Amended in Senate May 1, 2013

Amended in Senate April 1, 2013

Senate BillNo. 377


Introduced by Senator Lieu

February 20, 2013


An act to amend Sections 1726, 1741, 1771.2, and 1773.5 of the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

SB 377, as amended, Lieu. Public works: project determinations: wage and penalty assessments.

Existing law defines the term “public works” for purposes of requirements regarding the payment of prevailing wages, the regulation of working hours, and the securing of workers’ compensation for public works projects. Under existing law, the body awarding the contract for a public work is required to report any suspected violations of requirements relating to public works projects to the Labor Commissioner.

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Under the bill, an awarding body, that does not believe

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begin insertThis bill would require a political subdivision that believesend insert a project in which itbegin delete has a legal interestend deletebegin insert is interested, as specified,end insert isbegin insert notend insert a public work,begin delete is requiredend delete to provide notice, as specified, to the Director of Industrial Relations, the Labor Commissioner, and any other person who requests that notice.

Existing law authorizes the Director of Industrial Relations to establish rules and regulations for the purpose of carrying out public works requirements, including, but not limited to, the responsibilities and duties of awarding bodies relating to public works projects.

This bill wouldbegin delete authorize any party to request fromend deletebegin insert requireend insert the directorbegin delete a determination ofend deletebegin insert to determine, within 60 days of receipt of a request for a determination, except as specified,end insert whether a project is a publicbegin delete work, and would require the director to make that determination within 60 days of the receipt of that request, except as specifiedend deletebegin insert workend insert. This bill wouldbegin delete authorize a party to makeend deletebegin insert requireend insert an administrative appeal of that determinationbegin insert to be madeend insert within 30 days of the date of the determination, and would require the director to issue a determination on an appeal within 30 days after the receipt of the appeal, except as specified. This bill would grant to the director quasi-legislative authority to determine coverage of projects under prevailing wage requirements, and provide that a final determination on any appeal is subject to judicial review.

Existing law requires the Labor Commissioner to issue a civil wage and penalty assessment to a contractor or subcontractor, or both, if, after an investigation, the commissioner determines there has been a violation of the laws regulating public works projects, including the payment of prevailing wages. The assessment is required to be served within 180 days, with exceptions, after the filing of a valid notice of completion in the county where the public work was performed, as specified.begin insert Under existing law, each contractor and subcontractor is required to keep accurate payroll records, as prescribed, that are certified and available for inspection, as specified.end insert

This bill would require the assessment to be served within 180 days of the date of the determination of the violation. This bill would toll the period for service of assessments for the period of time required by the Director of Industrial Relations to make a determination of whether the project is a public work, as specified.begin insert The bill 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.end insert

Existing law authorizes a joint labor-management committee, established pursuant to a specified provision of federal law, to bring an action against any employer who fails to pay prevailing wages as required by state law. The action is required to commence not later than 180 days after the filing of a valid notice of completion in the county where the public work was performed or not later than 180 days after acceptance of the public work, whichever occurs later.

This bill would toll the period for commencing an actionbegin delete forend deletebegin insert duringend insert the period of timebegin delete required by the directorend deletebegin insert in which a requestend insert to determine whether a project is a public workbegin insert, including the period of a timely administrative appeal, is pending before the directorend insert, as specified.begin insert This bill would also toll the period for the period of time that end insertbegin inserta contractor or subcontractor fails to provide certified payroll records pursuant to a request from a joint labor-management committee.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:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert
begin insert

The Legislature finds and declares that the process
2for the Director of Industrial Relations to determine the existence
3of a public work and to decide administrative appeals from those
4determinations has created unacceptable delays and prejudice to
5the enforcement of the public works law, often resulting in the
6expiration of the statute of limitation for the identification and
7collection of wage and penalty assessments. As a result, wage theft
8has occurred because workers are not paid prevailing wage rates
9and the time for assessment has expired. Further, there has been
10an incentive to some developers, contractors, and public bodies
11to engage in expensive and time-consuming litigation in efforts to
12extend the time for determining the existence of a public work.
13This litigation is often a needless expense to the state. In addition,
14public bodies, developers, contractors, and others are entitled to
15a determination of whether a project is a public work as early as
16possible so that the costs of the project and the duties of the parties
17under the law may be known as early as possible. Thus, this act
18is necessary to ensure the actual receipt of proper wages, to reduce
19administrative and litigation costs to the state and others, and to
20provide early guidance to all interested parties.

