Sec. 106.1. Penalty and Forfeiture.
Sec. 106.2. Withholding of Funds.
Sec. 106.3. Where the City Does Not Have the Ability to Withhold Funds.
Sec. 106.4. Termination.
Sec. 106.5. Recourse Procedure.
Sec. 106.6. Distribution of Forfeiture and Damages.
Sec. 106.7. Remedies for Non-Compliance with Determination of Violation.
Any Contractor or Subcontractor who fails or neglects to comply with the requirements of Article 103, Article 104, and/or Article 105 shall forfeit to the City back wages due plus penalties. Penalties shall be forfeited in amounts consistent with analogous provisions of the California Labor Code as amended from time to time, including Sections 1775, 1777.7, and 1813, but not less than $50 for each calendar day, or portion thereof, for each worker not paid or otherwise not employed in compliance with the requirements of Article 103, Article 104, and/or Article 105. A Contractor shall be jointly and severally liable for the forfeitures of its Subcontractor(s). In addition, any Contractor or Subcontractor who fails or neglects to comply with the requirements of Article 103, Article 104, and/or Article 105 shall be subject to the penalties set forth in Article V of Chapter 6 of the Administrative Code, including debarment.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
For any Covered Project or Covered Contract under which the City has the ability to withhold funds, it shall be the duty of the officer, board, or commission under whose jurisdiction said Covered Project or Covered Contract is being carried on, constructed, or performed, when certifying to the Controller any payment which may become due under said Contract, to deduct from said payment or payments the total amount of any forfeiture provided for in Section 106.1. In doing so, the Department Head must also notify in writing the Labor Standards Enforcement Officer of the Department Head’s action. The Labor Standards Enforcement Officer may also, upon written notice to the Department Head responsible for the project, certify to the Controller any forfeiture(s) to deduct from any payment as provided for in this Section 106.2. Certification of forfeitures under this Section 106.2 shall be made only upon an investigation and audit by the responsible Department Head or the Labor Standards Enforcement Officer and upon service of written notice to the Contractor that includes identification of the grounds for the forfeiture or forfeitures (“Certification of Forfeiture”). The audit supporting the forfeiture shall be appended to the Certification of Forfeiture, but failure to append such documentation shall not invalidate the Certification of Forfeiture. Service of the Certification of Forfeiture shall be made by United States mail and the date of service shall be the date of mailing. The Controller, in issuing any warrant for any such payment, shall deduct from the amount which would otherwise be due on said payment or payments the amount of said forfeiture or forfeitures as so certified. This Section 106.2 does not provide for the withholding of funds disbursed through a City loan for a Covered Real Estate Project.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
A Covered Project or Covered Contract subject to the procedures and/or requirements of Section 106.2 shall not be subject to the procedures and requirements of Section 106.3. For any Covered Project or Covered Contract for which the City does not have the ability to withhold funds, the Labor Standards Enforcement Officer shall determine whether a Contractor and/or a Subcontractor has failed to comply with the Prevailing Wage Provisions. If after conducting an investigation, the Labor Standards Enforcement Officer determines that a violation has occurred, the Labor Standards Enforcement Officer shall issue to and serve a Determination of Violation on the Contractor and/or any Subcontractor, which sets forth the basis of the determination and orders payment of back wages due plus penalties in amounts consistent with Section 106.1. A Contractor shall be jointly and severally liable for the violations and liabilities set forth in a Determination of Violation issued to its Subcontractor(s). Service of the Determination of Violation shall be made by United States mail and the date of service shall be the date of mailing.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
In addition to and without prejudice to any other remedy available, the Department Head may terminate a Covered Contract unless within 30 days of service of the Certification of Forfeiture or Determination of Violation, the Contractor has either: (i) cured the violation; or (ii) established by documentary evidence, including but not limited to payroll records, the truth and accuracy of which is attested to by affidavit, proof of compliance with the applicable sections of the Prevailing Wage Provisions. Upon a termination under this Section 106.4, the Contractor shall not be entitled to any additional payment under the Covered Contract.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
(a) Any appeal from a Certification of Forfeiture or a Determination of Violation (each type of appeal referred to in this Section 106.5 as the “Appeal”) shall be filed in writing by the Contractor and/or Subcontractor (referred to in this Section 106.5, whether individually or together, as the “Appellant”) within 15 days of the date of service of the Certification of Forfeiture or the Determination of Violation. Appellant shall file the Appeal with the Controller and serve a copy on the Labor Standards Enforcement Officer. Failure by the Contractor or Subcontractor to submit a timely, written Appeal shall constitute concession to the forfeiture or determination, and the forfeiture or determination shall be deemed final upon expiration of the 15-day period.
