BILL ANALYSIS Ó
AB 1598
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1598 (Buchanan) - As Introduced: February 6, 2012
Policy Committee: Labor and
Employment Vote: 5-1
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill defines installation within the scope of a public
works project to include the assembly and disassembly of
freestanding and affixed modular office systems for the purpose
of paying a prevailing wage.
FISCAL EFFECT
1)Potential increased staff costs to the Department of
Industrial Relations (DIR), likely less than $125,000, due to
increased workload regarding enforcement.
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, which will likely offset any
increased staff costs.
COMMENTS
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
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
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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 requires a prevailing
wage to be paid to all workers employed on a public works
project over $1,000.
SB 975 (Alarcon), Chapter 938, Statutes of 2001, defined the
terms "public funds" and included the word installation in the
definition of public works. The term installation was added
to clarify future prevailing wage determinations made by DIR
as it related to the installation of office modular systems.
Prior to 2001, DIR issued several administrative decisions
that a prevailing wage was not required to be paid if the
modular systems were not bolted, secured, or mounted to the
walls/floors (Valley View Elementary School, PW 99-034
(September 1999) and Medal Workers and Metal Storage Shelving,
PW 99-060 (November 1999)).
2)Purpose . Chapter 938 was intended to clarify the issue of
paying a prevailing wage in public works projects involving
the installation of modular office systems. DIR, however,
continued to determine that paying a prevailing wage is only
required when the office system is "bolted down, secured, or
mounted to the realty (walls/floors)" (PW 2005-017, Western
Contract Services, Assembly and Disassembly of Free-Standing
Modular Furniture (December 2005). In 2009, DIR was more
specific in this conclusion stating: "where modular furniture
is mounted, bolted or secured to the floor, ceiling or walls,
it becomes part of the building structure. Free-standing
modular furniture is materially distinguishable from modular
furniture that is affixed to the reality in that free-standing
modular furniture more closely resembles personal office
furniture such as desks and chairs that do not become part of
the building structure."
The author contends the inclusion of the word installation in
the definition of public works under SB 975 "was to ensure
that the assembly and disassembly of modular office systems
would be covered by prevailing wages whether the office
systems installed were affixed or freestanding. Unfortunately,
no definition was provided for the term installation. The
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Director Ýof DIR] has continued to rely on the precedential
decisions referred to above that were made before the term
installation was added to the definition of covered work.
Consequently, the intent of the 2001 addition of the term
installation was never effectuated."
This bill, sponsored by the Northern California Carpenters
Regional Council, defines installation within the scope of a
public works project to include the assembly and disassembly
of freestanding and affixed modular office systems for the
purpose of paying a prevailing wage.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081