BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2013-2014 Regular Session
AB 1336 (Frazier)
As Amended June 24, 2013
Hearing Date: July 2, 2013
Fiscal: Yes
Urgency: No
TMW
SUBJECT
Prevailing Wages: Payroll Records
DESCRIPTION
This bill would extend the deadline from 180 days to 18 months,
as specified, for the Labor Commissioner to serve a civil wage
and penalty assessment against a public work contractor or
subcontractor, or both. This bill would also extend the
deadline from 180 days to 18 months, as specified, for a joint
labor-management committee to bring an action against an
employer that fails to pay the prevailing wage to its employees.
This bill would revise and recast remedies that may be awarded
by a court in these joint labor-management committee actions.
This bill would also authorize the court to award interest,
liquidated damages, and injunctive relief in these actions.
BACKGROUND
Existing law generally requires contractors engaged in public
works to pay employees the prevailing wage, as determined by the
Director of Industrial Relations. In 2000, AB 1646 (Committee
on Labor and Employment, Ch. 954, Stats. 2000) established the
authority of the Labor Commissioner to assess a civil wage and
penalty against a contractor or subcontractor who fails to pay
the prevailing wage. In 2001, SB 588 (Burton, Ch. 804, Stats.
2001) authorized joint labor-management committees to bring
actions against employers who fail to pay prevailing wages. A
joint labor-management committee is a committee organized by
employers and labor organizations representing employees in that
plant, area, or industry that are established for the purpose of
improving labor management relationships, job security,
(more)
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organizational effectiveness, enhancing economic development or
involving workers in decisions affecting their jobs, including
improving communication with respect to subjects of mutual
interest and concern. (29 U.S.C 175a.)
Under existing law, a joint labor-management committee may bring
an action against an employer who fails to pay prevailing wages
no later than 180 days after the filing of a valid notice of
completion or 180 days after acceptance of the public work,
whichever occurs last. In 2005, AB 581 (Klehs, 2005) sought to
extend the statute of limitations on these actions to four years
from the date of the violation and would have allowed the joint
labor-management committee to recover reasonable attorney's
fees, costs, and expenses, as well as restitution to employees
for unpaid wages. AB 581 passed out of this Committee on a vote
of 5-2 and was held on suspense in the Senate Committee on
Appropriations.
Similarly, in 2007, SB 569 (Steinberg, 2007), among other
things, would have extended the statute of limitations on these
actions to four years from the date of the violation. SB 569
passed out of this Committee on a vote of 3-2, but was held on
suspense in the Assembly Committee on Appropriations.
This bill would extend the deadlines from 180 days to 18 months
for the Labor Commissioner to serve a civil wage and penalty
assessment and a joint labor-management committee to bring an
action against an employer who fails to pay the prevailing wage.
This bill would also authorize a court to award interest,
liquidated damages, and injunctive relief in these actions.
This bill was heard by the Senate Labor and Industrial Relations
Committee on June 12, 2013, and passed out on a vote of 4-1.
CHANGES TO EXISTING LAW
1. Existing law generally defines a "public work" as
construction, alteration demolition, installation, or repair
work that is done under contract and that is paid for, in
whole, or in part out of public funds. (Lab. Code Sec. 1720.)
Existing law requires contractors engaged in public works to
pay employees the prevailing wage, as determined by the
Director of the Department of Industrial Relations. (Lab.
Code Secs. 1770, 1771, 1774.)
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Existing law requires the Labor Commissioner to issue a civil
wage and penalty assessment against a contractor or
subcontractor, or both, if the Labor Commissioner determines,
after investigation, that the contractor or subcontractor
violated the laws regulating public works contracts. The
assessment must be served no later than 180 days after the
filing of a valid notice of completion in the office of the
county recorder in each county in which the public work or
some part thereof was performed, or no later than 180 days
after acceptance of the public work, whichever occurs last.
(Lab. Code Sec. 1741.)
This bill would extend the statute of limitations from 180
days to 18 months for the Labor Commissioner to serve the
civil wage and penalty assessment.
