BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1598
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 1598 (Buchanan)
          As Introduced  February 6, 2012
          Majority vote 

           LABOR & EMPLOYMENT     5-1      APPROPRIATIONS      12-5        
           
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          |Ayes:|Swanson, Alejo, Allen,    |Ayes:|Fuentes, Blumenfield,     |
          |     |Furutani, Yamada          |     |Bradford, Charles         |
          |     |                          |     |Calderon, Campos, Davis,  |
          |     |                          |     |Gatto, Hall, Hill, Lara,  |
          |     |                          |     |Mitchell, Solorio         |
          |     |                          |     |                          |
          |     |                          |     |                          |
          |     |                          |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Morrell                   |Nays:|Harkey, Donnelly,         |
          |     |                          |     |Nielsen, Norby, Wagner    |
          |     |                          |     |                          |
          |     |                          |     |                          |
          |     |                          |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  Defines "installation" (for purposes of the law 
          applicable to the payment of prevailing wages on public works 
          projects) to include the assembly and disassembly of 
          freestanding and affixed modular office systems.

           EXISTING LAW  :

          1)Requires the prevailing wage rate to be paid to all workers on 
            "public works" projects over $1,000.

          2)Defines "public work" to include, among other things, 
            construction, alteration, demolition, installation or repair 
            work done under contract and paid for in whole or in part out 
            of public funds.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, this bill will result in potential increased staff 
          costs to the Department of Industrial Relations (DIR), likely 
          less than $125,000, due to increased workload regarding 








                                                                  AB 1598
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          enforcement.  However, increased fine revenue may offset any 
          increased staff costs.

           COMMENTS  :  According to the author, this bill seeks to clarify 
          the meaning of "installation" within the state public works law 
          to include the assembly and disassembly of freestanding and 
          affixed modular office systems.  There have been many 
          administrative decisions over the years concerning the assembly 
          of modular office systems and whether such work constitutes a 
          public work under state prevailing wage law.  For example, prior 
          to the passage of SB 975 (Alarcón), Chapter 938, Statutes of 
          2001, several DIR public works determinations held that the 
          assembly of such systems only constituted a "public work" if the 
          system was bolted, secured or mounted to the realty (walls 
          and/or floors).  See, for example Valley View Elementary School, 
          PW 99-034 (September 1999), and Metal Workers and Metal Storage 
          Shelving, PW 99-060 (November 1999).

          The sponsor of the current legislation (the Northern California 
          Carpenters Regional Council) argues that SB 975 added the term 
          "installation," in part, to clarify that such work would be 
          covered by prevailing wage law.

          However, even after the passage of SB 975, DIR continued to 
          apply the affixed/freestanding dichotomy in determining whether 
          such work was covered by prevailing wage law.  For example, in 
          Western Contract Services, PW 2005-017 (December 2005), DIR 
          found that the mere assembly and/or disassembly of freestanding 
          modular furniture was not subject to prevailing wage 
          requirements.  That case distinguished an earlier coverage 
          determination as involving modular furniture that was bolted 
          down, secured or mounted to the realty.

          In a subsequent decision, DIR stated that the determination of 
          whether such work was included as a public work was not affected 
          by SB 975's codification of "installation."  Modular Furniture, 
          County of Sacramento, PW 2008-035 (November 2009).  In that 
          decision, DIR stated that, "The relevant distinction between the 
          pre-SB 975 and post-SB 975 versions of the Labor Code are 
          immaterial.  Whether the work is installation rising to the 
          level of construction under the pre-SB 975 version or 
          'installation' under the post-SB 975 version produces the same 
          result.  The pre-SB 975 and the post-SB 975 coverage 
          determinations have in common the bolting, securing or mounting 








                                                                  AB 1598
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          of items to the realty as fixtures."

          The Northern California Carpenters Regional Council argues that 
          this bill is necessary because DIR's continued insistence in 
          recent years on the affixed/freestanding dichotomy means that 
          the intent of SB 975's addition of the term "installation" has 
          not been completely effectuated.

          The California State Conference of Carpenters writes that a 
          "tortured interpretation of the existing statute under the 
          previous administration resulted in a reversal of this well 
          established practice.  This simple statutory clarification will 
          bring a necessary measure of certainty to the public works 
          contracting process that reflects legislative and regulatory 
          intent as well as standard industry practice."

          Writing in opposition to this bill, the Associated Builders and 
          Contractors of California (ABC California) argues that it 
          "proposes to expand state prevailing wage mandates to the set up 
          and take down of office cubicles.  ABC California believes Ýthis 
          bill] continues the unwarranted expansion of state mandated 
          construction wage rates to projects that are not, in reality, 
          construction.  It is important to note that modular systems set 
          up and take down is something that is normally obtained by 
          purchase contract with office furniture equipment suppliers, not 
          under a public works construction contract."

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


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