Public Works
When the customer paying for a construction project is a government body, an entirely separate layer of labor and payment law applies on top of the ordinary contractor rules. This chapter explains how to recognize a public works job and the prevailing-wage, registration, payroll, bonding, and insurance duties that come with it.
What Counts as a Public Works Project
A public works project is, in plain terms, construction, alteration, demolition, installation, or repair work that is paid for in whole or in part with public funds. The label does not depend on who owns the land or who hires you — it depends on where the money comes from, so a privately built project can still be public works if a public agency contributes funding. Once a job qualifies, prevailing-wage and related rules attach to almost every contract, with only a narrow exception for the smallest jobs.
Prevailing Wage — How Rates Are Set
On a covered public works job, every worker must be paid at least the prevailing wage — a per-craft, per-locality minimum hourly rate. The Department of Industrial Relations (DIR) determines these rates by surveying wages actually paid in each county for each trade, and the rate is almost always far above the ordinary state or federal minimum wage. Each rate has two parts: a basic hourly cash rate plus a fringe-benefit amount covering items like health coverage, pension, training, and vacation. The contractor must post the applicable wage determination at the job site so workers can see what they are owed.
DIR Contractor Registration
Separate from a CSLB license, any contractor or subcontractor that wants to work on public works must first register annually with the DIR and pay the registration fee. Registration must be in place before the contractor submits a bid and before a public works contract is awarded. An awarding agency may not accept a bid from, or hand a contract to, an unregistered contractor, so letting registration lapse can knock a contractor out of a public job entirely.
Certified Payroll & Apprenticeship
Contractors on public works must keep certified payroll records — accurate records showing each worker's name, classification, hours worked, and wages paid — and submit them, typically through the DIR's online system, to the Labor Commissioner. These records prove that prevailing wage was actually paid and must be available for inspection. Public works also carry an apprenticeship duty: the contractor must employ apprentices in the proper ratio and must request apprentices from a state-approved apprenticeship program for each applicable craft.
Public Works Bonding
Public works contracts commonly require three kinds of bonds. A bid bond, submitted with the bid, guarantees the contractor will sign the contract if selected. A performance bond, usually demanded by the awarding agency, guarantees the project will be completed according to the contract. A payment bond is required by law on public works contracts over $25,000; it guarantees that workers, subcontractors, and material suppliers will be paid, which matters greatly because they cannot place a lien on public property.
Stop Payment Notices on Public Works
Because public property cannot be encumbered, a contractor or supplier on a public works job has no right to record a mechanics' lien — the lien remedy simply does not exist against government land. The substitute remedy is the stop payment notice: an unpaid claimant serves a written notice on the public agency, which must then withhold enough of the unpaid project funds to cover the claim until the dispute is resolved. Combined with the required payment bond, the stop payment notice gives subcontractors and suppliers their main path to payment on public projects.
Insurance, Overtime & Penalties
Public works jobs carry the same workers' compensation insurance requirement as any other contractor work, and awarding agencies typically require proof of general liability coverage as a condition of the contract. Overtime rules on public works are strict: work over eight hours in a day or forty hours in a week must be paid at the prevailing overtime rate. Violating prevailing-wage law is costly — the Labor Commissioner can assess penalties for each worker for each day of underpayment, and the contractor must also pay the difference between what was paid and the correct prevailing wage.