(b) Upon being served with the Appeal, the Office of Labor Standards Enforcement shall promptly afford Appellant an opportunity to meet and confer in good faith regarding possible resolution of the Certification of Forfeiture or Determination of Violation in advance of further proceedings under this Section 106.5, with the intention that such meeting occur within 30 days of the date the Appeal is filed.
(c) After the expiration of 30 days following the date the Appeal is filed, any party may request in writing, with concurrent notice to all other parties, that the Controller appoint a hearing officer to hear and decide the Appeal (“Hearing Officer”). If no party requests appointment of a Hearing Officer, the Certification of Forfeiture or Determination of Violation shall be deemed final on the 60th day after the date the Appeal is filed.
(d) Within 15 days of receiving a written request for appointment of a Hearing Officer under subsection (c), the Controller shall appoint an impartial hearing officer and promptly notify the enforcing official and Appellant, and their respective counsel or authorized representative, if any, of the appointment. The Hearing Officer shall be an Administrative Law Judge with at least 10 years of experience with the City and not less than two years of experience in labor law, Prevailing Wage, and/or wage and hour matters; or shall be an attorney with knowledge of and not less than five years of experience in labor law, Prevailing Wage, and/or wage and hour matters.
(e) The Hearing Officer shall promptly set a date for a hearing. The hearing shall commence within 45 days of the date of the notification of the Hearing Officer appointment, and conclude within 75 days of such notice. The Hearing Officer shall conduct a fair and impartial evidentiary hearing in conformance with the time limitations set forth in this Section 106.5 and in the rules, so as to avoid undue delay in the resolution of any appeal. The Hearing Officer shall have the discretion to extend the times under this Section 106.5, and any time requirements under the rules and regulations, only upon a showing of good cause.
(f) Appellant has the burden of proving by a preponderance of the evidence that the basis for the Certification of Forfeiture or Determination of Violation is incorrect, including any back wage and penalty assessments that are at issue in the Appeal.
(g) Within 30 days of the conclusion of the hearing, the Hearing Officer shall issue a written decision affirming, modifying, or dismissing the Certificate of Forfeiture or Determination of Violation. The decision of the Hearing Officer shall consist of findings and a determination. The Hearing Officer’s findings and determination shall be the City’s final determination.
(h) Appellant may appeal a final determination under this Section 106.5
only by filing in the San Francisco Superior Court. The Appellant may appeal the final administrative decision only by filing in San Francisco Superior Court a petition for a writ of mandate under California Code of Civil Procedure, Section 1094.5 et seq., as applicable, and as may be amended from time to time.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
(a) The Controller shall withhold any forfeiture as provided in Section 106.2 until such time as either the Contractor or Subcontractor has conceded to the forfeiture or, in the event of an Appeal, there is a determination no longer subject to judicial review. The Controller shall then distribute the amounts withheld in the following order:
(1) the Labor Standards Enforcement Officer shall make best efforts to distribute back wages withheld to the individual workers identified as not having been paid the proper wage rate;
(2) the penalty sums provided for above shall inure to the benefit of the general fund of the City;
(3) the Controller shall hold the balance of any back wages in escrow for workers who the Labor Standards Enforcement Officer, despite best efforts, cannot locate. In the event back wages are unclaimed for a period of three years, the Controller shall undertake administrative procedures for unclaimed funds in conformance with California Government Code Section 50050, et seq., as may be amended from time to time.
(Added by Ord. 296-24, File No. 240985, App. 12/19/2024, Eff. 1/19/2025, Oper. 2/19/2025)
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