BILL ANALYSIS Ó
AB 326
Page 1
ASSEMBLY THIRD READING
AB
326 (Frazier)
As Amended January 4, 2016
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Labor |7-0 |Roger Hernández, | |
| | |Harper, Chu, Low, | |
| | |McCarty, Patterson, | |
| | |Thurmond | |
| | | | |
| | | | |
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SUMMARY: Amends existing law related to civil wage and penalty
assessments for prevailing wage violations. Specifically, this
bill:
1)Provides that certain funds held in escrow by the Department
of Industrial Relations (DIR) in specified prevailing wage
proceedings shall be released "within 30 days" at the
conclusion of all administrative and judicial review.
AB 326
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2)Makes other technical changes.
EXISTING LAW:
1)Provides that after 60 days following the service of a civil
wage and penalty assessment for prevailing wage violations,
the affected contractor or subcontractor shall be liable for
liquidated damages in an amount equal to the wages, or portion
thereof, that still remain unpaid.
2)Provides that if the contractor or subcontractor demonstrates
to the satisfaction of the director of DIR that he or she had
substantial grounds for appealing the assessment or notice
with respect to a portion of the unpaid wages covered by the
assessment or notice, the director may exercise his or her
discretion to waive payment of the liquidated damages with
respect to that portion of the unpaid wages.
3)Provides that there shall be no liability for liquidated
damages if the full amount of the assessment or notice,
including penalties, has been deposited with DIR within 60
days following service of the assessment or notice, for DIR to
hold in escrow pending administrative and judicial review.
4)Requires DIR to release such funds, plus any interest earned,
at the conclusion of all administrative and judicial review to
the persons and entities who are found to be entitled to such
funds.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS: Under current law, if a wage and penalty assessment
for prevailing wage law violations remains unpaid for a period
AB 326
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of 60 days, the affected contractor or subcontractor is liable
for liquidated damages in an amount equal to the wages that
remain unpaid. The general purpose of this provision is to
encourage prompt payment of wages following an assessment for
violation of the law.
However, current law provides that there shall be no liability
for liquidated damages if the contractor or subcontractor has
deposited the full amount of the assessment (in cash) with DIR
pending administrative and judicial review of the assessment.
Existing law requires DIR to release the funds, plus any
interest earned, at the conclusion of all administrative and
judicial review to the persons and entities found to be entitled
to those funds.
According to the author, although the statute stipulates that
the cash funds deposited by the contractor in order to avoid
liquidated damages shall be released at the conclusion of all
administrative and judicial review, there is nothing in the
statute that states such funds shall be released in an expedited
manner. As a result, releasing such funds can take months
before the contractor is reimbursed. The author states that in
one case, the cash deposit was $93,608.01, and in another it was
$284,873.21. In both cases, these amounts were in addition to
at least the equivalent amount already being withheld by the
awarding bodies from the general contractor's contract balance.
In both cases, the claims against the contractor were dropped
according to counsel. However, according to the author the task
of getting the money back from DIR can take a long period of
time.
This bill is sponsored by the Associated General Contractors who
state:
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It is not unusual to have contractors post significant
cash deposits. An example, in one documented case the
contractor's civil wage and penalty assessment was
solely based on the misconduct of the subcontractor,
yet the general contractor had to post $250,489 in
order to avoid liquidated damages.
The cash deposit was held from February to August (six
months), where it was dismissed, and then it took
another three months to have the funds returned. This
bill simply states that once the case has been decided
that the funds should be returned within 30 days.
There is no opposition on file.
Analysis Prepared by:
Benjamin Ebbink / L. & E. / (916) 319-2091 FN:
0002541