Amended in Senate May 9, 2013

Amended in Senate May 1, 2013

Amended in Senate April 1, 2013

Senate Bill No. 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.

This bill would require a political subdivision that believes a project in which it is interested, as specified, is not a public work, 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 would require the director to determine, within 60 days of receipt of a request for a determination, except as specified, whether a project is a public work. This bill would require an administrative appeal of that determination to be made 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. 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.

This begin delete bill would require the assessment to be served within 180 days of the date of the determination of the violation. This end delete 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. 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.

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 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. This 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 a joint labor-management committee.

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

SEC. 2.  

Section 1726 of the Labor Code is amended to read:

1726.  

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

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

(c) A contractor may bring an action in a court of competent
jurisdiction 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 to an employee under this chapter,
any penalties required to be paid under this chapter, and costs and
attorney’s fees related to this action, if either of the following is
true:

(1) 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 in this chapter.

(2) 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 in this chapter,
and failed to disclose that information to the contractor before the
bid opening or awarding of the contract.

(d) When a political subdivision believes that a project in which
it is interested is not a public work, it shall notify the Director of
Industrial Relations, the Labor Commissioner, and any person who
has asked for that notice, together with the reason therefor, within
30 days of the commencement of any work estimated to last six
months or more, and before the commencement of any work if a
project is not estimated to exceed six months. For purposes of this
section, a political subdivision is interested in a project if it has a
proprietary interest, and not only a regulatory interest, in the
project. This notice shall be a public record. The director shall
create necessary forms and adopt regulations to implement this
subdivision.

SEC. 3.  

Section 1741 of the Labor Code is amended to read:

1741.  

(a) If the Labor Commissioner or his or her designee
determines after an investigation that there has been a violation of
this chapter, the Labor Commissioner shall with reasonable
promptness issue a civil wage and penalty assessment to the
contractor or subcontractor or both. The assessment shall be in
writing and shall describe the nature of the violation and the
amount of wages, penalties, and forfeitures due and shall include
the basis for the assessment. The assessment shall be served begin delete within end delete
begin insert not later than end insert 180 days begin delete of the date of the determination of a
violation end delete begin insert 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 not later than 180 days after
acceptance of the public work, whichever occurs last. However,
if the assessment is served after the expiration of this 180-day
period, but before the expiration of an additional 180 days, and
the awarding body has not yet made full payment to the contractor,
the assessment is valid up to the amount of the funds retained end insert .
Service of the assessment shall be completed pursuant to Section
1013 of the Code of Civil Procedure by first-class and certified
mail to the contractor, subcontractor, and awarding body. The
assessment shall advise the contractor and subcontractor of the
procedure for obtaining review of the assessment. The Labor
Commissioner shall, to the extent practicable, ascertain the identity
of any bonding company issuing a bond that secures the payment
of wages covered by the assessment and any surety on a bond, and
shall serve a copy of the assessment by certified mail to the bonding
company or surety at the same time service is made to the
contractor, subcontractor, and awarding body. However, no
bonding company or surety shall be relieved of its responsibilities
because it failed to receive notice from the Labor Commissioner.

(b) Interest shall accrue on all due and unpaid wages at the rate
described in subdivision (b) of Section 3289 of the Civil Code.
The interest shall accrue from the date that the wages were due
and payable, as provided in Part 7 (commencing with Section
1720) of Division 2, until the wages are paid.

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

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

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

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

SEC. 4.  

Section 1771.2 of the Labor Code is amended to read:

1771.2.  

(a) A joint labor-management committee established
pursuant to the federal Labor Management Cooperation Act of
1978 (Section 175a of Title 29 of the United States Code) may
bring an action in any court of competent jurisdiction against an
employer that fails to pay the prevailing wage to its employees,
as required by this article. 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 recorder 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, whichever last
occurs.

(b) The period for commencing an action shall be tolled during
the period of time in which a request to determine whether a
specific project is a public work is pending before the Director of
Industrial Relations, including the period of a timely administrative
appeal to the director from that determination by an interested
party, if applicable. The period for commencing an action shall
also be tolled for the period of time that a contractor or
subcontractor fails to provide in a timely manner certified payroll
records pursuant to a request from a joint labor-management
committee under Section 1776.

SEC. 5.  

Section 1773.5 of the Labor Code is amended to read:

1773.5.  

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

(b) The director shall determine whether a specific project is a
public work within 60 days of the receipt of a request for a
determination. If the director deems that the complexity of the
request requires additional time to make that determination, the
director may have up to an additional 60 days if he or she certifies
in writing to the requestor, and any interested awarding body , the
reasons for the extension. If the requestor is not an awarding body,
the requester shall serve a copy of the request upon the awarding
body, in which event the awarding body shall, within 15 days of
its receipt, advise the director of its position regarding the request.

(c) If an administrative appeal of the director’s determination
is made, it shall be made within 30 days of the date of the
determination. The director shall issue a determination on the
administrative appeal within 30 days after receipt of the begin delete appeal.
The director may have up to an additional 60 days if end delete begin insert appeal, unless end insert
he or she certifies in writing to the party requesting the appeal the
begin delete reasons for the extension end delete begin insert reason for additional time, in which case
the director’s determination shall issue within 60 days of the
appeal end insert .

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