Late last year, California expanded the definition of public works requiring the payment of prevailing wages to include the hauling or delivery of ready-mixed concrete for a public works project. The new law marks a significant departure from the laws that govern the construction industry, which have distinguished between the performance of construction work and the supply of construction materials, and supersedes the California Department of Industrial Relations' prior decision that the delivery of ready-mixed concrete to a public works project did not constitute work subject to prevailing wages.
The new law, codified at California Labor Code Section 1720.9, applies to all public works contracts awarded on or after July 1, 2016. It provides that the delivery of 'ready-mixed concrete', defined as "concrete that is manufactured in a factory or a batching plant, according to a set recipe, and then delivered in a liquefied state by mixer truck for immediate incorporation into a project", from a commercial plant to a public works job will be subject to prevailing wages. The prevailing wage rate is based on the geographic area in which the batch plant is located. The law requires the company that hauls or delivers ready-mixed concrete to enter into a written subcontract agreement with the contractor that engaged it. This means that a ready-mixed concrete supplier may not exclusively rely on purchase orders. Companies that haul or deliver ready-mixed concrete will also be required to submit certified payroll records to the contractor they contract with and the project's prime contractor within three working days of payment of the driver, accompanied by a written time record certified by each driver.
The law blurs the distinction between contractors and suppliers for prevailing wage purposes and attempts to expand the number of employees who are entitled to prevailing wages, which are generally higher than regular wages. Undoubtedly, the new law will increase the costs of public works projects and increase the administrative burdens on ready-mixed concrete suppliers.
For further information on this topic please contact Patty H. Lee at Seyfarth Shaw LLP by telephone (+1 415 397 8549) or email ([email protected]). The Seyfarth Shaw website can be accessed at www.seyfarth.com.