Amended in Assembly August 7, 2013

Amended in Senate February 19, 2013

Senate Bill No. 7

Introduced by Senators Steinberg and Cannella

December 3, 2012

An act to add Section 1782 to the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

SB 7, as amended, Steinberg. Public works: charter cities.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines “public works” to include, among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for, in whole or in part, out of public funds, and street, sewer, or other improvement work done under the direction and supervision or by the authority of any officer or public body of the state, or of any political subdivision or district thereof, whether the political subdivision or district operates under a freeholder’s charter or not.

This bill would prohibit a charter city from receiving or using state funding or financial assistance for a construction project if the city has a charter provision or ordinance that authorizes a contractor to not comply with prevailing wage provisions on any public works contract. The bill would, except as specified, prohibit a charter city from receiving or using state funding or financial assistance for a construction project begin delete for up to 2 calendar years end delete if the city begin delete has, after January 1, 2014, end delete begin insert has end insert awarded begin insert , within the prior 2 years, end insert a public works contract without requiring the contractor to comply with prevailing wage provisions. This bill would authorize charter cities to receive or use state funding or financial assistance if the city has begin delete adopted end delete a local prevailing wage ordinance begin insert , applicable to all of its public works contracts, end insert that includes requirements that are equal to or greater than the state’s prevailing wage requirements, as specified. This bill would exclude contracts for projects of $25,000 or less for construction work, or projects of $15,000 or less for alteration, demolition, repair, or maintenance work. This bill would require the Director of Industrial Relations to maintain a list of charter cities that may receive and use state funding begin delete and end delete begin insert or end insert financial assistance for their construction projects.

begin insert

This bill would provide that it does not restrict a charter city from receiving or using state funding or financial assistance that was awarded to the city prior to January 1, 2015, or from receiving or using state funding or financial assistance to complete a contract that was awarded prior to January 1, 2015, and that a charter city would not be disqualified from receiving or using state funding or financial assistance for its construction projects based on the city’s failure to require a contractor to comply with prevailing wage provisions in performing a contract the city advertised for bid or awarded prior to January 1, 2015.

end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) It is a matter of statewide concern that California has an
available workforce of skilled construction workers to efficiently
complete both public and private infrastructure projects, and
maintaining that workforce requires the continual training of new
workers to replace the aging workforce. An in-state workforce of
skilled construction workers who can complete projects in a
streamlined manner benefits the state’s economy.

(b) The state’s prevailing wage law promotes the creation of a
skilled construction workforce. The requirement that contractors
on public work pay prevailing wages to their employees encourages
contractors to hire the most skilled workers and to invest in their
training. The incentives provided in the prevailing wage law for
formal apprenticeship training in state-approved programs provide
the financial support and on-the-job training opportunities
necessary to train the next generation of skilled construction
workers.

(c) The majority of California workers do not have four-year
college degrees, and maintaining construction work as an
occupation that can provide good jobs to California workers is
important to the future of the state.

(d) The state’s prevailing wage law helps to maintain
construction work as an occupation that provides middle-class jobs
to hundreds of thousands of California workers, enabling the
workers to support families and contribute to their communities.
The prevailing wage law also provides necessary on-the-job
training opportunities for the more than 50,000 apprentices enrolled
in state-approved apprenticeship programs in the building and
construction trades, enabling the apprentices to graduate from the
programs and pursue careers as journey-level workers.

(e) The state’s prevailing wage law applies to construction
projects paid for in whole or in part out of public funds, including
projects awarded by any county, city, district, public housing
authority, public agency of the state, and assessment or
improvement districts.

(f) The California Supreme Court has held that charter cities
need not require contractors to comply with the state’s prevailing
wage law on purely municipal projects. Many charter cities require
contractors to comply with the state’s prevailing wage law on their
municipal projects, but some charter cities do not.

(g) Charter cities that require compliance with the prevailing
wage law on their municipal projects are furthering a state policy
that has substantial benefits that go beyond the limits of the city.
Many of the workers employed on a municipal project will not
live in the city where the project is located, and many apprentices
receiving training on municipal projects will pursue careers outside
the city.

