If a DIR audit on a public works project finds that a contractor underpaid prevailing wages, what is the awarding body authorized to do under Labor Code §1726?
Explanation
Labor Code §1726 and §1727 make the awarding body withhold from progress or final payments the wages, penalties and forfeitures the Labor Commissioner has assessed, and hold them until the assessment is resolved, so the money stays available to the underpaid workers. Cancelling the contract is a remedy for breach and is governed by the contract's own default and notice provisions, not by a wage audit. Prevailing wage enforcement is civil, so a criminal referral is not the ordinary route. And the awarding body is not a bystander: withholding is its own statutory duty once it is notified.
Law Reference: Labor Code §1726(a); §1727This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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