2. Existing law authorizes a joint labor-management committee to
bring an action against any employer who fails to pay the
prevailing wage to its employees, not later than 180 days
after the filing of a valid notice of completion in the county
recorder's office in each county in which the public work was
performed, or not later than 180 days after the acceptance of
the public work, whichever is later. (Lab. Code Sec. 1771.2.)
Existing law authorizes a court to 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. (Lab. Code Sec.
1776(e).)
This bill would extend the statute of limitations from 180
days to 18 months for a joint labor-management committee to
bring an action against the employer.
This bill would repeal the above provision regarding
restitution and attorney's fees and costs and recast it to
require the court, in an action brought by the joint
labor-management committee against the employer, to award
restitution to an employee for unpaid wages, plus interest
from the date that the wages became due and payable, and
reasonable attorney's fees and costs incurred by the joint
labor-management committee in maintaining the action,
including expert witness fees.
This bill would also require the court to award liquidated
damages equal to the amount of unpaid wages owed, and
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authorize the court to impose civil penalties, only against an
employer that failed to pay the prevailing wage to its
employees, injunctive relief, or any other appropriate form of
equitable relief.
This bill would prohibit these remedies in an action based on
the employer's misclassification of the craft of a worker in
its certified payroll records.
This bill would provide that liquidated damages may be awarded
only if the complaint alleges with specificity the wages due
and unpaid to the individual workers, including how that
amount was calculated, and the defendant fails to pay the
wages, deposit that amount with the court to be held in
escrow, or provide proof to the court of an adequate surety
bond to cover the wages, within 60 days of service of the
complaint.
This bill would also specify that liquidated damages may be
awarded only on the wages found to be due and unpaid, and, if
the defendant demonstrates to the satisfaction of the court
that the defendant had substantial grounds for contesting that
a portion of the allegedly unpaid wages were owed, the court
may exercise its discretion to waive the payment of the
liquidated damages with respect to that portion of the unpaid
wages.
3. Existing law requires each contractor and subcontractor on a
public works project to 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. (Lab. Code
Sec. 1776.)
Existing law requires 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) to be marked or
obliterated only to prevent disclosure of an individual's name
and social security number. (Lab. Code Sec. 1776(e).)
This bill would only require the individual's social security
number to be marked or obliterated in any copy 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.
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175a).
This bill would also require any copy of records made
available for inspection by, or furnished to, a multiemployer
Taft-Hartley trust fund (29 U.S.C. Sec. 186(c)(5)) that
requests the records for the purposes of allocating
contributions to participants to 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.
COMMENT
1. Stated need for the bill
The author writes:
AB 1336 provides oversight of public works projects to ensure
that applicable prevailing wage laws are being followed.
Misclassification of workers on public works projects is
unfair to the employees and to the taxpayers funding the
projects. If workers are performing skilled crafts that they
are not properly trained and qualified to do, the quality and
safety of the project, as well as the safety of other
employees on the job site, may be jeopardized. . . .
AB 1336 extends the deadline for bringing a civil action to
recover lost wages from 180 days to 18 months, extends the
deadline for the Labor Commissioner to issue a citation for a
violation of prevailing wage laws from 180 days to 18 months,
provides that the court may impose civil penalties and damages
and award attorney's fees to a joint labor-management
committee bringing an action, and allows employee names to be
included in the records provided to a joint labor-management
committee, to ensure that underpaid workers can be properly
compensated. . . . Recent amendment also clarify that the
bill does not expose contractors to a new liability for unpaid
wages of workers that were not their employees.
2. Extending statute of limitations
This bill would extend the statute of limitations from 180 days
to 18 months, as specified, for the Labor Commissioner to serve
a civil wage and penalty assessment against a public work
contractor or subcontractor, or both. This bill would also
extend the statute of limitations from 180 days to 18 months, as
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specified, for a joint labor-management committee to bring an
action against an employer that fails to pay the prevailing wage
to its employees.