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21

begin deleteSECTION 1.end delete
22begin insertSEC. 2.end insert  

Section 1726 of the Labor Code is amended to read:

23

1726.  

(a) The body awarding the contract for public work shall
24take cognizance of violations of this chapter committed in the
25course of the execution of the contract, and shall promptly report
26any suspected violations to the Labor Commissioner.

27(b) If the awarding body determines as a result of its own
28investigation that there has been a violation of this chapter and
P4    1withholds contract payments, the procedures in Section 1771.6
2shall be followed.

3(c) A contractor may bring an action in a court of competent
4jurisdiction to recover from an awarding body the difference
5between the wages actually paid to an employee and the wages
6that were required to be paid to an employee under this chapter,
7any penalties required to be paid under this chapter, and costs and
8attorney’s fees related to this action, if either of the following is
9true:

10(1) The awarding body previously affirmatively represented to
11the contractor in writing, in the call for bids, or otherwise, that the
12work to be covered by the bid or contract was not a “public work,”
13as defined in this chapter.

14(2) The awarding body received actual written notice from the
15Department of Industrial Relations that the work to be covered by
16the bid or contract is a “public work,” as defined in this chapter,
17and failed to disclose that information to the contractor before the
18bid opening or awarding of the contract.

19(d) begin deleteIf an awarding body end deletebegin insertWhen a political subdivisionend insertbegin insert end insertbelieves
20that a project in which itbegin delete has a legal interestend deletebegin insert is interestedend insert is not a
21public work,begin delete the awarding bodyend deletebegin insert itend insert shall notify the Director of
22Industrial Relations, the Labor Commissioner, and any person who
23has asked for that notice, together with the reason therefor,begin delete not
24less thanend delete
within 30 days of the commencement of any work
25estimated to last six months or more, and before the
26commencement of any work if a project is not estimated to exceed
27six months.begin insert For purposes of this section, a political subdivision
28is interested in a project if it has a proprietary interest, and not
29only a regulatory interest, in the project.end insert
This notice shall be a
30public record. The director shall create necessary forms and adopt
31regulations to implement this subdivision.

32

begin deleteSEC. 2.end delete
33begin insertSEC. 3.end insert  

Section 1741 of the Labor Code is amended to read:

34

1741.  

(a) If the Labor Commissioner or his or her designee
35determines after an investigation that there has been a violation of
36this chapter, the Labor Commissioner shall with reasonable
37promptness issue a civil wage and penalty assessment to the
38contractor or subcontractor or both. The assessment shall be in
39writing and shall describe the nature of the violation and the
40amount of wages, penalties, and forfeitures due and shall include
P5    1the basis for the assessment. The assessment shall be served within
2180 days of the date of the determination of a violation. Service
3of the assessment shall be completed pursuant to Section 1013 of
4the Code of Civil Procedure by first-class and certified mail to the
5contractor, subcontractor, and awarding body. The assessment
6shall advise the contractor and subcontractor of the procedure for
7obtaining review of the assessment. The Labor Commissioner
8shall, to the extent practicable, ascertain the identity of any bonding
9company issuing a bond that secures the payment of wages covered
10by the assessment and any surety on a bond, and shall serve a copy
11of the assessment by certified mail to the bonding company or
12surety at the same time service is made to the contractor,
13subcontractor, and awarding body. However, no bonding company
14or surety shall be relieved of its responsibilities because it failed
15to receive notice from the Labor Commissioner.

16(b) Interest shall accrue on all due and unpaid wages at the rate
17described in subdivision (b) of Section 3289 of the Civil Code.
18The interest shall accrue from the date that the wages were due
19and payable, as provided in Part 7 (commencing with Section
201720) of Division 2, until the wages are paid.

21(c) (1) The Labor Commissioner shall maintain a public list of
22the names of each contractor and subcontractor who has been found
23to have committed a willful violation of Section 1775 or to whom
24a final order, which is no longer subject to judicial review, has
25been issued.

