BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                  AB 508
                                                                  Page  1

          Date of Hearing:   April 13, 2011

                                Sandre Swanson, Chair
                 AB 508 (Swanson) - As Introduced:  February 15, 2011
          SUBJECT  :   Displaced public transit, solid waste handling, and 
          recycling services employees.

           SUMMARY  :   Extends an existing bid preference for public transit 
          contractors who agree to retain employees (as specified) to also 
          include solid waste handling and recycling services contractors.

           EXISTING LAW  :

          1) Requires all bidders on public transit service contracts to 
             advise the awarding authority whether they will retain the 
             employees of the prior contractor/subcontractor.

          2) Requires awarding authorities who put out a bid for public 
             transit service to provide a 10 percent bidding preference to 
             contractors and subcontractors who agree to retain the 
             employees of the prior contractor/subcontractor for a period 
             of at least 90 days.

          3) Requires existing contractors to provide awarding authorities 
             with specified employee information, which will assist 
             bidding contractors/subcontractors in costing their bids.

          4) Exempts contractors/subcontractors from retaining employees 
             for "cause," as defined.

          5) Authorizes the new contractor/subcontractor to pay alternate 
             wages and provide alternate benefits from those of the prior 

          6) Authorizes the new contractor/subcontractor to retain fewer 
             employees than the prior contractor, if necessary.  In such a 
             situation, the employees shall be retained by seniority 
             within the given job classification.

          7) Authorizes employees who have not been offered employment or 
             who have been discharged in violation of the provisions of 
             this bill to bring suit against the contractor/subcontractor 
             in superior court.


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          8) Provides for remedy in the form of reinstatement, back pay, 
             benefits and attorney's fees and costs.

          9) Obliges an awarding authority, after public hearing, to 
             terminate a contract substantially breached by a 

          10)Provides that such a terminated contractor/subcontractor is 
             ineligible to bid or be awarded a contract/subcontract with 
             the terminating awarding authority for between one and three 
             years, to be determined by the awarding authority. 

          11)Also provides for employment retention protection for 
             employees of janitorial and building maintenance contractors, 
             as specified.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :  Existing law already establishes a 10 percent bidding 
          preference for public transit service contractors and 
          subcontractors who agree to retain employees of the previous 
          contractor for a period of at least 90 days.  That requirement 
          was enacted by Senate Bill 158 (Alarcón) of 2003.

          This bill would simply extend those requirements to contractors 
          and subcontractors who submit bids for solid waste handling and 
          recycling services.   


          This bill is co-sponsored by the California Labor Federation, 
          AFL-CIO and the California Teamsters Public Affairs Council.  
          The sponsors state that this bill is intended to reduce 
          unemployment by keeping workers from being displaced when a 
          city's contract for garbage and recycling changes companies.  

          They note that with an unemployment rate stuck at 12.5 percent, 
          working people in California face the bleakest economy since the 
          Great Depression.  Last year alone the Employment Development 
          Department (EDD) paid out an unprecedented $22.9 billion in 
          unemployment benefits to 1.7 million jobless Californians.   
          Workers who have lost jobs are finding it nearly impossible to 
          find new ones.  The number of long-term unemployed doubled last 
          year to 880,000.  In fact, over 40 percent of the unemployed 


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          have been out of work more than six months.
          The sponsors argue that when cities and counties contract for 
          services like garbage and recycling disposal, they are often 
          focused on the costs of the bids, the level of service provided, 
          and the type of diversion offered.  In many cases, the workers 
          fall through the cracks when contracts change hands.  The 
          existing workforce, trained and experienced, is summarily laid 
          off and replaced. 

          These mass layoffs hurt individual families, but also impact the 
          local economy.  Promoting a stable workforce allows workers to 
          invest in and contribute to their community.  It means people 
          can stay in their homes, kids can stay in their schools, and 
          families can retain health insurance.  It also means fewer 
          workers relying on unemployment benefits or other 
          taxpayer-funded programs.

          The sponsors contend that this bill rewards companies who retain 
          existing garbage and recycling employees for ninety days after 
          the new contract takes effect with a 10 percent bid preference. 
          This allows the company an opportunity to decide whether to 
          retain the employee, while giving the employee additional time 
          to prepare for a possible layoff job.   Existing law already 
          provides such a preference in bids for transit services. 


          Opponents contend that this bill is designed to ensure that a 
          union, who has been elected as the bargaining representative 
          through the proper procedures for the prior contractor, will 
          remain the bargaining representative for the subsequent 
          employer.  Since this bill mandates that subsequent employers / 
          contractors, who want to obtain a bid preference for a public 
          contract, must agree to hire the predecessor's employees, 
          opponents argue that it basically forces a successor 
          employer/contractor into a union workforce.  Refusal to make 
          such a promise will basically eliminate that contractor from the 
          bidding process to obtain the contract.  Opponents believe the 


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          decision of whether or not to have a union in the workplace 
          should be left to the employers and employees, after following 
          the proper procedures outlined by the National Labor Relations 

          Additionally, opponents argue that this bill does not provide 
          protection for all employees of the solid waste handling and 
          recycling, but rather only those employees of the prior 
          contractor.  By forcing a subsequent contractor to promise to 
          hire the prior contractor's employees, it places the subsequent 
          employer in the untenable position of either: (1) losing the 
          contract in order to save his/her existing workforce; or (2) 
          promising to terminate his existing employees and hire the prior 
          contractor's employees in order to obtain the bid preference.   
          Accordingly, despite being employees of solid waste handling and 
          recycling that this bill seeks to protect, the existing 
          employees of the subsequent contractor will ultimately lose if 
          this bill is implemented.  

          California Labor Federation, AFL-CIO (co-sponsor)
          California Teamsters Public Affairs Council (co-sponsor)

          California Business Properties Association
          California Chamber Of Commerce
          California Independent Grocers Association
          California Manufacturers & Technology Association

          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091