AB 538 Expands Accountability and Enforcement Measures Regarding Certified Payroll Records for Public Works Projects

12.12.2025

On October 11, 2025, Governor Newsom approved Assembly Bill (“AB”) 538 (Berman) (Stats, 2025, Ch. 616). AB 538 is intended to expand the available accountability and enforcement measures regarding requests from the public for certified payroll records for public works projects found in Labor Code section 1776. The changes implemented by AB 538 will take effect on January 1, 2026.

In summary, AB 538 requires the awarding body of a public works project to obtain and produce the payroll records from a contractor in response to a request by the public and authorizes the Division of Labor Standards Enforcement (“DLSE”) to enforce certain penalties if a contractor fails to comply with the awarding body’s request and provide the requested records in a timely manner.

Prior to AB 538, Labor Code section 1776(a) requires that each contractor and subcontractor on a public works project keep accurate payroll records showing the following information about each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work:

Name
Address
Social Security Number
Work Classification
Straight Time and Overtime Hours worked each day and week
Actual Per Diem Wages paid.

Certified copies of these payroll records may be requested by members of the public through the awarding body or the DLSE and must be made available upon request. Any contractor, subcontractor, agent, or representative who neglects to keep accurate payroll records is guilty of a misdemeanor.

Beginning January 1, 2026, if the request for copies of certified payroll records is made through the awarding body of a public works project and the awarding body does not possess the records, the awarding body is responsible for obtaining the requested certified payroll records and making them available to the requesting entity or individual. Following receipt of a request, the awarding body must provide the contractor with written notice of the request. The contractor will have 10 days to provide the awarding body with certified payroll records. If a contractor or subcontractor fails to provide the certified payroll records within 10 days, the awarding body must notify the DLSE, which may request that the awarding body withhold progress payments due to the contractor or subcontractor. We note that prior to AB 538, awarding bodies were not required to notify DLSE of noncompliance regarding the disclosure of certified payroll records.

While additional costs may be incurred by the public agency when ensuring contractor compliance, awarding bodies will not be reimbursed by the state for these costs. Additionally, a contractor will not be subject to a penalty assessment for a subcontractor’s failure to comply with an awarding body’s request for certified payroll records. However, subcontractors that fail to comply may be subject to the same progress payment penalties that DLSE may request from a noncompliant contractor.

Special thanks to our FCPPG law clerk, John Adamson, for his contributions to this alert.