BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1336
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          Date of Hearing:  April 30, 2013

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                    AB 1336 (Frazier) - As Amended: April 17, 2013
           
          SUBJECT  :  Prevailing wages: ENFORCEMENT

           KEY ISSUE  :  SHOULD A NUMBER OF CHANGES RELATED TO ENFORCEMENT OF  
          PREVAILING WAGE LAW BY JOINT LABOR-MANAGEMENT COMMITTEES BE  
          MADE?  

           FISCAL EFFECT  :  As currently in print this bill is keyed fiscal.

                                      SYNOPSIS

          This measure was recently approved by the Labor Committee, which  
          has the primary jurisdiction and expertise of the issues  
          presented.  The bill seeks to enact various provisions of law  
          related to enforcement of prevailing wage law by specified  
          joint-labor management committees, including: 1) extending the  
          statute of limitations for civil actions for failure to pay  
          prevailing wages brought by specified joint labor-management  
          committees from 180 days to 24 months after the wages were due;  
          2) providing 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; and 3) providing  
          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.  The bill  
          is sponsored by the State Building and Construction Trades  
          Council of California, and is supported by a host of labor  
          organizations.  It is opposed by a host of building contractor  
          and other organizations.

           SUMMARY  :  Enacts various provisions of law related to  
          enforcement of prevailing wage law by specified joint-labor  
          management committees.  Specifically,  this bill  , among other  
          things:  

          1)Extends the statute of limitations for civil actions for  
            failure to pay prevailing wages brought by specified joint  
            labor-management committees from 180 days to 24 months after  








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            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 these provisions do not limit any other  
            available remedies for a violation of the law. 

           EXISTING LAW:

           1)Authorizes joint labor-management committees to bring a civil  
            action against an employer that fails to pay the prevailing  
            wage to its employees.  (Labor Code Section 1771.2. (a).  All  
            further code references are to this code unless otherwise  
            noted.)

          2)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.  (Section 1776(e).)

          3)Imposes specified civil penalties against a contractor or  
            subcontractor that fails 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.   
            (Section 1775.)

           COMMENTS  :  This bill largely falls within the jurisdiction of  
          the Labor Committee, which recently approved it.  That  
          Committee's key expertise and analysis of the bill's provisions  
          largely follows, with special emphasis on the key provisions of  
          interest to the Judiciary Committee.

          In essence, this measure proposes a number of changes related to  
          enforcement of prevailing wage law by joint labor-management  








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          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  .  As  
          noted above, 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  
          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  








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          and liquidated damages equal to the amount of unpaid wages owed.  
           In addition, the court 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 Related 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.  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.

          Current law also 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  








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          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  
          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  








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          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) 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  








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          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.  

           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  :  Drew Liebert / JUD. / (916) 319-2334