BILL ANALYSIS Ó
AB 1140
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Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1140 (Daly) - As Amended: March 19, 2013
Policy Committee: Labor and
Employment Vote: 5-1
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires projects awarded or noticed for bid on or
after January 1, 2014 to be subject to prevailing wage rate
adjustments, as specified. Specifically, this bill:
1)Requires if during any semiannual period the Department of
Industrial Relations (DIR) determines there has been a change
in any prevailing wage rate, the new rate applies on its
effective date to any contract that is awarded or for which a
bid notice is published on or after January 1, 2014.
2)Authorizes any contractor, awarding body, or representative of
any craft, classification, or type of work affected by a
change in rates on a particular contract to file a verified
petition with DIR (within 20 days after the new wage
determination) for the purpose of reviewing the determination,
as specified. Further requires the petition to be filed with
the awarding body within two days.
3)Requires DIR to initiate an investigation or hold a hearing
upon filing of a petition. This measure further requires DIR
to make a determination on the investigation or the hearing
within 20 days after the filing of the petition (or a longer
time period if all interested parties agree).
FISCAL EFFECT
1)Ongoing . Unknown GF costs, of at least $500,000, to DIR.
These costs are associated with hiring additional staff to
handle workload increases due to reviewing collective
bargaining agreements in an accelerated timeframe when a wage
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determination is made.
2)To the extent this measure leads to an increase in the
prevailing wage rate paid on specific contracts, this measure
may cause increases in state and local government contract
costs (non-state reimbursable mandate), assuming
contractors/subcontractors have not currently built in wage
rate adjustments in their contracts. Statute does not require
these increase costs to be paid by the local government.
Costs may be paid by the contractor depending on the nature of
the agreement between the local government and the contractor.
COMMENTS
1)Background . Existing law requires the prevailing wage rate to
be paid to workers on public works projects over $1,000.
Statute 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, except
work done directly by any public utility company, as
specified.
According to DIR, California's prevailing wage rate is the
basic hourly rate paid on public works projects 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 (if a majority of such workers are paid at a
single rate). If there is no single rate paid to a majority,
the single or modal rate being paid to the greater number of
workers is prevailing. DIR further notes that the prevailing
wage is determined by the Director of DIR in written
determinations issued annually on February 22 and August 22.
2)Rationale . Under current law, once DIR determines the
prevailing wage rate - "such determination by the Director of
Industrial Relations shall not be effective as to any contract
for which the notice to bidders has been published." Statute,
however, does allow for adjustments if they are predetermined,
meaning they are built into collective bargaining agreements
and known at the time DIR establishes the prevailing wage
rate.
According to the author, "There is sometimes a long lag
between when a project is advertised for bid and when
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construction starts, and some construction projects involve
work extending for a multi-year period. The lag between when
a project is advertised for bid, and when work is actually
performed, leads to situations in which the wage determination
does not reflect the actual prevailing wage for the craft and
locality. Wage rates tend to increase over time to reflect
increases in the cost of living, while employer costs for
pension and health care have been increasing by a higher
percentage. Thus, the wage determination in effect when a
project was advertised for bid in 2008 will not reflect the
true prevailing wage rate when construction is being performed
in 2013."
This bill requires projects awarded or noticed for bid on or
after January 1, 2014 to be subject to prevailing wage rate
adjustments, as specified.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081