registered pursuant to this section. If the failure to pay the renewal fee was inadvertent, the contractor may renew its registration retroactively by paying an additional nonrefundable penalty renewal fee equal to the amount of the renewal fee within 90 days of the due date of the renewal fee. (d) If, after a body awarding a contract accepts the contractor’s bid or awards the contract, the work covered by the bid or contract is determined to be a public work to which Section 1771 applies, either as the result of a determination by the director pursuant to Section 1773.5 or a court decision, the requirements of this section shall not apply, subject to the following requirements: (1) The body that awarded the contract failed, in the bid specification or in the contract documents, to identify as a public work that portion of the work that the determination or decision subsequently classifies as a public work. (2) Within 20 days following service of notice on the awarding body of a determination by the Director of Industrial Relations pursuant to Section 1773.5 or a decision by a court that the contract was for public work as defined in this chapter, the contractor and any subcontractors are registered under this section or are replaced by a contractor or subcontractors who are registered under this section. (3) The requirements of this section shall apply prospectively only to any subsequent bid, bid proposal, contract, or work performed after the awarding body is served with notice of the determination or decision referred to in paragraph (2). (e) The requirements of this section shall apply to any bid proposal submitted on or after March 1, 2015, to any contract for public work, as defined in this chapter, executed on o [Text truncated for display. Full text available on Congress.gov.]