BILL ANALYSIS                                                                                                                                                                                                    






               Senate Committee on Labor and Industrial Relations
                              Carole Migden, Chair

          Date of Hearing: April 11, 2007      2007-2008 Regular  
          Session                              
          Consultant: Alma Perez               Fiscal:Yes
                                               Urgency:No
          
                                Bill No: SB 569
                               Author: Steinberg
                        Amended Version: March 26, 2007
          

          Subject: Public works: prevailing wage payments: payroll  
          records. 

          Purpose:
          
          This bill makes a number of changes and additions to  
          current law to address public works transparency and  
          enforcement of the state's prevailing wage law.  

          Analysis:
          
           Existing law  defines "public work" as construction,  
          alteration, demolition, installation, or repair work that  
          is done under contract and that is paid for, in whole or in  
          part, out of public funds, as defined.  Existing law also  
          imposes prevailing wage obligations upon employers who  
          provide services or construction work for public entities  
          under contracts in excess of $1000. 

          Each contractor and subcontractor engaged in public works  
          is required to keep accurate payroll records.  Among other  
          things, the law states that:
                 Payroll records must be certified and available for  
               inspection at all reasonable hours at the employer's  
               principal office.  
                 However, the public does not have access to records  
               at the principal office of the contractor, but rather,  
               through a request by the body awarding the contract,  
               the Division of Apprenticeship Standards, or the  
               Division of Labor Standards Enforcement.  
                 Personal information (SSN, name, address) of each  
               individual worker is not available to the general  
               public. 









                 Payroll information requested from an employer by  
               the allowed entity must be provided within 10 days of  
               written request.

          The Labor Commissioner may investigate and issue a civil  
          wage and penalty assessment to a contractor or  
          subcontractor, or both, if it is found that laws regulating  
          public works contracts were violated.  Currently, the  
          contractor and subcontractor are jointly liable for all  
          amounts due pursuant to a final order or a judgment on that  
          final order, but requires the Labor Commissioner to collect  
          amounts due from the subcontractor before pursuing the  
          claim against the contractor. Any amounts collected from a  
          contractor will first be applied to satisfy any outstanding  
          wage claim before it is applied to the penalty.  

          Currently, federally recognized joint labor-management  
          committees may bring an action against an employer who  
          fails to pay prevailing wages as required by state law, not  
          later than 180 days after the filing of a valid notice of  
          completion or acceptance of the public work, whichever  
          occurs later. Courts may award restitution to employees and  
          attorney's fees and costs to the committee.

          In addition, the Labor Commissioner is directed to publish  
          a list of contractors and subcontractors who have committed  
          willful violations or against whom a final compliance order  
          has been issued.  
           
          This Bill  would make specific requirements of awarding  
          bodies, the Contractors State License Board (CSLB), joint  
          labor-management committees, contractors and subcontractors  
          in regards to public works contracts and payroll records.    


          Specifically, this bill:
                 Requires each awarding body of a public works  
               project to report specified information (name, license  
               number, location, ID number) about the public works  
               project, as well as, the contractor and subcontractor  
          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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               performing the work to the CSLB.  The board shall  
               include this information on their Web site.  
                 Deletes the provision requiring the Labor  
               Commissioner to collect amounts due from the  
               subcontractor before pursuing a claim against the  
               contractor. 
                 Changes the statute of limitations for joint labor  
               management committees to take enforcement actions  
               against an employer from 180 days to not later than  
               four years after the violation occurs.  
                 Provides that where a prevailing wage violation has  
               been proven, the court must enjoin further violations  
               and award unpaid wages to employees, and to award the  
               joint labor-management committee attorney's fees,  
               costs, and expenses.
                 Allows for members of the public to request  
               certified payroll records directly from the contractor  
               or subcontractor in addition to the Division of  
               Apprenticeship Standards, the Division of Labor  
               Standards Enforcement. 
                 Allows only a contractor or subcontractor to be  
               reimbursed for the costs of copying the payroll  
               records.  
                 Deletes the existing prohibition to public access  
               of payroll records at the principal office of the  
               employer, and instead, allows for direct public  
               access, but specifies access is not required to be  
               given at the principal office of the contractor or  
               subcontractor.     
                 Deletes the provisions authorizing the use of  
               printouts of payroll data that is maintained as  
               computer records.  

          This bill specifies that provisions of this act are  
          severable, and if any provisions or applications are held  
          invalid, that invalidity shall not affect other provisions  
          or applications that can be given effect without the  
          invalid provisions or applications.  
           

