Amended in Senate June 9, 2016

Amended in Senate May 10, 2016

Amended in Assembly January 4, 2016

Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 326


Introduced by Assembly Member Frazier

February 13, 2015


An act to amend Section 1742.1 of the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

AB 326, as amended, Frazier. Public works: prevailing wage rates: wage and penalty assessments.

Existing law requires the Labor Commissioner to issue a civil wage and penalty assessment to a contractor or subcontractor, or both, if the Labor Commissioner determines, after investigation, that the contractor or subcontractor, or both, violated the laws regulating public works contracts, including the payment of prevailing wages. Existing law also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.

Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. Existing law provides that, after 60 days following the service of a civil wage and penalty assessment or notice, the affected contractor, subcontractor, and surety on a bond issued to secure the payment of wages, as provided, become liable for liquidated damages in an amount equal to the amount of unpaid wages, as specified. Existing law provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits the full amount of the assessment or notice, including penalties, with the Department of Industrial Relations to hold in escrow pending administrative or judicial review. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.

This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities within 30 days following either the conclusion of all administrative and judicial review or uponbegin delete written notice being received by the department from the commissioner, his or her designee, or a representative of an authorized labor compliance program of an awarding body of a settlement or other final disposition of the assessment or notice.end deletebegin insert the department receiving written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued, as specified, or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued, as specified.end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 1742.1 of the Labor Code is amended to
2read:

3

1742.1.  

(a) After 60 days following the service of a civil wage
4and penalty assessment under Section 1741 or a notice of
5withholding under subdivision (a) of Section 1771.6, the affected
6contractor, subcontractor, and surety on a bond or bonds issued to
7secure the payment of wages covered by the assessment or notice
8shall be liable for liquidated damages in an amount equal to the
9wages, or portion thereof, that still remain unpaid. If the assessment
10or notice subsequently is overturned or modified after
11administrative or judicial review, liquidated damages shall be
12payable only on the wages found to be due and unpaid.

P3    1Additionally, if the contractor or subcontractor demonstrates to
2the satisfaction of the director that he or she had substantial grounds
3 for appealing the assessment or notice with respect to a portion of
4the unpaid wages covered by the assessment or notice, the director
5may exercise his or her discretion to waive payment of the
6liquidated damages with respect to that portion of the unpaid
7wages. Any liquidated damages shall be distributed to the employee
8along with the unpaid wages. Section 203.5 shall not apply to
9claims for prevailing wages under this chapter.

10(b) Notwithstanding subdivision (a), there shall be no liability
11for liquidated damages if the full amount of the assessment or
12notice, including penalties, has been deposited with the Department
13of Industrial Relations, within 60 days following service of the
14assessment or notice, for the department to hold in escrow pending
15administrative and judicial review. The department shall release
16 the funds in escrow, plus any interest earned, to the persons and
17entities that are found to be entitled to those funds, within 30 days
18following either of the specified events occurring:

19(1) The conclusion of all administrative and judicial review.

begin delete

20(2) Written notice is received by the Department of Industrial
21Relations from the Labor Commissioner, his or her designee, or a
22representative of an authorized labor compliance program of an
23awarding body of a settlement or other final disposition of the
24assessment or notice.

end delete

25
begin insert(2)end insertbegin insertend insertbegin insertThe department receives written notice from the Labor
26Commissioner or his or her designee of a settlement or other final
27disposition of an assessment issued pursuant to Section 1741 or
28from the authorized representative of the awarding body of a
29settlement or other final disposition of a notice issued pursuant to
30Section 1771.6.end insert

31(c) The Labor Commissioner shall, upon receipt of a request
32from the affected contractor or subcontractor within 30 days
33following the service of a civil wage and penalty assessment under
34Section 1741, afford the contractor or subcontractor the opportunity
35to meet with the Labor Commissioner or his or her designee to
36attempt to settle a dispute regarding the assessment without the
37need for formal proceedings. The awarding body shall, upon receipt
38of a request from the affected contractor or subcontractor within
3930 days following the service of a notice of withholding under
40subdivision (a) of Section 1771.6, afford the contractor or
P4    1subcontractor the opportunity to meet with the designee of the
2awarding body to attempt to settle a dispute regarding the notice
3without the need for formal proceedings. The settlement meeting
4may be held in person or by telephone and shall take place before
5the expiration of the 60-day period for seeking administrative
6review. No evidence of anything said or any admission made for
7the purpose of, in the course of, or pursuant to, the settlement
8meeting is admissible or subject to discovery in any administrative
9or civil proceeding. No writing prepared for the purpose of, in the
10course of, or pursuant to, the settlement meeting, other than a final
11settlement agreement, is admissible or subject to discovery in any
12administrative or civil proceeding. The assessment or notice shall
13advise the contractor or subcontractor of the opportunity to request
14a settlement meeting.



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