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

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            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

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            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