          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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          Comments:
          
          1.  Proponents  :
            
            According to the sponsor, the California State Pipe  
            Trades Council, prevailing wage laws were enacted to  
            ensure that skilled construction workers employed on  
            public works projects would be paid at least the wages  
            and benefits that "prevail" in their local communities.  
            
            The author's office states that underpaying prevailing  
            wages reduces the tax revenue the State would otherwise  
            receive from the employees of dishonest contractors.  The  
            taxpayers fund public projects based on prevailing-wage  
            compliance - they should get what they pay for, both in  
            taxes and quality construction.  

            The sponsors believe that dishonest contractors have  
            ample opportunity to cheat. There are thousands of public  
            works projects in California, with tens of thousands of  
            contractors and hundreds of thousands of workers  
            performing them.  The sponsors believe it is impossible  
            for the Labor Commissioner - who has only a handful of  
            prevailing wage enforcement deputies - to monitor  
            thousands of projects, investigate the complaints they  
            generate and pursue violations.  

            Existing law provides no mechanism for identifying a  
            contractor's public works projects, or for preventing  
            repeat violations by contractors who are caught cheating.  
            SB 569 does a number of things to improve public works  
            transparency and enforcement of the state's prevailing  
            wage law.  

          2.  Opponents  :

            According to the Associated General Contractors of  
            California, this bill will place significant new burdens  
          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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            on contractors and awarding agencies that are  
            unnecessary.

            The opponents argue that making the contractor and  
            subcontractor jointly liable for violations would be  
            partially overturning the Violante case decided on last  
            year which held that a prime contractor was not liable in  
            a civil lawsuit for a subcontractor's prevailing wage  
            violations.  The Construction Employers' Association  
            (CEA) fails to see why a contractor should be subject to  
            penalties when a subcontractor commits fraud.  

            Opponents argue that requiring every awarding body in  
            California to report the name and license number of each  
            contractor performing on public works projects would be  
            impractical because the awarding bodies and the general  
            contractor are not aware of every subcontractor who may  
            perform work on a project. CEA believes this would  
            present a tremendous burden to the already under-staffed,  
            under-funded CSLB and would be of little value.  

            The opposition also believes the bill clearly encourages  
            litigation by allowing an action to be brought four years  
            after an alleged violation rather than the current 180  
            days. They believe violations need to surface quickly so  
            that an offending subcontractor can be held accountable,  
            and because within the 180 days the project will still be  
            fresh in people's minds, documentation will not yet be  
            archived, and a contractor is likely to have the same  
            employees.  

            The bill provides that a joint labor management committee  
            shall be entitled to collect attorney's fees, costs and  
            expenses if they prevail in a court action.  CEA states  
            that this bill fails to provide these same items to a  
            contractor if the contractor prevails in a court action  
            against a joint labor management committee.  

            Lastly, the opposition believes this bill takes a step  
            backward by prohibiting a contractor from using printouts  
          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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            of payroll data that are maintained as computer records  
            and instead requiring the contractor to provide the data,  
            at considerable additional expenses, on forms provided by  
            the Division of Labor Standards.  

          3.  Prior Legislation :

            AB 581 (Klehs) in the 2005 legislative session. The bill  
            aimed at enabling labor-management committees to monitor  
            and enforce compliance with prevailing wage laws.  The  
            bill died in Senate Appropriations Committee. 

          4.  Staff Comment  :

            According to the author, under section 4, subparagraph  
            (e), the language was intended to read that where  
            certified payroll records are provided to the joint  
            labor-management committees, only the individuals' social  
            security numbers be blocked out and have the names  
            remain.  According to the sponsors, this is necessary so  
            that all underpaid workers can be identified and be  
            properly paid.  

            This provision is not included in this version of the  
            bill; however, the author intends to amend the bill at  
            the subsequent committee to reflect this change.  

            This bill has been double referred to this committee and  
            to the Judiciary committee. 
          
          Support:
          
          California State Pipe Trades Council (Sponsor)
          California State Association of Electrical Workers
          State Building and Construction Trades Council, AFL-CIO
          Western States Council of Sheet Metal Workers
          
          Opposition:
          
          Associated Builders and Contractors of California 
          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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          Associated General Contractors of California
          California Chamber of Commerce  
          Construction Employers' Association (CEA) 


































          Hearing Date:  April 11, 2007                            SB  
          569  
          Consultant: Alma Perez                                    
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          Senate Committee on Labor and Industrial Relations