BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                  AB 514
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          Date of Hearing:   May 18, 2011

                                Felipe Fuentes, Chair

               AB 514 (Roger Hernandez) - As Amended:  April 27, 2011 

          Policy Committee:                              Labor and 
          Employment   Vote:                            5-1

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              No


          This bill clarifies the definition of "hauling refuse" for the 
          purposes of prevailing wage statute.  Specifically, this bill: 

          1)Defines "hauling refuse" as including, but not limited to, 
            hauling materials other than bona fide commodities sold at 
            fair market value from a public work site.  

          2)Defines "bona fide commodity" as a commodity for which a 
            publicly traded commodity market exists, such as copper, 
            steel, or aluminum.  

           FISCAL EFFECT  

          1)Minor, absorbable costs to the Department of Industrial 
            Relations (DIR) to enforce this measure.

          2)To the extent this measure leads to an increase in the number 
            of prevailing wage fines issued by DIR, there will an increase 
            in special fund revenue.  Likewise, this measure may cause a 
            minor increase in local government contract costs (non-state 
            reimbursable mandate), assuming contractors/subcontractors are 
            not currently paying a prevailing wage to workers hauling 


          1)Background  .  According to DIR, California's prevailing wage 
            rate is the basic hourly rate paid on public works projects to 
            a majority of workers engaged in a particular craft, 
            classification or type of work within the locality and in the 


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            nearest labor market area (if a majority of such workers are 
            paid at a single rate).  If there is no single rate paid to a 
            majority, the single or modal rate being paid to the greater 
            number of workers is prevailing.  DIR further notes that the 
            prevailing wage is determined by the Director of DIR in 
            written determinations issued annually on February 22 and 
            August 22.  Existing law establishes penalties for 
            contractors/subcontractors who fail to pay the prevailing wage 
            to workers, as specified.

            Existing law defines "public works" as construction, 
            alteration, demolition, installation, or repair work done 
            under contract and paid for in whole or in part out of public 
            funds, except work done directly by any public utility 
            company, as specified.  Statute also defines "public works" to 
            mean the hauling of refuse from a public works site to an 
            outside disposal location, with respect to contracts involving 
            any state agency, including the California State University 
            and the University of California, or any political subdivision 
            of the state (i.e., any county, city, district, public housing 
            authority, or public agency of the state, and assessment or 
            improvement districts). 

           2)Purpose  .  Proponents of this measure (California State 
            Building Trades and California Teamsters) contend that some 
            contractors, despite current statute, do not pay a prevailing 
            wage to workers hauling refuse.  Specifically, they contend 
            contractors are selling refuse hauled from public work sites, 
            often for minuscule fee, and then do not pay the worker that 
            hauled the refuse the prevailing wage.  The contractor 
            provides the employee the rational that the material hauled 
            away had some value and as such, it is not refuse.   

           3)DIR interpretation of prevailing wage and refuse hauling  .  In 
            October 2008, DIR issued a public works determination 
            regarding prevailing wage statute and the hauling of refuse.  
            Specifically, DIR was asked to comment on whether or not a 
            contractor was required to pay a prevailing wage to truck 
            drivers hauling debris from a construction site to a landfill. 
             DIR states: "The apparent intent of the Legislature in 
            enacting section 1720.3 was to include within the definition 
            of 'public works' the hauling of any refuse that was part of 
            the construction project." (83 Ops. Cal.Atty.Gen. 166, 168-169 
            (2000).)   Consistent with long-standing Department 
            interpretation, the term "refuse" encompasses "anything 


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            discarded or rejected as useless or worthless; trash." (See 
            American Heritage Dict. (new college ed. 1979) p. 1095).)"

           Analysis Prepared by  :    Kimberly Rodriguez / APPR. / (916)