26(2) The list shall include the date of each assessment, the amount
27of wages and penalties assessed, and the amount collected.

28(3) The list shall be updated at least quarterly, and the
29contractor’s or subcontractor’s name shall remain on that list until
30the assessment is satisfied, or for a period of three years beginning
31from the date of the issuance of the assessment, whichever is later.

32(d) The period for service of assessments shall be tolled for the
33period of time required by the Director of Industrial Relations to
34determine whether a project is a public work, including a
35determination on administrative appeal, if applicable, pursuant to
36subdivisions (b) and (c) of Section 1773.5.begin insert The period for service
37of assessments shall also be tolled for the period of time that a
38contractor or subcontractor fails to provide in a timely manner
39certified payroll records pursuant to a request from the Labor
40Commissioner or a joint labor-management committee under
P6    1Section 1776, or an approved labor compliance program under
2Section 1771.5 or 1771.7.end insert

3

begin deleteSEC. 3.end delete
4begin insertSEC. 4.end insert  

Section 1771.2 of the Labor Code is amended to read:

5

1771.2.  

(a) A joint labor-management committee established
6pursuant to the federal Labor Management Cooperation Act of
71978 (Section 175a of Title 29 of the United States Code) may
8bring an action in any court of competent jurisdiction against an
9employer that fails to pay the prevailing wage to its employees,
10as required by this article. This action shall be commenced not
11later than 180 days after the filing of a valid notice of completion
12in the office of the county recorder in each county in which the
13public work or some part thereof was performed, or not later than
14180 days after acceptance of the public work, whichever last
15occurs.

16(b) The period for commencing an action shall be tolledbegin delete forend delete
17begin insert duringend insert the period of timebegin delete required byend deletebegin insert in which a request to
18determine whether a specific project is a public work is pending
19beforeend insert
the Director of Industrial Relationsbegin delete to determine whether
20a project is a public workend delete
, includingbegin insert the period ofend insert abegin delete determination
21onend delete
begin insert timelyend insert administrative appealbegin insert to the director from that
22determination by an interested partyend insert
, ifbegin delete applicable, pursuant to
23subdivisions (b) and (c) of Section 1773.5.end delete
begin insert applicable. The period
24for commencing an action shall also be tolled for the period of
25time that a contractor or subcontractor fails to provide in a timely
26manner certified payroll records pursuant to a request from a joint
27labor-management committee under Section 1776.end insert

28

begin deleteSEC. 4.end delete
29begin insertSEC. 5.end insert  

Section 1773.5 of the Labor Code is amended to read:

30

1773.5.  

(a) The Director of Industrial Relations may establish
31rules and regulations for the purpose of carrying out this chapter,
32including, but not limited to, the responsibilities and duties of
33awarding bodies under this chapter.

34(b) begin deleteAny party may request from the director a determination of end delete
35begin insertThe director shall determine end insert whether abegin insert specificend insert project is a public
36begin delete work, and the director shall make that determinationend deletebegin insert workend insert within
3760 days of the receipt ofbegin delete thatend deletebegin insert aend insert requestbegin insert for a determinationend insert. If the
38director deems that the complexity of the request requires
39additional time to make that determination, the director may have
40begin insert up to end insert an additional 60 days if he or she certifies in writing to the
P7    1requestor, and anybegin insert interestedend insert awarding body begin delete with a legal interest
2in the projectend delete
, the reasons for the extension.begin insert If the requestor is not
3an awarding body, the requester shall serve a copy of the request
4upon the awarding body, in which event the awarding body shall,
5within 15 days of its receipt, advise the director of its position
6regarding the request.end insert

7(c) begin deleteA party may make end deletebegin insertIfend insertbegin insert end insertan administrative appeal of the
8director’s determinationbegin insert is made, it shall be madeend insert within 30 days
9of the date of the determination. The director shall issue a
10determination on the administrative appeal within 30 days after
11receipt of the appeal. The director may havebegin insert up to end insert an additional
1260 days if he or she certifies in writing to the party requesting the
13appeal the reasons for the extension.

14(d) The director shall have quasi-legislative authority to
15determine coverage of projects under prevailing wage laws. A
16final determination on any appeal is subject to judicial review
17pursuant to Section 1085 of the Code of Civil Procedure.



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