BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 219


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          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.   








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          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  








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            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. 








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          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  








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          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