BILL ANALYSIS Ó AB 219 Page 1 ASSEMBLY THIRD READING AB 219 (Daly) As Amended June 1, 2015 Majority vote ----------------------------------------------------------------- |Committee |Votes |Ayes |Noes | | | | | | | | | | | |----------------+------+--------------------+--------------------| |Labor |5-2 |Roger Hernández, |Harper, Patterson | | | |Chu, Low, McCarty, | | | | |Thurmond | | | | | | | |----------------+------+--------------------+--------------------| |Appropriations |12-5 |Gomez, Bonta, |Bigelow, Chang, | | | |Calderon, Daly, |Gallagher, Jones, | | | |Eggman, |Wagner | | | | | | | | | | | | | |Eduardo Garcia, | | | | |Gordon, Holden, | | | | |Quirk, Rendon, | | | | |Weber, Wood | | | | | | | | | | | | ----------------------------------------------------------------- SUMMARY: Expands the definition of "public works" to include the hauling and delivery of ready-mixed concrete, as specified. AB 219 Page 2 Specifically, this bill: 1)Expands the definition of "public works" to include the hauling and delivery of ready-mixed concrete or asphaltic concrete to carry out a public works contract, with respect to contracts involving any state agency or any political subdivision of the state. 2)Provides that "ready-mixed concrete" means concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered in a liquefied state by mixer truck for immediate incorporation into a project. 3)Provides that the "hauling and delivery of ready-mixed concrete to carry out a public works contract" means the job duties for a ready mixer driver that are used by the Department of Industrial Relations (DIR) under existing law, and includes receiving the concrete at the factory or batching plant and the return trip to the factory or batching plant. 4)Provides that the applicable prevailing wage rate shall be the current prevailing wage rate as determined for the geographic area in which the factory or batching plant is located. 5)Provides that the entity hauling or delivering ready-mixed concrete to carry out a public works contract shall enter into a written subcontract agreement with the party that engaged the entity to supply the ready-mixed concrete. The written agreement shall require compliance with specified requirements of existing law. 6)Requires the entity hauling or delivering ready-mixed concrete to carry out a public works contract to submit a certified copy AB 219 Page 3 of the payroll records to the party that engaged the entity and to the general contractor within three working days after the employee has been paid, accompanied by a written time record certified by each driver. 7)Provides that this bill does not apply to contracts advertised for bid or awarded prior to the effective date of this bill. FISCAL EFFECT: According to the Assembly Appropriations Committee: 1)This bill may cause an increase in state and local government contract costs assuming contractors/subcontractors are not currently paying a prevailing wage to workers delivering concrete. According to the California Department of Transportation (Caltrans), on average, the hourly rate for ready-mixed drivers would increase from $16 per hour to $34 per hour. Actual additional costs will depend on the prevailing wage rate in each county, any resulting increase in concrete costs, and the portion of any contract that involves the purchase and delivery of concrete 2)This bill will increase support costs on Caltrans contracts both for inspection of the hauling activities and enforcement of prevailing wage requirements under Caltrans' labor compliance programs operations. Caltrans estimates costs of approximately $1 million related to compliance. 3)Ongoing administrative costs of approximately $125,000 (special funds) for the DIR Compliance Monitoring Unit to monitor and enforce the prevailing wage requirements of this measure. To the extent this measure leads to an increase in the number of prevailing wage fines issued by DIR, there will an increase in special fund revenue. AB 219 Page 4 COMMENTS: This bill is co-sponsored by the California Public Affairs Council and the State Building and Construction Trades Council, and would define "public works" for purposes of state prevailing wage law to include the delivery of ready-mix concrete. The sponsors state that under the current material supplier exemption to the prevailing wage law, delivery drivers hired by a material supplier are exempted from the prevailing wage. However, there is no physical distinction between the work performed by ready-mix drivers employed by contractors and ready-mix drivers employed by manufacturers, as the product and work is identical. By expanding the prevailing wage to all ready-mix drivers serving public works, this bill would create a more fair application of the Labor Code that does not depend on who owns the truck delivering the ready-mix or whether the driver is employed by an onsite contractor or a cement manufacturer. They conclude that this bill is about uniformity and a fair application of the prevailing wage law to deliveries of ready-mix and not about expanding prevailing wage to all material drivers. Opponents contend that this bill ignores longstanding distinctions in labor law between a driver and a construction worker. In addition, they argue that it is inconsistent with the contract between a supplier and a contractor. They note that ready mix concrete is a finished product, delivered to the site in an unfinished state pursuant to a purchase order. Opponents also argue that this bill contravenes longstanding and well-established legal precedent that material suppliers are not subject to prevailing wage law. Finally, opponents argue that this bill imposes significant new liability and administrative burdens on prime contractors since, under California law, prime AB 219 Page 5 contractors are jointly and severally liable for the payment of prevailing wages by all subcontractors on a public work project. This bill would expand that liability to include the payment of prevailing wages by a material supplier providing ready-mixed concrete to a public works construction jobsite. Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0000573