BILL ANALYSIS Ó AB 219 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 219 (Daly) As Amended August 31, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |52-27 |(June 3, 2015) |SENATE: | |(September 1, | | | | | |24-13 |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: L. & E. SUMMARY: Expands the definition of "public works" to include the hauling and delivery of ready-mixed concrete, as specified. The Senate amendments: 1)Provide that the entity hauling or delivering ready-mixed concrete shall be considered a subcontractor solely for the purposes of a specified chapter of the code. 2)Provide that this bill applies to public works contracts that are awarded on or after July 1, 2016. FISCAL EFFECT: According to the Senate Appropriations Committee, the California Department of Transportation AB 219 Page 2 (CalTrans) estimates that this bill would result in increased costs of $21 million to $42 million (special funds), which includes impacts to materials costs, compliance and administration (see Staff Comments). The Department of Industrial Relations (DIR) would incur first-year costs of $127,000 and $119,000 in the out-years (special funds) to 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 would 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. 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. AB 219 Page 3 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 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: 0001645