BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 219|
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THIRD READING
Bill No: AB 219
Author: Daly (D), et al.
Amended: 8/31/15 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/24/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 4-2, 8/27/15
AYES: Lara, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
NO VOTE RECORDED: Beall
ASSEMBLY FLOOR: 52-27, 6/3/15 - See last page for vote
SUBJECT: Public works: concrete delivery
SOURCE: State Building and Construction Trades Council
DIGEST: This bill expands the definition of public works to
include the hauling and delivery of ready-mixed concrete to
carry out a public works contract.
ANALYSIS:
Existing law:
1)Requires that workers employed on public works projects in
California be paid the applicable prevailing wage, as
determined by the Department of Industrial Relations (DIR).
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Page 2
2)Requires that not less than the general prevailing wage rate
be paid to all workers employed on a "public works" project
costing over $1,000 and imposes misdemeanor penalties for a
violation of this requirement. (Labor Code §1771)
3)Defines "paid for in whole or in part out of public funds" as,
among other things, "Fees, costs, rents, insurance or bond
premiums, loans, interest rates, or other obligations normally
required in the execution of a contract that are paid,
reduced, charged at less than fair market value, waived or
forgiven." (Labor Code §1720)
4)Defines "public work" to include, among other things,
construction, alteration, demolition, installation or repair
work done under contract and paid for in whole or in part out
of public funds. (Labor Code §1720)
5)Defines "public works," as the hauling of refuse from a public
works site to an outside disposal location, with respect to
contracts involving any state agency. (Labor Code §1720.3)
6)Provides that "hauling of refuse" includes, but is not limited
to hauling soil, sand, gravel, rocks, concrete, asphalt,
excavation materials, and construction debris. (Labor Code
§1720.3)
7)Provides that the contractor to whom the contract is awarded,
and any subcontractor under him, shall pay not less than the
prevailing wage to all workers employed in the execution of
the contract. (Labor Code §1774)
This bill:
1)Expands the definition of "public works" to include the
hauling and delivery of ready-mixed 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
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concrete to carry out a public works contract" means the job
duties for a ready mix driver that are used by 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 this chapter. The entity hauling of delivering ready mixed
concrete shall be considered a subcontractor sorely for the
purposes of this chapter.
6)Requires the entity hauling or delivering ready-mixed concrete
to carry out a public works contract to submit a certified
copy 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)States that this section applies to public works contracts
that are awarded on or after July 1, 2016.
8)Provides that this bill does not apply to contracts advertised
for bid or awarded prior to the effective date of this bill.
Comments
Under existing law and longstanding legal and DIR precedent, the
employees of subcontractors who haul material to public work
sites must be paid prevailing wage. Employees of bona fide
material suppliers are excluded from prevailing wage
requirements. A 1999 decision of DIR addressed the issue of
whether the state's prevailing wage laws applied to the delivery
of ready-mix concrete to public works job sites. Alameda
Corridor Project: A&A Ready Mix Concrete and Robertson's Ready
Mix Concrete (Public Works Case No. 99-037).
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DIR relied on a California Court of Appeals decision to set
forth the general test for determining whether the work was
subject to the payment of prevailing wages. O.G. Sansome v.
California Department of Transportation, (1976) 55 Cal. App. 3d
434. DIR noted that the Court in Sansome applied the following
test:
"The Court set forth three principal criteria for the
determination of material supplier. First, a material
supplier must be in the business of selling supplies to the
general public. Second, the plant from which the material is
obtained must not be established specially for the particular
contract. Third, the plant may not be located at the site of
the work."
Applying these three criteria to the case at hand, DIR
determined that the concrete entities involved were material
suppliers and not subcontractors. The opinion also stated that
the Legislature failed to pass a version of AB 302 (Floyd,
Chapter 220, Statutes of 1999) that designated concrete mix
on-hauling a public work however, it also noted "that such
action does not reflect a legislative intent to preclude the
payment of prevailing wages to concrete mix delivery drivers."
In a 2008 decision by DIR, it was determined that the
off-hauling of demolition debris and materials whether performed
by the on-site demolition contractor's employees or by an
independent trucking company is subject to prevailing wage
requirements. In addition, DIR determined that the on-hauling
of material for backfill performed by the on-site demolition
contractor's employees is also subject to prevailing wage
requirements. Friendly Inn Senior Center (City of Morgan Hill),
(Public Works Case No. 2008-027).
Need for this bill? California recognizes the work of ready-mix
drivers as skilled construction work and has published
prevailing wage determinations which contractors are required to
use in two cases. Currently, the delivery of ready-mixed
concrete for incorporation into a public works construction
project is "covered work" under prevailing wage when the product
is delivered by a driver hired by the contractor to deliver the
product or when the product is manufactured at a "dedicated"
plant (one that is established solely for that particular public
workers project). The author notes that exempted from prevailing
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wage are deliveries by "material men," who are essentially
drivers that are employed directly by the manufacturer,
operating trucks owned by that manufacturer. The author argues
that there is no physical distinction between the work performed
by ready-mix drivers employed by contractors and drivers
employed by manufacturers.
AB 219 provides that the delivery of ready-mixed concrete is
covered work in all public works circumstances. The work would
be covered regardless of who owns the truck delivering the
product, and regardless of whether the driver is operated by an
independent trucking company or by the manufacturer of the
concrete. According to the author, AB 219 closes a loophole in
current law by requiring the application of prevailing wage to
deliveries of all ready-mix concrete to public works projects.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
The California Department of Transportation (CalTrans) estimates
that this bill will result in increased costs of $21 million to
$42 million (special funds), which include impacts to materials
costs, compliance and administration.
