BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
SB 377 (Lieu) - Public Works: Project Determinations: Wage and
Penalty Assessments
Amended: May 9, 2013 Policy Vote: L&IR 3-1
Urgency: No Mandate: No
Hearing Date: May 23, 2013 Consultant: Robert Ingenito
SUSPENSE FILE.
Bill Summary: SB 377 would require the Director of the
Department of Industrial Relations (DIR) to establish a new
process to determine whether a project is a public work, upon
the request of any party.
Fiscal Impact: DIR estimates that it would incur staffing costs
of $580,000 (special funds) for additional staff and related
equipment expenses to implement the provisions of the bill, for
(1) developing forms, (2) adopting regulations, (3) monitoring
reports by awarding bodies about projects not believed to be
subject to the requirements of the California prevailing wage
law, and (4) making coverage determinations and decisions on
appeal within the time prescribed by the bill. Additionally, the
bill would result in database costs to DIR to capture the
interested political subdivision, the parties and any person
that has asked for that notice the reason and all the pertinent
dates and timeframes pursuant to the decision process for the
determinations. The estimated cost for this on-line
notification system is $230,000 in the first year of
implementation plus $50,000 ongoing for operation and
maintenance.
Background: DIR enforces prevailing wage law in the State.
Toward that end, DIR's Director makes public works coverage
determinations on request, issuing letter decisions stating
whether a given project or type of work is subject to prevailing
wages and often defends those decisions in court.
The Division of Labor Standards Enforcement (DLSE) enforces the
prevailing wage laws and imposes penalties for violations. Using
research by Office of Policy, Research and Legislation, the
Director publishes general prevailing wage determinations in the
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58 counties for a variety of job classifications engaged in
public works. Included in these determinations are employer
payments for a variety of benefits including Health & Welfare,
Pension, Travel and Subsistence, Apprenticeship, and sums for
Industry Advancement and Enforcement.
DLSE reviews certified payroll records and verifies that
employer payments are properly irrevocably made to a third party
plan, fund or program. DLSE also assures that the proper
classifications were used and the appropriate wage rates were
paid.
Currently, a city can put out a project for bid without
determining its eligibility as a public works project.
Current law does not mandate when DIR must respond to a public
works determination request. However, current law does require
wage claims to be filed within 180 days upon completion of the
project. To the extent that DIR issues its determination after
the 180 days has expired, workers would be unable to recover
back pay or hold the contractors and awarding agencies liable
for wage violations.
Proposed Law: This bill would, among other things, do the
following:
Require a political subdivision to notify the Labor
Commissioner, Director of Industrial Relations, and any
person who has asked for that notice if a project in which
it is interested in is not a public works.
Require the notification 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.
Require the Director of DIR to determine, within 60 days
of receipt of a determination request, whether a project is
a public works.
Require an administrative appeal of that determination
to be made within 30 days after receipt.
Require the Director to issue a determination of an
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appeal with 30 days of its receipt.
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 is pending before the director.
Staff Comments: To the extent that this bill leads to the
reclassification of contracts as public works projects after
they have been awarded, construction costs on these projects
would be higher than initially planned.