BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1598 (Buchanan) - Public contracts: public works:
installation.
Amended: April 26, 2012 Policy Vote: L&IR 5-1
Urgency: No Mandate: No
Hearing Date: August 16, 2012 Consultant:
Bob Franzoia
SUSPENSE FILE.
Bill Summary: AB 1598 would modify the definition of
installation to include the assembly and disassembly of
freestanding and affixed modular office systems.
Fiscal Impact: Unknown, potentially significant to major costs
to the General Fund or special funds in any year for the
assembly and disassembly of freestanding modular office systems
at prevailing wages.
Minor, absorbable costs to the Labor Enforcement and
Compliance Fund for oversight and enforcement. Potentially
General Fund costs beginning July 1, 2013 when authorization
for the Labor Enforcement and Compliance Fund sunsets.
Background: Existing law requires that not less than the general
prevailing wage rate of per diem wages, as determined by the
Department of Industrial Relations (DIR), be paid to all workers
employed on a public works project. The prevailing wage rate is
the hourly rate paid on a public works project 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.
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. At issue with
this bill is work that may or may not be "installation." There
have been administrative decisions concerning the assembly of
modular office systems and whether such work constitutes a
public work under state prevailing wage law. Chapter 938/2001,
SB 975 (Alarcon), amended Labor Code 1720 to add "installation,"
in part, to clarify that such work would be covered by
prevailing wage law. Despite the addition of "installation,"
AB 1598 (Buchanan)
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DIR maintained a distinction between freestanding and affixed
modular office systems when determining whether such
installation was covered by prevailing wage law.
Modular office system assembly is generally done as part of new
construction for the purpose of creating work stations and
disassembly and assembly is generally done as part of renovation
when carpet is replaced or painting is done. Often, modular
office system assembly or disassembly is obtained by purchase
contract with office furniture equipment suppliers, not under a
public works construction contract.
Proposed Law: This bill would amend Labor Code 1720 (a) to read:
1720. (a) As used in this chapter, "public works" means:
(1) 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 pursuant to order of the Public Utilities
Commission or other public authority. For purposes of this
paragraph, "construction" includes work performed during the
design and preconstruction phases of construction including, but
not limited to, inspection and land surveying work. For
purposes of this paragraph, "installation" includes, but is not
limited to, the assembly and disassembly of freestanding and
affixed modular office systems.
Staff Comments: The state pays prevailing wages on public works
projects or if prevailing wages are required because of the
nature of the work. For example, in commercial moving services
agreements, even though it is not a public works project, the
state pays prevailing wages for workers as directed by
Government Code 14920.
Generally, the Department of General Service contracts for both
assembly of free-standing and for affixed modular office
systems. Department staff may do some non contract assembly of
these systems but there is no differential in compensation.
When the modular office systems are affixed, the prevailing
wages for carpenters and modular furniture installers are paid.
When the modular office systems are free-standing assembly,
prevailing wages are not paid pursuant to decisions issued by
DIR.
AB 1598 (Buchanan)
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