BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 377
                                                                  Page  1

          Date of Hearing:   August 21, 2013

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                  Mike Gatto, Chair

                      SB 377 (Lieu) - As Amended:  May 9, 2013 

          Policy Committee:                             Labor and  
          Employment   Vote:                            5-2

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              No

           SUMMARY  

          This bill establishes the following requirements regarding  
          prevailing wage determinations:  

          1)Requires a political subdivision, when it believes a project  
            it is interested in, as defined, is not a public work, to  
            notify the Director of Industrial Relations (Director), the  
            Labor Commissioner (LC), and any person who asked for a  
            notice, within 30 days of the beginning of any work estimated  
            to last six months or more, as specified.  Further requires  
            the Director to create necessary forms and adopt regulations  
            to implement this requirement.  

          2)Requires the Director to determine whether a specific project  
            is a public work within 60 days of the request.  Authorizes  
            the Director to have an additional 60 days to make the  
            determination if he or she certifies in writing to the  
            requestor and any interested awarding body the reasons for the  
            extension.  

          3)Requires an administrative appeal of the Director's  
            determination on whether a project is a public work to be made  
            within 30 days of the date of the determination.  Further  
            requires the Director to issue a determination on the appeal  
            within 30 days after receiving the appeal, unless he or she  
            certifies additional time is needed, as specified.  

          4)Deems the Director to have quasi-legislative authority to  
            determine coverage of projects under the prevailing wage laws.  
             Further specifies a final determination of any appeal is  
            subject to judicial review.  








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          5)Requires the period for service assessments to be tolled for  
            the period of time it takes for the Director to determine  
            whether a project is a public work, including an  
            administrative appeal, as specified.  

          6)Requires the period for service assessments to be tolled for  
            the period of time a contractor or subcontractor fails to  
            provide certified payroll records pursuant to a request from  
            the LC or a joint-labor management committee or an approved  
            labor compliance program.  

           FISCAL EFFECT  

          Annual special fund costs of $860,000, to the Department of  
          Industrial Relations (DIR) to hire additional staff to make  
          public work determinations, including any appeals, and develop  
          infrastructure to meet the notification and response  
          requirements of this measure.  Of this cost, approximately  
          $230,000 (special funds) would be one-time.  

           COMMENTS  

           1)Background  .  Existing law requires the prevailing wage rate to  
            be paid to workers on public works projects over $1,000.   
            Statute defines public works as construction, alteration,  
            demolition, installation, or repair work done under contract  
            and paid for in whole or in part out of public funds, except  
            work done directly by any public utility company, as  
            specified.  

            Statute also requires the LC, within reasonable promptness and  
            after an investigation, issue a civil wage and penalty  
            assessment to a contractor if the LC determined the contractor  
            violated prevailing wage requirements for a public work  
            project.  The assessment is required to be served no later  
            than 180 days after the filing the notice of completion with  
            the county recorder in each county in which the public work  
            project was performed, as specified.    

           2)Rationale  .  According to the author, "Current law does not  
            provide adequate notification requirements for public works  
            projects. Currently, a city can put out a project for bid  
            without determining its eligibility as a public works project,  
            causing the contractor with the winning bid to pay below the  








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            prevailing wage, depriving the workers of their lawful wages.

            "Additionally, 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. It is becoming  
            increasingly frequent for DIR to issue its determination after  
            the 180 days has expired, thereby leaving workers unable to  
            recover back pay or hold the contractors and awarding agencies  
            liable for wage violations."

            This bill shortens the length of time for the Director to make  
            prevailing wage determinations and establishes notification  
            requirements, as specified.  

           Analysis Prepared by  :    Kimberly Rodriguez / APPR. / (916)  
          319-2081