BILL ANALYSIS Ó SB 922 Page 1 Date of Hearing: September 7, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair SB 922 (Negrete-McLeod) - As Amended: September 2, 2011 Policy Committee: Business and Professions Vote: 6-3 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill requires that all project labor agreements (PLAs) incorporate specified provisions, and prohibits state funding assistance, after January 1, 2015, on public works projects of charter cities having ordinances prohibiting the use of PLAs. Specifically, this bill: 1)Requires a PLA on a public works project of any state or local government entity to incorporate all of the following provisions: a) Prohibit discrimination based on race, national origin, sex, sexual orientation, political affiliation, or membership in a labor organization. b) Permit qualified contractors and subcontractors to bid regardless of whether they are part of a collective bargaining agreement. c) Contain drug-testing protocol and guarantee against work stoppages, strikes, lockouts, and similar project disruptions. d) Require disputes over the PLA to be resolved by a neutral arbitrator. 2)Authorizes the governing boards of local public entities, by majority vote, to use PLAs, and stipulates that charter provisions, initiatives, or ordinances do not prevent governing bodies, except charter cities, from exercising this authority on a project-specific basis. SB 922 Page 2 3)Stipulates that, if a charter city has a charter provision, initiative, or ordinance prohibiting its governing board from entering into a PLA for a project, then state funding or financial assistance may not be used to support that project. For charter cities with such a charter provision, initiative, or ordinance in effect prior to November 1, 2011, this prohibition on state funding would not be applicable until January 1, 2015. FISCAL EFFECT 1)Any state costs to incorporate the required provisions in PLAs on state projects should be minor. Based on information received at the time of this analysis, state agencies seldom use PLAs. 2)Any costs for local governments would be non-reimbursable, as the bill authorizes, but does not require, the use of PLAs. Charter cities with PLA prohibitions adopted by charter amendment or initiative, that seek to maintain eligibility for state funding assistance on city projects after January 1, 2015 would incur the costs of an election seeking voter approval to repeal those prohibitions. Again, these costs would not be state reimbursable. COMMENTS 1)Background . A PLA is a pre-hire agreement establishing the terms and conditions of employment for a specific construction project. PLAs are completed before any workers are hired, to establish the wage rates and benefits of all employees working on the project and to prevent strikes, lockouts, or other work stoppages for the length of the project. The terms of the agreement apply to all contractors and subcontractors, whether union or non-union, who successfully bid on the project, and supersede any existing collective bargaining agreements. 2)Purpose . According to the author, this bill stems from recent campaigns to obtain blanket prohibitions on PLAs through local charter amendments, initiatives and ordinances. Bans on PLAs have been enacted by voter initiatives in San Diego County and in the Cities of Chula Vista and Oceanside and through ordinances adopted by the governing boards of Orange and SB 922 Page 3 Stanislaus Counties. Proponents argue these blanket prohibitions prevent local governing boards from choosing to use a PLA even if the governing board decides a PLA would be cost-beneficial. The author states, "PLAs can help projects meet deadlines by guaranteeing a steady supply of highly skilled labor and by reconciling the various work routines of the many trades. PLAs also help to assure timely completion by keeping projects free from disruptions resulting from local labor disputes, grievances, or jurisdictional issues. Language in PLAs can be written to advance important policy goals, such as improving training and recruiting members of disadvantaged communities into high-paying jobs in construction." 3)Support . At the time of this analysis, the bill was supported by the State Building and Construction Trades Council of California, other labor associations, and a few contractor organizations. Proponents note that SB 922 intends to make clear that non-union contractors can be awarded contracts under a PLA and that workers on a PLA would not be forced to join a union. 4)Opponents include the League of California Cities and several contractor organizations. Opponents cite process issues, related to the bill's recent amendments, and interference with local control and voter-approved initiatives. 5)Proposed author's amendments change the author to Steinberg and add co-authors. Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081