BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: March 23, 2011 2009-2010 Regular Session Consultant: Gideon L. Baum Fiscal:No Urgency: No Bill No: SB 644 Author: Hancock Version: As Introduced February 18, 2011 SUBJECT Public works: volunteers KEY ISSUE Should the Legislature allow volunteers to continue to perform certain work on public works projects by extending the sunset date, from January 1, 2012 to January 1, 2017, on the exemption that allows volunteers to perform such work and not be paid the prevailing wage, as otherwise required? PURPOSE To extend the sunset for the exemption of volunteers from public works requirements. ANALYSIS Existing law defines public works as any construction, alteration, demolition, installation or repair work done under contract and paid for in whole or in part from public funds. This includes work performed during the design and pre-construction phase, including, but not limited to, inspection and land surveying. Existing law requires, with certain exceptions, contracted public works projects to be submitted for bids by the public entity requesting the work, and that the contract is awarded to the lowest responsible bidder. The awarding body is required to ensure that the winning contractor is appropriately licensed with the Contractors' State Licensing Board, and has not been in barred from bidding on, accepting, or performing public contracts. Existing law requires all employees who work on public works projects with a budget of $1,000 or more to be paid the general prevailing rate of per diem wages and the general prevailing rate for holiday and overtime work for the specific location where the public work is to be performed. This prevailing wage is determined by the Department of Industrial Relations. Existing law exempts from public work requirements any project where the Department of Fish and Game (DFG) contracts with public agencies, Indian tribes, or nonprofit organizations for fish and wildlife habitat preservation, restoration, and enhancement. Existing law also allows the DFG to contract with public and private entities for fish and wildlife habitat preservation, restoration, and enhancement, but these contracts are only exempt from public work requirements if they are less than $50,000 (Fish and Game Code §1501.5). Existing law exempts any work performed by volunteers from the public works requirements, but the exemption allowing volunteers on public works projects is set to expire on January 1, 2012. Under existing law volunteers are defined as: Individuals who perform works for civic, charitable, or humanitarian reasons for a public agency or tax-exempt organization, such as a 501(c)(3), without any compensation; Volunteer coordinators. Members of the California Conservation Corps (CCC) or the Community Conservation Corps are also exempt. Existing law excludes from the definition of a volunteer: Anyone who works on the public works project for compensation; or Anyone who received payment from the contractor on the public works project for construction, alteration, demolition, installation, repair, or maintenance work on the same project. This bill extends the sunset on the exemption for volunteers on Hearing Date: March 23, 2011 SB 644 Consultant: Gideon L. Baum Page 2 Senate Committee on Labor and Industrial Relations public works project out five years, from January 1, 2012 to January 1, 2017. COMMENTS 1. Need for this bill? In 2004, AB 2690 (Hancock), Chapter 330, Statutes of 2004, created an exemption for volunteers from public works requirements, but also included the sunset of January 1, 2009. This bill came about from a 2003 Department of Industrial Relations (DIR) decision, which found that a stream restoration project using student volunteers should have paid prevailing wages and assessed back wages and civil penalties. At the time, the proponents argued that a public works exemption for volunteers was needed due to the "importance of volunteers in building community support for local projects", many of which included environmental projects such as stream restoration, beach clean-up, wetlands restoration, and trail building. In 2008, this sunset was extended until January 1, 2012 by AB 2537 (Furutani), Statutes of 2008, Chapter 678. The proponents of this bill argue that this exemption has proven successful, and therefore it is important to extend this exemption for an additional 5 years to allow volunteers to continue to participate in preservation activities on public lands, including removing invasive species, river and beach clean-ups, and maintaining walking trails. 2. Staff Questions: Have there been any specific instances of abuse of the volunteer exemption by employers or any other party? According to the Department of Industrial Relations report on volunteer labor on public works projects, there was one complaint involving volunteer labor on public works projects in 2009 and 2010. In that case, a complaint was filed against a contractor for failing to provide payroll reports for electrical work done in a firehouse. However, the Fire Hearing Date: March 23, 2011 SB 644 Consultant: Gideon L. Baum Page 3 Senate Committee on Labor and Industrial Relations Chief for that district issued a statement confirming that eight volunteer firemen were completing the electrical work on the firehouse. Prior to that complaint, the only reports of abuse received by the Division of Labor Standards Enforcement (DLSE) was the initial complaint from 2003. If the sunset were deleted, what avenues for complaint or action would be available for someone who felt the volunteer exemption was being abused? Any affected party, including the body that awarded the contract, can go to the Labor Commissioner and ask that an investigation take place. If it is found that a violation has occurred and prevailing wages should have been paid and weren't, the Labor Commissioner is empowered to assess back wages and penalties. In certain cases, employees who were denied the prevailing wage may turn to the courts for relief as well. What workplace protections do the volunteers have while on the job? The Labor Code excludes individuals who volunteer for a public agency or private non-profit organization from the definition of an employee. Since most labor law protections are centered on employees, this would exclude volunteers from many of the protections and requirements employers have for their employees, including workers' compensation . However, since these positions are voluntary, issues like meal and rest breaks and hours of work probably would be handled by the volunteer. For members of the California Conservation Corps or Community Conservation Corps, however, wages are paid to the participants of both of those programs, and therefore they are covered by Workers Compensation and other labor law protections. 3. Proponent Arguments : Hearing Date: March 23, 2011 SB 644 Consultant: Gideon L. Baum Page 4 Senate Committee on Labor and Industrial Relations Proponents argue that during these difficult fiscal times, local government need to be able to call upon volunteers to complete important projects and maintain local park infrastructure. Proponents also note that hundreds of restoration projects are taken up by local governments in partnership with non-profits and local business, and that project managers work hard to ensure that there is a clear delineation between tasks for volunteers and tasks for paid employees and contractors. Proponents also note that there have been no reported labor law violations on environmental and restoration projects since the public works exemption was put in law in 2004. 4. Current Legislation: AB 587 (Gordon), which is currently before the Assembly Committee on Labor and Employment, is nearly identical to this bill. AB 987 (Grove), which is currently before the Assembly Committee on Labor and Employment, would make significant changes to public works requirements, including the removal of the sunset on the volunteer exemption. 5. Prior Legislation : AB 2537 (Furutani) Statutes of 2008, Chapter 678, was discussed above. AB 2690 (Hancock), Chapter 330, Statutes of 2004, created the initial public work exemption for volunteers. SUPPORT California Park and Recreation Society (CPRS) California Watershed Network Newport Bay Conservancy OPPOSITION Hearing Date: March 23, 2011 SB 644 Consultant: Gideon L. Baum Page 5 Senate Committee on Labor and Industrial Relations None on file. Hearing Date: March 23, 2011 SB 644 Consultant: Gideon L. Baum Page 6 Senate Committee on Labor and Industrial Relations