BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1140|
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THIRD READING
Bill No: AB 1140
Author: Daly (D)
Amended: 5/24/13 in Assembly
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 3-1, 6/26/13
AYES: Monning, Leno, Yee
NOES: Wyland
NO VOTE RECORDED: Padilla
SENATE APPROPRIATIONS COMMITTEE : 4-1, 8/12/13
AYES: De León, Hill, Lara, Steinberg
NOES: Gaines
NO VOTE RECORDED: Walters, Padilla
ASSEMBLY FLOOR : 54-24, 5/30/13 - See last page for vote
SUBJECT : Public works: prevailing wages
SOURCE : State Building and Construction Trades Council of
California
DIGEST : This bill provides that changes made to prevailing
wage rates apply on their effective date to any contract that is
awarded or for which notice to bidders is published on or after
January 1, 2014, as specified.
ANALYSIS : Existing law defines "public works" to include,
among other jobs, construction, alteration, demolition,
installation, or repair work done under contract and paid for in
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whole or in part out of public funds.
Under existing law, "paid for in whole or in part out of public
funds" means, among other things, the following:
1. The payment of money or the equivalent of money by the state
or political subdivision directly to or on behalf of the
public works contractor, subcontractor, or developer.
2. The performance of construction work by the state or
political subdivision in execution of the project.
3. Fees, costs, rents, insurance or bond premiums, loans,
interest rates, or other obligations that would normally be
required in the execution of the contract, that are paid,
reduced, charged at less than fair market value, waived, or
forgiven by the state or political subdivision.
4. Money loaned by the state or political subdivision that is to
be repaid on a contingent basis.
Existing law requires all employees who work on public works
projects costing $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.
Existing law requires the Director of the Department of
Industrial Relations (DIR) to use specific methodology when
determining the prevailing wage rate. That methodology defines
the prevailing wage as the hourly wage rate being paid to a
majority of workers in a particular craft within a given
locality. If no single rate is being paid to a majority of the
workers, then the single rate being paid to the greatest number
of workers is the prevailing rate - known as the "modal rate."
Existing law states that if the Director of DIR determines that
the general prevailing rate of per diem wages is the rate
established by a collective bargaining agreement, and that the
collective bargaining agreement contains definite and
predetermined changes during its term that will affect the rate
adopted, the Director of DIR shall incorporate those changes
into the determination.
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Existing law defines "awarding body" or "body awarding the
contract" as the department, board, authority, officer or agent
awarding a contract for public work.
Existing law provides that if during any quarterly period DIR
determines that there has been a change in any prevailing wage
rate, it shall make the change available to the awarding body
and the determination shall be final.
Existing law provides that this determination shall not be
effective as to any contract for which notice to bidders has
been published.
This bill provides that changes made to prevailing wage rates
apply on their effective date to any contract that is awarded or
for which notice to bidders is published on or after January 1,
2014. Specifically, this bill:
1. Provides that if during any semiannual period DIR determines
that there has been a change in any prevailing wage rate, the
determination shall apply on its effective date to any
contract that is awarded or for which notice to bidders is
published on or after January 1, 2014.
2. Provides that specified parties may, within 20 days after
publication of a new determination, file with DIR a petition
to review the determination on the grounds that the rate has
not been determined in accordance with existing law. The
petition shall be filed with the awarding body within two
days thereafter.
3. Provides that, upon filing of such a petition, DIR shall
initiate an investigation or hold a hearing.
4. Provides that within 20 days after the filing of such a
petition (or within a longer period agreed to by all
interested parties), DIR shall make a determination that is
final.
5. States that a determination issued by the Director of DIR is
effective 10 days after its issuance. The Director of DIR
must include an issue date on the determination. The
determination will remain in effect until it is modified,
rescinded, or superseded by the Director of DIR.
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FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, DIR estimates
that it will require $125,000 (special funds) and one position
to implement the provisions of this bill. Additionally, to the
extent that this bill's provisions result in an increase in the
prevailing wage rate, state government contract costs could
rise.
SUPPORT : (Verified 8/14/13)
State Building and Construction Trades Council of California
(source)
California Labor Federation, AFL-CIO
California Legislative Conference of Plumbing, Heating & Piping
Industry
California State Association of Electrical Workers
California State Pipes Trade Council
National Electrical Contractors Association
Southern California Contractors Association
Western States Council of Sheet Metal Workers
OPPOSITION : (Verified 8/14/13)
Air Conditioning Trade Association
Associated Builders and Contractors of California
California Association of Sanitation Agencies
California Special Districts Association
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT : According to proponents, sometimes
there is a long lag between when a project is advertised for bid
and when construction starts - which leads to situations in
which the prevailing wage determination does not reflect the
actual prevailing wage for the craft and locality. Proponents
argue that wage rates tend to increase over time to reflect
increases in the cost of living, and employer costs for pension
and health care have been increasing by a higher percentage.
They maintain that as a result, the prevailing wage
determination in effect when a project was advertised for bid in
2008 will not reflect the true prevailing wage rate when
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construction is being performed in 2013. Proponents contend
that this lag places unionized contractors at a disadvantage in
bidding for public work, because they are bound to pay the wages
and make the benefits contributions required by the current
collective bargaining agreement (CBA).
Proponents argue that this bill will solve this problem by
providing that, after January 1, 2014, the semi-annual
prevailing wage determinations issued by DIR become effective on
all public works projects. Proponents contend that contractors
bidding on projects can estimate future changes in prevailing
wage rates just as they estimate future changes in the cost of
materials, using the example of unionized contractors that
already must anticipate future changes in CBA wage rates.
ARGUMENTS IN OPPOSITION : Opponents believe that this bill
unreasonably opens the door to constant changes in prevailing
wage rates by permitting any interested parties from
contractors, awarding bodies, or any union to petition for
updates in prevailing wages at any time during the year.
Opponents contend that if enacted, this bill imposes increases
to the prevailing wage rate upon projects bid, contracted and
commenced at the legal prevailing wage in effect at the time of
the bid. Opponents argue that without accurate estimates of
wages and related expenses agencies would face significant
financial uncertainties on public works projects. Further,
opponents argue that this bill unpredictably increases
construction costs after local agencies have already bonded and
budgeted for a project. Lastly, opponents contend that the
changes under this bill interrupts the pace of public works
projects, especially in localities where prevailing wages change
multiple times over the course of a project -thereby
guaranteeing multiple change orders on large projects and will
postpone the pace of these projects.
ASSEMBLY FLOOR : 54-24, 5/30/13
AYES: Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,
Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon,
Campos, Chau, Chesbro, Cooley, Daly, Dickinson, Eggman, Fong,
Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gray,
Hall, Roger Hernández, Jones-Sawyer, Levine, Lowenthal,
Medina, Mitchell, Mullin, Muratsuchi, Nazarian, Nestande, Pan,
Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas,
Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada,
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John A. Pérez
NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Dahle,
Donnelly, Beth Gaines, Gorell, Grove, Hagman, Harkey, Jones,
Linder, Logue, Maienschein, Mansoor, Melendez, Morrell, Olsen,
Patterson, Wagner, Waldron, Wilk
NO VOTE RECORDED: Holden, Vacancy
PQ:d 8/14/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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