BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 326|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 326
Author: Frazier (D)
Amended: 6/9/16 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-0, 6/8/16
AYES: Mendoza, Stone, Leno, Mitchell
NO VOTE RECORDED: Jackson
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 70-0, 1/15/16 - See last page for vote
SUBJECT: Public works: prevailing wage rates: wage and
penalty assessments
SOURCE: Associated General Contractors
DIGEST: This bill requires that funds held as collateral by the
Department of Industrial Relations (DIR) pending a prevailing
wage proceeding be released back to the contractors who
deposited them within 30 days of the conclusion of the
proceeding, as specified.
ANALYSIS:
Existing law:
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1)Requires the Labor Commissioner to issue civil wage and
penalty assessments to contractors or subcontractors who
violate prevailing wage laws (Labor Code §1741).
2)States that after 60 days following the service of a civil
wage and penalty assessment for prevailing wage violations,
the contractors or subcontractors in question who have not yet
paid the outstanding unpaid wages, are liable for additional
penalties, called liquidated damages, equal to the amount of
the wages that remain unpaid (Labor Code §1742.1).
3)Allows contractors to appeal these decisions and obtain an
administrative or judicial review. If review is granted, the
Director of DIR may choose to waive liquidated damages (Labor
Code §1742.1).
4)Permits contractors or subcontractors to avoid paying
liquidated damages if, pending administrative and judicial
review, the full amount of the assessment or notice, including
penalties, has been deposited with DIR to hold in escrow as
collateral within 60 days following service of the wage
penalty assessment or notice (Labor Code §1742.1).
5)Requires the DIR to release these 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 (Labor Code §1742.1).
This bill creates a time limit that requires the DIR to release
funds held in escrow for pending prevailing wage proceedings,
plus any interest earned, to the persons and entities who are
found to be entitled to such funds within 30 days following the
occurrence of either:
1)The conclusion of all administrative and judicial review.
2)Receipt by the DIR of a written notice from the Labor
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Commissioner, his or her designee, of a settlement or other
final disposition of an assessment issued pursuant to Labor
Code §1741 or from the authorized representative of the
awarding body of a settlement or other final disposition of a
notice issued pursuant to Labor Code §1771.6.
Comments
Need for this bill? Currently, if the DIR finds that a
contractor or subcontractor has violated prevailing wage laws
they issue a penalty assessment notice that fines these
contractors. In addition to fining these contractors and trying
to recoup lost wages, the Labor Commissioner or the Division of
Labor Standards Enforcement may impose additional penalties,
called liquidated damages, if contractors do not pay these
unpaid wages within 60 days. However, contractors can appeal
these decisions, and while they are doing so, they can avoid
liquidated damages by depositing the entire amount of the
penalty assessment in cash with the DIR to hold in escrow
pending their appeal and subsequent review.
Following resolution or settlement of these appeals, and/or
payment of wages, contractors may recoup any remaining funds
that they deposited as collateral with the DIR. However, there
is no specified time limit for when these funds must be released
by DIR. As a result, contractors in some cases must wait for an
indeterminate period of time to recover their money. This bill
creates a 30-day time limit for the release of these funds and
specifies conditions for when the 30-day time limit commences.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified6/27/16)
Associated General Contractors (source)
Associated Builders & Contractors of California
Construction Employers' Association
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California Professional Association of Specialty Contractors
Southern California Contractors Association
OPPOSITION: (Verified6/27/16)
None received
ARGUMENTS IN SUPPORT: Proponents contend that construction, by
its
nature, is a project-by-project business model with a unique set
of rules it must
follow. Employees may file a claim with the Division of Labor
Standards
Enforcement regarding the payment of prevailing wages. The
contractor has a right
to appeal the claim; however, to avoid the additional penalty of
liquidated damages
in addition to other penalties, the contractor must post a cash
deposit, which
includes the full amount of the assessment notice, plus
penalties. Proponents are
concerned that while 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 no deadline
in the statute that
states such funds shall be released in an expedited manner. As a
result, releasing
such funds can take months before a contractor is reimbursed.
Unnecessarily tying
up cash can place innocent contractors in jeopardy of losing
their business or
creating financial hardship. Even when a contractor is fully
exonerated, it is often
difficult to receive reimbursement from the state in a timely
manner.
ASSEMBLY FLOOR: 70-0, 1/15/16
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla,
Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau,
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Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Gatto, Gipson, Gonzalez, Gordon, Gray, Grove, Hadley, Harper,
Roger Hernández, Irwin, Jones, Kim, Lackey, Levine, Lopez,
Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez,
Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson,
Quirk, Rendon, Rodriguez, Salas, Santiago, Steinorth, Mark
Stone, Thurmond, Ting, Wagner, Waldron, Weber, Williams, Wood,
Atkins
NO VOTE RECORDED: Bloom, Chávez, Eduardo Garcia, Gomez, Holden,
Jones-Sawyer, Linder, Ridley-Thomas, Wilk
Prepared by:Brandon Seto / L. & I.R. / (916) 651-1556
6/29/16 15:45:48
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