BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
William W. Monning, Chair
Date of Hearing: June 12, 2013 2013-2014 Regular
Session
Consultant: Deanna D. Ping Fiscal:Yes
Urgency: No
Bill No: AB 1336
Author: Frazier
As Amended: April 17, 2013
SUBJECT
Prevailing wages: payroll records
KEY ISSUES
Should the legislature extend 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?
Should the legislature change the information that must be
marked or obliterated for certified payroll records provided to
joint labor-management committees and multiemployer Taft-Hartley
trust fund?
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 whole or in part
out of public funds. (Labor Code �1720)
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 (Labor Code �1771)
Existing law allows a contractor to bring an action in court to
recover from an awarding body the difference between the wages
actually paid to an employee and the wages that were required to
be paid (per prevailing wage provisions) if it meets the
following requirements:
The awarding body previously affirmatively
represented to the contractor in writing, in the call for
bids, or otherwise, that the work to be covered by the
bid or contract was not a "public work" as defined.
The awarding body received actual written notice
from the Department of Industrial Relations that the work
to be covered by the bid or contract is a "public work,"
as defined, and failed to disclose that information to
the contractor before the bid opening or awarding of the
contract. (Labor Code �1726)
Existing law states that a joint labor-management committee may
bring an action in any court of competent jurisdiction against
an employer that fails to pay the prevailing wage to its
employees. This action shall be commenced not later than 180
days after the filing of a valid notice of completion in the
office of the county recorded in each county in which the public
work or some part thereof was performed or not later than 180
days after acceptance of the public work, whoever last occurs.
(Labor Code �1771.2)
Existing law states that each contractor and subcontractor shall
keep accurate payroll records, showing the name, address, social
security number, work classification, straight time and overtime
hours worked each day and week, and the actual per diem wages
paid.
(Labor Code �1776)
Existing law states that any copies of records made available
for inspection by, or furnished to, a joint labor-management
committee established pursuant to the federal Labor Management
Cooperation Act of 1978 (29 U.S.C. Sec. 175a) shall be marked or
obliterated only to prevent disclosure of an individual's name
and social security number . (Labor Code �1776)
This bill enacts various provisions of law related to
enforcement of prevailing wage law by specified joint-labor
management committees. Specifically, this bill :
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 2
Senate Committee on Labor and Industrial Relations
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 provide the
individual's name .
7)Provides that a copy of certified payroll records provided to
a multiemployer Taft-Hartley trust fund (generally a pension
or welfare fund) that requests the records for the purpose of
allocating contributions to participants shall provide the
last four digits of the individual's social security number .
COMMENTS
1. Need for this bill?
In 2001, the Legislature enacted SB 588 (Burton) which
authorized representatives from a labor-management committee
to inspect payroll records on public works projects and to
take civil action to enforce prevailing wage requirements.
Currently joint labor-management committees can bring a civil
action against an employer that fails to pay the prevailing
wage to its employees. However, 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.
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 3
Senate Committee on Labor and Industrial Relations
According to the author's office, while the inspection and
enforcement provided by SB 558 allows representatives from the
labor-management committee to inspect payroll records for
prevailing wage violations, the 180 requirement for bringing a
civil action can be problematic as workers are often underpaid
for years and the current statute of limitations is not
sufficient to recover lost wages.
Additionally, current law states that an individual's name and
social security number must be redacted in payroll records. If
a civil action is successful it can be difficult to locate
those workers to award their owed wages as only the worker's
address is available under current law. If an individual
changes residences in the time frame of the civil action it
could be difficult to find them and ensure that they are
properly compensated.
AB 1336 addresses these issues by extending the deadline for
bringing a civil action to recover lost wages to two years and
allowing employee names to be included in the records provided
to a joint labor-management committee.
2. Double Referral:
AB 1336 has been doubled referred to Senate Judiciary
Committee.
3. Proponent Arguments :
According to the sponsor, State Building and Construction
Trades Council, the bill 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 argues 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. Proponents 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
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 4
Senate Committee on Labor and Industrial Relations
unnoticed.
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. They contend that many instances
of wage theft involve payroll records that do not report all
the hours an employee is actually working and that providing
the names of the employees will allow the committee to
properly follow-up and determine if the payroll records are
fraudulent.
The sponsor also 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.
4. Opponent Arguments :
According to opponents, the deletion of the requirement that
the civil action be commenced not later than 180 days is
unnecessary and would create an imbalance with other
enforcement provisions in the prevailing wage statutes that
require the Division of Labor Standards Enforcement (DLSE) to
issue a civil wage and penalty assessment within 180 days.
Further, opponents argue 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.
Opponents also argue that the provisions of the bill
specifying the civil remedies that may be pursued by joint
labor-management committees are problematic. They contend that
while the courts have long held that plaintiffs may only file
suit against the actual employer for wage claims, Labor Code
Section 1775 imposes "joint and several liability" between a
contractor and subcontractor for wage claims. Opponents argue
that the bill directs courts to adhere to Section 1775 and
imposes "joint and several liability" where it did not
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 5
Senate Committee on Labor and Industrial Relations
previously exist. Opponents express 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).
Lastly, the California Surety Federation (CSF) opposes this
measure and argues that, from a surety perspective, creating a
"tail of liability" that extends out two years creates various
challenges, such as the inevitable loss of evidence over time.
CSF contends that 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.
5. 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. It also would have
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.
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.
SUPPORT
State Building and Construction Trades Council of California
(sponsor)
California Labor Federation, AFL-CIO
California State Association of Electrical Workers
California State Pipe Trades Council
Western States Council of Sheet Metal Workers
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 6
Senate Committee on Labor and Industrial Relations
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
United Contractors (oppose unless amended)
Western Electrical Contractors Association
Hearing Date: June 12, 2013 AB 1336
Consultant: Deanna D. Ping Page 7
Senate Committee on Labor and Industrial Relations