DIR would incur first-year costs of $127,000 and $119,000 in the
out-years (special funds) monitor and enforce the bill's
prevailing wage requirements for non-CalTrans projects. To the
extent that DIR issues additional fines, special funds revenues
would increase. The magnitude is unknown.
While the bill will impact CalTrans disproportionately at the
state level, it could also potentially result in increased
administrative, materials and compliance costs to other
departments that use ready-mix concrete, including the High
Speed Rail Authority, the Department of Water Resources, the
Department of Corrections and Rehabilitation, the Department of
General Services, and the three segments of higher education
(the University of California, California State University, and
the California Community Colleges). The magnitudes are unknown.
SUPPORT: (Verified8/28/15)
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State Building and Construction Trades Council (source)
Alameda Building Trades Council
American Federation of State, County and Municipal Employees,
AFL-CIO
California Labor Federation, AFL-CIO
California Professional Firefighters
California State Council of Laborers
California Teamsters Public Affairs Council
Contra Costa Building Trades Council
Fresno, Madera, Tulare & Kings Building Trades Council
Humboldt/Del Norte Building Trades Council
Imperial Building Trades Council
Kern, Inyo & Mono Building Trades Council
Los Angeles/Orange Building Trades Council
Marin Building Trades Council
Mid Valley Building Trades Council
Monterey/Santa Cruz Building Trades Council
Napa/Solano Building Trades Council
Northeastern, Shasta, Trinity, Lassen & Tehama Building Trades
Council
Sacramento/Sierra Building Trades Council
San Bernardino/Riverside Building Trades Council
San Diego Building Trades Council
San Francisco Building Trades Council
San Joaquin, Calaveras & Alpine Building Trades Council
San Mateo Building Trades Council
Santa Clara/San Benito Building Trades Council
Sonoma, Mendocino & Lake Building Trades Council
Stanislaus, Merced & Mariposa Building Trades Council
Tri-Counties Building Trades Council
OPPOSITION: (Verified8/28/15)
711 Materials Inc.
Associated Builders and Contractors of California
Associated General Contractors of California
Associated Ready Mixed Concrete
Assured Aggregates Company Inc
Bender Ready Mix
BoDean Company
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Calaveras Materials
California Asphalt Pavement Association
California Chamber of Commerce
California Concrete Contractor Association's
California Construction and Industrial Materials Association
California Construction Trucking Association
California Trucking Association
CalPortland Company
Casraic Brick
CEMEX
Desert Water Agency
Don Chappin Company
El Dorado Irrigation District
GCU Trucking
George Reed Inc
Granite Construction Co.
Granitrock
Hansen Brothers Enterprises
Hanson
Hanson HEIDELBERG cement Group
Hazard Construction
Holliday Rock Co.
Howard Jarvis Taxpayers Association
Knife River Construction
Livingston's Concrete Service Inc.
Mathews Readymix LLC
National Ready Mixed Concrete Company
Northgate Ready Mix
P.W. Gillibrand Co.
Plumbing-Heating-Cooling Contractors Association of California
Puente Ready Mix Inc.
Remedy Concrete, Asphalt & Aggregate
San Diego Regional Chamber of Commerce
Southwest Concrete Pavement Association
Spragues' Ready Mix
Superior Ready Mix Concrete
Syar Concrete LLC
Teichert Materials
United Contractors
United States Pumice Company
Vulcan Materials Co.
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT: Proponents state that this bill will
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expand the prevailing wage to drivers delivering ready-mix
concrete to public works projects, regardless of whether the
delivery drivers are employed by material suppliers or project
contractors. Proponents argue that ready-mix concrete is a
precise mixture or set recipe that is customized for
construction sites and which is transported from a dedicated
batch location or from a manufacturing facility. They contend
that under existing law, the delivery of ready-mixed concrete
for a public works project is covered under the prevailing wage
if either of the following occurs: 1) The product is delivered
by a driver hired by the on-site general contractor or a
subcontractor; or 2) the product is manufactured at a
"dedicated" plant (i.e. one that is established solely for the
public works project).
Proponents 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, they argue that 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. They contend that expanding
the prevailing wage to all ready-mix drivers serving public
works, this bill creates 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.
ARGUMENTS IN OPPOSITION:Opponents contend that AB 219 ignores
longstanding distinctions in labor law between a driver and a
construction worker. They argue that ready-mix concrete is
delivered to construction sites by drivers, whose training and
duties pertain to driving. They contend that the spreading,
vibrating, testing and finishing of the concrete is done by
trained construction workers and drivers do not participate in
on-site construction work, nor do they work alongside the
construction workers.
Additionally, opponents argue that this bill 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.
They contend that ready mix concrete delivered to the jobsite is
essentially the same as material delivered to the site such as
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paint, lumber or steel. They argue that once the product is
delivered, it becomes the responsibility of the contractor, a
separate legal entity. Opponents also note that DIR has
specifically addressed the question of whether the prevailing
wage applies in such cases. They argue that the bill also
potentially sets off a "chain reaction" by targeting a single
delivered product such as lumber, steel, paint, welding
materials, fuel and other supplies.
ASSEMBLY FLOOR: 52-27, 6/3/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd,
Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,
Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty,
Medina, Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Atkins
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chávez,
Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones,
Kim, Lackey, Linder, Maienschein, Mathis, Mayes, Melendez,
Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk
NO VOTE RECORDED: Chang
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
8/30/15 19:42:03
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