BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: March 25, 2009 2009-2010 Regular
Session
Consultant: Rodger Dillon Fiscal:Yes
Urgency: No
Bill No: SB 45
Author: Padilla
Version: As Amended March 16, 2009
SUBJECT
Public works; payment of prevailing wages; violations.
KEY ISSUE
Should public works contractors that are found to be in willful
violation of the public works law be permanently barred from
bidding on or receiving a public works contract?
PURPOSE
To increase the penalty on contractors that willfully violate
prevailing wage law, and thereby remove such contractors from
competition with law-abiding contractors.
ANALYSIS
Existing law:
Provides that when a contractor or subcontractor performing a
public works project is found by the Labor Commissioner to be
in violation of public works law with intent to defraud, the
contractor or subcontractor or firm, corporation, partnership,
or association in which the contractor or subcontractor has
any interest shall be ineligible for a period of not less than
one year or more than three years to:
? Bid on or be awarded a public works contract;
? Perform work as a subcontractor on a public works
contract.
Provides that when a contractor or subcontractor performing a
public works project is found by the Labor Commissioner to be
in willful violation of public works law, the contractor or
subcontractor or firm, corporation, partnership, or
association in which the contractor or subcontractor has any
interest shall be ineligible for a period up to three years
for each second and subsequent violation occurring within
three years of a separate and previous willful violation to:
? Bid on or be awarded a public works contract;
? Perform work as a subcontractor on a public works
contract.
This Bill deletes the specified one-to-three year penalties and
establishes a permanent bar to contractors and subcontractors
participating in public works contracts when found by the Labor
Commissioner to have engaged in intent to defraud or to have
been in willful violation of public works law [i.e., Labor Code
Sections 1720 et. seq.].
COMMENTS
1. Need for this bill?
Due to the historic and on-going record of violations of
public works law, California has placed a number of strictures
and penalties in law to deter the incidence of such violations
and to ensure that the most reputable contractors and
subcontractors are performing vital state public works
construction. Nevertheless, violations of various kinds
continue. It may be that the more serious consequences of
violations in this arena would serve as a further deterrent to
unlawful activities.
2. Proponent Arguments :
The sponsor of the bill cites a specific violation of labor
law/public works law - the intentional misclassification of
employees as independent contractors. The author and
supporters state that SB45 will put an end to the vicious
Hearing Date: March 25, 2009 SB 45
Consultant: Rodger Dillon Page 2
Senate Committee on Labor and Industrial Relations
cycle of bad contractors who willfully violate the law from
continuing to do so. It will also help streamline the law,
bring necessary revenue into the State and protect our
precious public funds and infrastructure. The intentional and
willful misclassification of employees as independent
contractors is far too common in the construction industry,
supporters argue. Such violations hinder the state's
unemployment insurance fund workers' compensation system, and
revenue from income taxes.
3. Opponent Arguments :
None received.
4. Prior Legislation :
This author has introduced two bills over the last two years
to deal with the issue of misclassification. SB622 (Padilla)
of 2007 would have increased monetary penalties for willful
misclassification. The bill was approved by the Legislature
but vetoed by the Governor. SB1490 (Padilla) of 2008 would
have required employers to notify individuals classified by
employers as independent contractors of said classification
and provided these persons with information regarding their
rights. This bill was held in Senate Appropriations.
SUPPORT
State Building and Construction Trades Council, AFL-CIO
(Sponsor)
California State Council of Laborers (Sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
OPPOSITION
None received.
Hearing Date: March 25, 2009 SB 45
Consultant: Rodger Dillon Page 3
Senate Committee on Labor and Industrial Relations
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Hearing Date: March 25, 2009 SB 45
Consultant: Rodger Dillon Page 4
Senate Committee on Labor and Industrial Relations