The State Building and Construction Trades Council (SBCTC),
sponsor, states that extending the statute of limitations for
these actions "will allow for adequate time for a legal remedy
for workers cheated out of wages they are owed since victims of
wage theft are often underpaid for years on multiple projects
and only come forward when their employment with the contractor
ends." In support, the California State Council of Laborers
asserts that "[t]he Laborers have long been committed to helping
crack down on underground economy activity and helping state
officials and others reign in unscrupulous contractors who fail
to pay prevailing wages, jeopardize the safety of workers on the
job-site and game the system to gain an unfair competitive
advantage over legitimate, law-abiding businesses. AB 1336 adds
to the enforcement tool box a mechanism to ensure prevailing
wages are being paid and provides adequate time for enforcement
agencies and legal remedies to evaluate and make a determination
and enforce prevailing wage law on behalf of workers who have
been cheated out of wages they are owed. This added time is
crucial as many victims of wage theft are underpaid for years on
multiple projects and only come forward when their employment
with the contractor has ended."
Although the author has taken several amendments to address the
opponents' concerns, they insist that the 18-month deadline to
notice an employer of a violation is too long and
unsubstantiated. The Associated General Contractors of
California (AGC), opposed, writes:
Requiring that the action be commenced not later than 18
months from the time of the acceptance or completion of the
public work creates an imbalance with other enforcement
provisions in the prevailing wage statutes that require the
Division of Labor Standards Enforcement to issue a civil wage
and penalty assessment within 180 days of the events described
above. The division 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. Further, to extend the
time frame to one and a half years for joint-labor management
committees to commence civil actions would thwart the
underlying purposes for the existing time periods, namely that
wage claimants with good causes of actions should pursue them
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with reasonable diligence, that defendant employers might not
have access to witnesses or other evidence to disprove a stale
claim, and that dormant claims have more of cruelty than
justice in them.
For example, on projects of long duration (High Speed Rail and
the Bay Bridge come to mind), a wage claim could be filed many
years after a violation had occurred. It is very difficult,
sometimes impossible, to track down first and second tier
subcontractors and pertinent documents after completion of a
project - especially when a subcontractor has committed a
violation unknown to the general contractor and has been paid
their retention and other payments. The general contractor
needs to know of a wage violation before a project is
completed and as soon after a violation has occurred so swift
action can be taken to make a worker's pay whole.
Extending the time frame for a wage claim will likely result
in just the opposite effect. In addition, if the general
contractor is not able to discover wage violations in a timely
manner, it is highly likely that the "guilty" subcontractor
will continue to commit wage violations to the maximum time
allowed or until caught - which ever [sic] is longer - and
further add to the injury of the worker.
In response to these concerns, the sponsor argues that a worker
would not be required to wait 18 months to file a claim.
Rather, this bill would protect a worker who was not being paid
properly but had waited to file a claim until he or she was no
longer working on the project out of fear of being fired for
filing the claim. Staff notes that all parties agree that
paying the worker timely, fair wages is of great importance to
the general contractors and labor, and other protections need to
be established to address this concern, that are outside the
scope of this bill.
As for this bill, extending the statute of limitations so that
the Labor Commissioner has adequate time to investigate wage
claims and issue appropriate civil wage and penalty assessments
is arguably appropriate to provide workers with wages they have
earned. Notably, the statute of limitations extension to 18
months provided in this bill for joint labor-management
committees is less than the four years statute of limitations
extension previously approved by this Committee in AB 581
(Klehs, 2005) and SB 569 (Steinberg, 2007) (see Background).
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3. Revising restitution and attorney's fees and providing
additional remedies
This bill would revise and recast provisions for restitution and
attorney's fees and costs that may be awarded by a court in
these joint labor-management committee actions. This bill would
also authorize the court to award interest, liquidated damages,
and injunctive relief in these actions.
The sponsor argues this bill will enhance the state's
enforcement efforts to combat the underground economy and
protect the public's investment in infrastructure and workers
from wage theft. Notably, existing law authorizes the Labor
Commissioner to recover interest on unpaid wages and liquidated
damages in connection with the civil wage and penalty
assessments issued to the violating contractor or subcontractor.
