BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2677
                                                                  Page  1


          ASSEMBLY THIRD READING
          AB 2677 (Swanson)
          As Amended  March 29, 2012
          Majority vote 

           LABOR & EMPLOYMENT     5-1      APPROPRIATIONS      12-5        
           
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          |Ayes:|Swanson, Alejo, Bonnie    |Ayes:|Fuentes, Blumenfield,     |
          |     |Lowenthal, Gorell, Yamada |     |Bradford, Charles         |
          |     |                          |     |Calderon, Campos, Davis,  |
          |     |                          |     |Gatto, Hall, Hill, Lara,  |
          |     |                          |     |Mitchell, Solorio         |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Morrell                   |Nays:|Harkey, Donnelly,         |
          |     |                          |     |Nielsen, Norby, Wagner    |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 
           SUMMARY  :  Clarifies that certain fringe benefit contributions do 
          not operate to constitute a violation of prevailing wage law.  
          Specifically,  this bill  specifies that an increased fringe 
          benefit contribution that results in a lower hourly straight 
          time or overtime wage shall not be considered a violation of the 
          applicable prevailing wage determination so long as all of the 
          following conditions are met:

          1)The increased fringe benefit is made pursuant to criteria set 
            forth in a collective bargaining agreement.

          2)The increased fringe benefit and hourly straight time and 
            overtime wage combined are no less that the general prevailing 
            wage rate.

          3)The fringe benefit contribution is irrevocable unless made in 
            error.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, this bill will result in minor and absorbable costs 
          to the Department of Industrial Relations (DIR) to implement 
          this measure.

           COMMENTS  :  Current law requires that, except as specified, not 
          less than the general prevailing rate of per diem wages be paid 








                                                                  AB 2677
                                                                  Page  2


          to workers employed on public works projects.  Existing law 
          deems per diem wages to include specified employer payments and 
          provides that employer payments are a credit against the 
          obligation to pay the general prevailing rate of per diem wages. 
          Existing law, however, provides that credits for employer 
          payments do not reduce the obligation to pay the hourly straight 
          time or overtime wages found to be prevailing.

          This bill would provide that an increased fringe benefit 
          contribution that results in a lower hourly straight time or 
          overtime wage is not considered to be a violation of the 
          applicable prevailing wage determination so long as specified 
          conditions are met.

          This bill is sponsored by the California State Association of 
          Electrical Workers and the Western States Council of Sheet Metal 
          Workers.  The sponsors state that many collective bargaining 
          agreements allow members to elect to have a percentage or a set 
          amount deducted from their paycheck and deposited in a 
          supplemental pension account or a health care reserve at their 
          discretion.  The sponsors state that DIR has issued several 
          opinion letters finding that this does not constitute a 
          violation of the prevailing wage as long as the total hourly 
          package equals the correct prevailing wage rule.  This bill 
          seeks to codify the DIR opinion letters in order to avoid future 
          misapplication of the statutes.

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




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