(h) The state has limited financial resources to support local
construction projects, and it would further state policy to provide
financial assistance only to those charter cities that require
compliance with the prevailing wage law on all their municipal
construction projects. To the extent that requiring compliance with
the state’s prevailing wage law may raise the cost of municipal
projects for these cities, these cities also would be more in need
of state financial support for their other construction projects.

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(i) Part of the state’s purpose in subsidizing public works
projects is to create and maintain good jobs and training
opportunities in the construction industry in order to preserve the
middle class. Cities that require compliance with the prevailing
wage law on all their public works projects have construction
programs that are furthering rather than undermining that goal.

end insert begin delete

(i)

end delete

begin insert (j) end insert  The intent of Section 1782 of the Labor Code is to provide
a financial incentive for charter cities to require contractors on
their municipal construction projects to comply with the state’s
prevailing wage law by making these charter cities eligible to
receive and use state funding begin delete and end delete begin insert or end insert financial assistance for their
construction projects. begin insert State funding or financial assistance for
charter city construction projects makes up only a small portion
of charter city budgets, and charter cities have the power to raise
other revenues if they do not wish to require the payment of
prevailing wages on all their municipal construction projects. end insert

SEC. 2.  

Section 1782 is added to the Labor Code, to read:

1782.  

(a) A charter city shall not receive or use state funding
or financial assistance for a construction project if the city has a
charter provision or ordinance that authorizes a contractor to not
comply with the provisions of this article on any public works
contract.

(b) A charter city shall not receive or use state funding or
financial assistance for a construction project if the city has
awarded, within the begin delete current or prior two calendar end delete begin insert prior two end insert years,
a public works contract without requiring the contractor to comply
with all of the provisions of this article. begin delete This subdivision shall not
apply to contracts awarded prior to January 1, 2014. end delete This
subdivision shall not apply if the charter city’s failure to include
the prevailing wage or apprenticeship requirement in a particular
contract was inadvertent and contrary to a city charter provision
or ordinance that otherwise requires compliance with this article.

(c)  begin delete Notwithstanding subdivision (a), a charter city may receive
or use end delete begin insert A charter city is not disqualified by subdivision (a) from
receiving or using end insert state funding or financial assistance for its
construction projects if the charter city has begin delete adopted end delete a local
prevailing wage ordinance begin insert for all its public works contracts end insert that
includes requirements that in all respects are equal to or greater
than the requirements imposed by the provisions of this article and
that do not authorize a contractor to not comply with this article.

(d) For purposes of this section, the following shall apply:

(1) A public works contract does not include contracts for
projects of twenty-five thousand begin delete ($25,000) end delete dollars begin insert ($25,000) end insert or
less when the project is for construction work, or projects of fifteen
thousand begin delete ($15,000) end delete dollars begin insert ($15,000) end insert or less when the project is
for alteration, demolition, repair, or maintenance work.

(2) A charter city includes any agency of a charter city and any
entity controlled by a charter city whose contracts would be subject
to this article.

begin insert

(3) A “construction project” means a project that involves the
award of a public works contract.

end insert begin delete

(3)

end delete

begin insert (4) end insert  State funding begin delete and end delete begin insert or end insert financial assistance includes direct state
funding, state loans and loan guarantees, state tax credits, and any
other type of state financial support for a construction project.
State funding begin delete and end delete begin insert or end insert financial assistance does not include begin delete tax end delete
revenues that charter cities are entitled to receive without
conditions under the California Constitution.

(e) The Director of Industrial Relations shall maintain a list of
charter cities that may receive and use state funding begin delete and end delete begin insert or end insert financial
assistance for their construction projects.

begin insert

(f) (1) This section does not restrict a charter city from receiving
or using state funding or financial assistance that was awarded
to the city prior to January 1, 2015, or from receiving or using
state funding or financial assistance to complete a contract that
was awarded prior to January 1, 2015.

end insert begin insert

(2) A charter city is not disqualified by subdivision (b) from
receiving or using state funding or financial assistance for its
construction projects based on the city’s failure to require a
contractor to comply with this article in performing a contract the
city advertised for bid or awarded prior to January 1, 2015.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert begin insert

The provisions of this section are severable. If any
provision of this section or its application is held invalid, that
invalidity shall not affect other provisions or applications that can
be given effect without the invalid provision or application.

end insert