BILL ANALYSIS                                                                                                                                                                                                    






                 Senate Committee on Labor and Industrial Relations
                                 Ted W. Lieu, Chair

          Date of Hearing: June 22, 2011               2011-2012 Regular 
          Session                              
          Consultant: Gideon L. Baum                   Fiscal:Yes
                                                       Urgency: No
          
                                   Bill No: AB 508
                                   Author: Swanson
                      Version: As Introduced February 15, 2011
          

                                       SUBJECT
          
            Displaced public transit, solid waste handling, and recycling 
                                 services employees.


                                      KEY ISSUE

          Should the Legislature extend a bid preference to contractors 
          and subcontractors who pledge to not terminate any existing 
          employees for up to 90 days when bidding for solid waste 
          handling and recycling services?
          

                                       PURPOSE
          
          To extend bid preferences and termination protections found in 
          public transit contract bidding to solid waste handling and 
          recycling services contract bidding.


                                      ANALYSIS
          
           Existing law  requires that when a public entity puts out to bid 
          a public service contract on public transit services, the bidder 
          must state as part of the bid for a service contract whether or 
          not he or she will retain the employees of the prior contractor 
          or subcontractor for a period of not less than 90 days.  (Labor 
          Code  1072)

           Existing law  also requires that an awarding authority letting a 
          service contract out to bid for public transit services shall 
          give a 10 percent preference to any bidder who agrees to retain 









          the employees of the prior contractor or subcontractor.  (Labor 
          Code  1072)

           Existing law  requires successor contractor or subcontractor for 
          public transit services who agrees to retain employees must 
          retain employees who have been employed by the prior contractor 
          or subcontractors, except for reasonable and substantiated 
          cause, which includes the particular employee's performance or 
          conduct while working under the prior contract, as well as or 
          the employee's failure of any controlled substances and alcohol 
          test.  (Labor Code  1072)

           Existing law  requires successor contractor or subcontractor for 
          public transit services shall make a written offer of employment 
          to each employee to be rehired. That offer shall state the time 
          within which the employee must accept that offer, which may not 
          be less than 10 days, and does not need to be at the same level 
          of wages or benefits as provided by the previous contractor or 
          subcontractor.  (Labor Code  1072)
             
           Existing law  provides that if the successor contractor or 
          subcontractor for public transit services determines that fewer 
          employees are required than were required under the prior 
          contract or subcontract, the successor contractor must retain 
          qualified employees by seniority within the job classification.  
          The successor contractor is permitted to consider licensing 
          requirements when judging seniority.  (Labor Code  1072)

           Existing law  also provides that an employee who was not offered 
          employment or who has been discharged in violation of this 
          chapter, or his or her agent, may bring an action against the 
          successor contractor or subcontractor in any superior court 
          having jurisdiction over the successor contractor or 
          subcontractor. Upon finding a violation of this, the court must 
          order reinstatement to employment with the successor contractor 
          or subcontractor and award backpay, including the value of 
          benefits, for each day of violation, as well as reasonable 
          attorney fees.  (Labor Code  1073)

           Existing law  also provides that, upon its own motion or upon the 
          request of any member of the public, an awarding authority may 
          terminate any service contract if both of the following occur: 
          Hearing Date:  June 22, 2011                             AB 508  
          Consultant: Gideon L. Baum                               Page 2

          Senate Committee on Labor and Industrial Relations 
          









             i.   The contractor or subcontractor has substantially 
               breached the contract; and 

             ii.   The awarding authority holds a public hearing within 30 
               days of the receipt of the
                request or its announcement of its intention to terminate.

          A contractor or subcontractor terminated as described above must 
          be ineligible to bid on or be awarded a service contract or 
          subcontract with that awarding authority for a period of not 
          less than one year and not more than three years, to be 
          determined by the awarding authority.  
          (Labor Code  1074)

           This bill  would  expand  the above-described requirements for 
          public transit contracts to also include  solid waste handling 
          and recycling services  .


                                      COMMENTS

          
          1.  Need for this bill?

            The author of this bill states that the genesis for the bill 
            lies in the significant unemployment rate in California and 
            the fiscal constraints facing cities and counties.  The author 
            notes that California's unemployment rate has been 
            consistently above 12% since the start of the Great Recession, 
            which has made it nearly impossible for workers to find new 
            jobs and significantly increased long-term unemployment.  

            The author notes that for specialized and experienced workers, 
            this can be particularly difficult.  In the case of employees 
            specialized in solid waste handling and recycling services, 
            these individuals are frequently the highest paid and 
            therefore at the greatest risk when a city or county opts to 
            contract out services.  The author believes that the 
            significant fiscal pressures cities are facing can lead to a 
            focus on the lowest possible bid, which can lead to the needs 
            of workers and their families to fall between the cracks.
          Hearing Date:  June 22, 2011                             AB 508  
          Consultant: Gideon L. Baum                               Page 3

          Senate Committee on Labor and Industrial Relations 
          









            AB 508 seeks to address these concerns by expanding existing 
            provisions on contracts for public transit providers to 
            include solid waste handling and recycling services.  The 
            author believes that the bill would encourage contractors to 
            keep necessary employees on contract for at least 90 days, 
            while also giving employees who are soon to be terminated time 
            to adjust and look for work.  

          2.  Proponent Arguments  :
            
            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.  
            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. 

            The sponsors argue that these mass layoffs hurt individual 
            families, but also impact the local economy.  The sponsors 
            also believe that this bill promotes a stable workforce that 
            allows workers to invest in and contribute to their community 

          3.  Opponent Arguments  :

            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.  

            Additionally, opponents argue that this bill does not provide 
          Hearing Date:  June 22, 2011                             AB 508  
          Consultant: Gideon L. Baum                               Page 4

          Senate Committee on Labor and Industrial Relations 
          








            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.  


          4.  Prior Legislation  :

            SB 158 (Alarcon), Statutes of 2003, Chapter 103, establishes 
            the above-discussed bid preferences and hiring procedures for 
            public transit contracts.


                                       SUPPORT
          
          California Labor Federation (Co-Sponsor)
          California Teamsters Public Affairs Council (Co-Sponsor)

          
                                     OPPOSITION
          
          California Business Properties Association
          California Chamber of Commerce
          California Disability Services Association
          California Independent Grocers Association
          California Manufacturers & Technology Association
          Desert Arc.
          Vocational Improvement Program Inc.








          Hearing Date:  June 22, 2011                             AB 508  
          Consultant: Gideon L. Baum                               Page 5

          Senate Committee on Labor and Industrial Relations