(Lab. Code Secs. 1741, 1741.2.) Additionally, this bill
provides for a limitation on liquidated damages in joint
labor-management committee actions, similar to that provided in
Labor Commissioner assessments. Liquidated damages would not be
awarded if the defendant contractor deposits the wages or
provides proof of a surety bond to cover the wages.
Furthermore, this bill would provide judicial discretion to
award liquidated damages if the defendant demonstrates that it
had substantial grounds for contesting that a portion of the
allegedly unpaid wages were owed.
4. Revisions regarding information redacted from payroll records
Existing law requires each contractor and subcontractor on a
public works project to 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. Any copies of those records
that are made available for inspection by, or furnished to, a
joint labor-management committee must have the employee's name
and social security number redacted. (Lab. Code Sec. 1776(e).)
This bill, instead, would only require the individual's social
security number to be redacted. This bill would also require
any copy of records made available for inspection by, or
furnished to, a multiemployer Taft-Hartley trust fund that
requests the records for the purposes of allocating
contributions to participants to be redacted to exclude the
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individual's full social security number, but shall provide the
last four digits of the social security number.
SBCTC argues that "under current law, [a labor management
cooperation committee (LMCC)] that requests certified payroll
records receives them with only 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
employee will allow the LMCC to properly follow up and determine
if the payroll records are fraudulent."
SBCTC also asserts that providing Taft-Hartley trust funds with
the last four digits of social security numbers would enable
"the correct allocation of health benefit and pension
contributions to workers for which the contributions were made.
The redaction of this information severely hinders this process
and oftentimes lawsuits are required to obtain the information."
As noted above, SBCTC states wage theft regularly involves
incomplete payroll records 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 benefits contributions."
This bill seeks to provide additional information, the worker's
names and last four digits of the worker's social security
number, to joint labor-management committees and Taft-Hartley
trust funds in order to assist in fraudulent payroll records
investigations and proper benefits contributions allocations.
Support : California Labor Federation, AFL-CIO; California
Professional Firefighters; California State Association of
Electrical Workers; California State Council of Laborers
Opposition : Air Conditioning Trade Association; Associated
Builders and Contractors of California; Associated General
Contractors of California; California Chapter of the American
Fence Association; California Concrete Contractors Association,
Inc.; California Fence Contractors' Association; Construction
Employers Association; Engineering Contractors' Association;
Flasher Barricade Association; Marin Builders Association;
Plumbing-Heating-Cooling Contractors Association of California;
Southern California Contractors; United Contractors; Western
Electrical Contractors Association
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HISTORY
Source : State Building and Construction Trades Council of
California
Related Pending Legislation :
AB 972 (Calderon) would require public construction projects
that require the use of an electrician to provide the
electrician's state certification number on the payroll records.
AB 972 is currently in the Senate Committee on Labor and
Industrial Relations.
SB 377 (Lieu) would toll the period for service of assessments
regarding a public work project, as specified, and toll the
period for commencing an action during the period of time in
which a request to determine whether a project is a public work,
including the period of a timely administrative appeal, is
pending before the director, as specified. SB 377 would also
toll the period for the period of time that a contractor or
subcontractor fails to provide certified payroll records
pursuant to a request from the Labor Commissioner, a joint
labor-management committee, or an approved labor compliance
program. SB 377 is currently in the Assembly Committee on Labor
and Employment.
Prior Legislation :
SB 569 (Steinberg, 2007) See Background; Comment 2.
AB 581 (Klehs, 2005) See Background; Comment 2.
SB 588 (Burton, Ch. 804, Stats. 2001) See Background.
AB 1646 (Committee on Labor and Employment, Ch. 954, Stats.
2000) See Background.
Prior Vote :
Senate Committee on Labor and Industrial Relations (Ayes 4, Noes
1)
Assembly Floor (Ayes 49, Noes 21)
Assembly Committee on Appropriations (Ayes 12, Noes 5)
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Assembly Committee on Judiciary (Ayes 7, Noes 3)
Assembly Committee on Labor and Employment (Ayes 5, Noes 2)
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