BILL ANALYSIS Ó
SB 776
Page 1
Date of Hearing: July 3, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
SB 776 (Corbett) - As Amended: April 15, 2013
Policy Committee: Labor and
Employment Vote: 5-2
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill establishes restrictions on granting credits for
employer payments made to monitor and enforce public works
statute, as specified. Specifically, this bill:
1)Prohibits employer payments from being a credit against an
obligation to pay the prevailing wage of per diem payments
made to monitor and enforce laws related to public works, if
those payments are not made to a program or committee
established under the federal Labor Management Cooperation
Act.
2)Authorizes an employer to take credit for an employer payment
even if contributions are not made, or costs are not paid, if
the employer regularly makes the contributions, or regularly
pays the costs, for the plan, fund, or program on no less than
a quarterly basis.
FISCAL EFFECT
Minor, absorbable costs to the Department of Industrial
Relations (DIR) to enforce this measure.
COMMENTS
1)Background . Existing law requires workers employed on public
works projects in California be paid the applicable prevailing
wage, as determined by the director of DIR and the body
awarding a contract assure compliance with this requirement.
The definition of prevailing wage includes two components: a
basic hourly rate of pay and bona fide fringe benefits, as
SB 776
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specified. Examples of bona fide fringe benefits include
health and life insurance, pension, vacation, apprenticeship
or training programs and public works enforcement programs or
committees, as specified. Current law also delineates an
"other purposes" category that is meant to be similar to the
specific examples of bona fide fringe benefits (i.e.,
insurance, pension, etc.).
2)Rationale . According to the author, "The requirement that
fringe benefit payments be for 'bona fide' benefits to the
employee is a key to safeguarding employee wages and benefits.
Under federal and state law, a contractor selected for a
prevailing wage project must pay the wage portion of the
applicable prevailing wage determination in cash wages but may
meet the fringe benefits portion in different ways, as long as
the worker is paid at least the total package for each hour
worked.
"Increasingly, contractors selected for a prevailing wage
project that do not typically provide employee benefits equal
to the level required by prevailing wage laws are claiming
credit against their obligation to pay prevailing wages for
payments to an employer-sponsored 'contract compliance
committee,' asserting that these payments are for 'other'
purposes [as defined under state statute]."
The author contends employers are utilizing the 'other
purposes' category to pay reduced wages to workers.
The author further states: "[This bill] closes loopholes in
prevailing wage law by clarifying that contractor payments for
monitoring and enforcing laws related to public works cannot
count as a credit towards a contractor's obligation to pay
prevailing wages, if those payments are not made to a joint
program or committee established under the federal Labor
Management Cooperation Act of 1978."
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081