BILL ANALYSIS �
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hern�ndez, Chair
AB 1336 (Frazier) - As Amended: April 17, 2013
SUBJECT : Prevailing wages: payroll records.
SUMMARY : Enacts various provisions of law related to
enforcement of prevailing wage law by specified joint-labor
management committees. Specifically, this bill :
1)Extends the statute of limitations for civil actions for
failure to pay prevailing wage brought by specified joint
labor-management committees from 180 days to 24 months after
the wages were due.
2)Provides that in such civil actions, the court shall award
restitution to an employee for unpaid wages plus interest,
liquidated damages equal to the amount of unpaid wages owed,
and may impose specified civil penalties, injunctive relief,
or any other appropriate form of equitable relief.
3)Provides that the court shall award a prevailing joint
labor-management committee its reasonable attorney's fees and
costs incurred in maintaining the action, including expert
witness fees.
4)Specifies that such a civil action shall not be based on the
employer's misclassification of the craft of a worker in its
certified payroll records.
5)Specifies that these provisions do not limit any other
available remedies for a violation of the law.
6)Provides that a copy certified payroll records provided to a
joint labor-management committee shall be marked or
obliterated on to prevent disclosure of an individual's social
security number (but not their name).
7)Provides that a copy of certified payroll records provided to
a multiemployer Taft-Hartley trust fund that requests the
records for the purpose of allocating contributions to
participants shall be marked or obliterated only to prevent
disclosure of an individual's full social security number, but
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shall provide the last four digits of the social security
number.
FISCAL EFFECT : Unknown
COMMENTS : This bill proposes a number of changes related to
enforcement of prevailing wage law by joint labor-management
committees. Joint labor-management committees are authorized
and established pursuant to the federal Labor Management
Cooperation Act of 1978. The changes proposed by this bill may
be classified into two main categories: (1) civil actions filed
by joint-labor management committees; and (2) requirements
regarding certified payroll records. Both of these issues will
be discussed in turn below.
Civil Actions Filed by Joint Labor-Management Committees
Existing law authorizes joint labor-management committees to
bring a civil action against an employer that fails to pay the
prevailing wage to its employees. Current law provides that
such a civil action shall be commenced not later than 180 days
after the filing of a valid notice of completion or not later
than 180 days after the acceptance of the public work, whichever
occurs last.
This bill would instead provide that such civil actions shall be
commenced not later than 24 months after the wages were due.
In addition, this bill specifies some of the remedies available
in such action. Existing law (at Labor Code Section 1776(e))
already provides that a joint labor management committee may
maintain an action in a court of competent jurisdiction against
an employer who fails to comply with the requirement to pay
prevailing wages. Current law provides that the court may award
restitution to an employee for unpaid wages and may award the
joint labor management committee reasonable attorney's fees and
costs incurred in maintaining the action. Current law also
specifies that such an action may not be based on the employer's
misclassification of the craft of a worker on its certified
payroll record and specifies that these provisions do not limit
any other available remedies for a violation of the law.
Existing law (Labor Code Section 1775) also imposes specified
civil penalties against a contractor or subcontractor that fails
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to pay prevailing wages. However, current law specifies that
the prime contractor is not liable for such penalties unless it
had knowledge of the failure of the subcontractor to pay
prevailing wages or unless the prime contractor failed to comply
with specified requirements.
This bill replicates these provisions in Labor Code Section
1771.2(c) and adds some additional provisions. Specifically,
this bill provides that in such civil actions, the court shall
award restitution to an employee for unpaid wages plus interest,
liquidated damages equal to the amount of unpaid wages owed, and
may impose specified civil penalties (in accordance with Labor
Code Section 1775, discussed above), injunctive relief, or any
other appropriate form of equitable relief (emphasis provided).
The bill also provides that the court shall award a prevailing
joint labor-management committee its reasonable attorney's fees
and costs incurred in maintaining the action, including expert
witness fees (emphasis provided). The bill also provides,
consistent with existing law, that these provisions do not limit
any other available remedies for a violation of the law.
Finally, the bill specifies, consistent with existing law, that
such a civil action shall not be based merely on the employer's
misclassification of the craft of a worker in its certified
payroll records.
Prior Legislation - SB 569 (Steinberg) of 2007 would have, among
other things, extended the statute of limitations for such civil
actions to four years after the violation occurs. SB 569 was
held under submission in the Assembly Appropriations Committee.
Similarly, AB 581 (Klehs) of 2005 would have extended the
statute of limitations to four years. AB 581 was held under
submission in the Senate Appropriations Committee.
Access to Certified Payroll Records
Current law requires contractor and subcontractors on public
works projects to keep accurate payroll records showing the
name, address social security number, work classification, hours
worked and wages paid to employees. The payroll records are
required to be certified as true and correct by the contractor
or subcontractor.
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Certified payroll records shall be made available for inspection
upon request of the employee, the awarding body, the Division of
Labor Standards Enforcement, or the Division of Apprenticeship
Standards.
In addition, under current law a certified copy of payroll
records shall be made available for inspection by a member of
the public. However, a request by the public shall be made
through either through the awarding body, the Division of Labor
Standards Enforcement, or the Division of Apprenticeship
Standards.
Current law provides that copies of records made available to
the public shall be marked or obliterated to prevent disclosure
of an individual's name, address and social security number.
Existing law also provides that copies provided to joint
labor-management committees shall be marked only to prevent
disclosure of an individual's name and social security number.
This bill provides that copies of records provided to joint
labor-management committees shall be marked only to obliterate
social security numbers, but not names.
This bill also provides that a copy of certified payroll records
provided to a multiemployer Taft-Hartley trust fund (generally a
pension or health and welfare fund) that requests the records
for the purpose of allocating contributions to participants
shall be marked or obliterated only to prevent disclosure of an
individual's full social security number, but shall provide the
last four digits of the social security number.
Prior Legislation - SB 569 (Steinberg) of 2007 would have, among
other things, provided that copies of records provided to joint
labor-management committees shall be marked only to obliterate
social security numbers, but not names. SB 569 was held under
submission in the Assembly Appropriations Committee.
ARGUMENTS IN SUPPORT :
This bill is sponsored by the State Building and Construction
Trades Council of California, who argues that it will enhance
the state's enforcement efforts to combat the underground
economy, protect the public's investment in infrastructure and
protect workers from wage theft.
The sponsor states that the change in the statute of limitations
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for claims will allow for adequate time for a legal remedy for
workers cheated out of wages they are owed since victims of wage
theft are underpaid for years on multiple projects and only come
forward when their employment with the contractor ends.
In addition, the sponsor states that under current law, a joint
labor-management committee that requests certified payroll
records receives them only with the workers' addresses and not
the workers' names. However, many instances of wage theft
involve payroll records that do not report all the hours an
employee is actually working. Providing the names of the
employees will allow the committee to properly follow-up and
determine if the payroll records are fraudulent.
Finally, the sponsor states that this bill will provide
Taft-Hartley trust funds with the last four digits of social
security numbers, enabling the correct allocation of health
benefits and pension contributions to workers for which the
contributions were made. The sponsor states that the redaction
of this information severely hinders this process and often
lawsuits are required to obtain this information. Many
instances of wage theft involve payroll records that do not
report all the hours the employee is actually working and there
are occasions when the employer has gone out of business or
refuses to cooperate in an audit, so the certified payroll
records are the only practicable means for allocating benefit
contributions.
Similarly, other supporters argue that the extension of the
statute of limitations will ensure that any and all violations
result in full compensation for the employee and further
discourage an employer from attempting to go unnoticed. They
argue that this bill will help to prevent the misclassification
of workers and ensure that work is done by appropriately
qualified skilled workers.
ARGUMENTS IN OPPOSITION :
The Associated General Contractors of California (AGC) opposes
this bill unless amended. Primarily, AGC argues deleting the
requirement that the civil action be commenced not later than
180 days after acceptance of the public work, or the filing of a
valid notice of completion, whichever is later, is unnecessary
and would create an imbalance with other enforcement provisions
in the prevailing wage statutes that require the Division of
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Labor Standards Enforcement (DLSE) to issue a civil wage and
penalty assessment within 180 days of the events described
above. AGC argues that DLSE regularly and routinely issues such
assessments within the proscribed 180 day period, and there is
no legitimate basis for creating a different period of time for
joint labor-management committees.
AGC also argues that the certified payroll record provisions of
this bill threaten the privacy rights of California workers by
changing the law to allow joint labor-management committees to
obtain the names of workers and the last four digits of their
social security numbers. AGC contends that such committees are
already entitled to obtain the addresses of these workers, and
this additional information will most certainly enable joint
labor-management committee representatives and employees to not
only mail information and questionnaires to such workers but to
also visit their homes and speak with them and their families
directly. In certain circumstances, workers may likely find
such visits intrusive and unwelcome.
The Construction Employers' Association (CEA) also opposes this
measure, raising particular concern with the provisions of the
bill specifying the civil remedies that may be pursued by joint
labor-management committees. CEA states that courts have long
held that plaintiffs may only file suit against the actual
employer for wage claims. Conversely, Labor Code Section 1775
imposes "joint and several liability" between a contractor and
subcontractor for wage claims. Because this bill directs courts
to adhere to Section 1775, CEA contends that the bill is
imposing "joint and several liability" where it did not
previously exist. Furthermore, pursuant to 1775 (b) the Labor
Commissioner may waive penalties related to a subcontractor's
violation. However, CEA expresses concern that the courts do
not have the same level of expertise as the Labor Commissioner
when it comes to certified payroll enforcement and could
potentially impose penalties that are not otherwise due pursuant
to 1775 (b). CEA states that if the goal of this measure is to
penalize those entities who violate wage law, the bill should be
amended to speak only to those entities.
The California Surety Federation opposes this measure and argues
that, from a surety perspective, creating a "tail of liability"
that extends out two years creates various challenges. First,
the ability to prove a claim two years after the fact becomes a
significant challenge due to the inevitable loss of evidence
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over time. Furthermore, a surety must have an expectation of
closure to properly price and author a bond. If there is a
concern that a significant liability may retain outstanding for
up to two years, it is possible that some sureties might not be
willing to take the risk, thereby driving up the cost of bonding
and a limited supply of sureties willing to write such business.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO
California State Association of Electrical Workers
California State Pipe Trades Council
State Building and Construction Trades Council of California
(sponsor)
Western States Council of Sheet Metal Workers
Opposition
Air Conditioning Trade Association
Associated Builders and Contractors of California
Associated General Contractors of California (oppose unless
amended)
California Association of Sanitation Agencies
California Chapter of the American Fence Association
California Fence Contractors' Association
California Surety Federation
Construction Employers' Association
Engineering Contractors' Association
Flasher Barricade Association
Marin Builders Association
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091