BILL ANALYSIS Ó AB 327 Page 1 Date of Hearing: May 6, 2015 ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT Roger Hernández, Chair AB 327 (Gordon) - As Amended April 30, 2015 SUBJECT: Public works: volunteers SUMMARY: Extends the sunset date on a public works exemption for specified "volunteers" and other related individuals. Specifically, this bill: 1)Extends the current January 1, 2017 sunset date in existing law until January 1, 2024. 2)Makes related technical and conforming changes. EXISTING LAW: 1) Requires the prevailing wage rate to be paid to all workers on public works projects over $1,000. 2) 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. AB 327 Page 2 3) Provides that the provisions of existing law dealing with the payment of prevailing wages on public works projects do not apply to work performed by a volunteer or volunteer coordinator, as defined. 4) Defines a "volunteer" as an individual who performs work for civic, charitable, or humanitarian reasons for a public agency or 501 (c)(3) tax-exempt organization without promise, expectation, or receipt of any compensation for work performed. 5) Defines a "volunteer coordinator" as an individual paid by a corporation or 501(c)(3) tax-exempt organization to oversee or supervise volunteers. 6) Clarifies that an individual may be considered a "volunteer coordinator" even if the individual performs some non-supervisory work on a project alongside the volunteers, so long as the individual's primary responsibility is to supervise. 7) Specifies that an individual shall be considered a volunteer only when his or her services are offered freely and without pressure and coercion, direct or implied, from an employer. 8) Authorizes a volunteer to receive reasonable meals, lodging, transportation, and incidental expenses or nominal non-monetary awards if those benefits and payments are not a substitute form of compensation. 9) Excludes from the definition of volunteer an individual if that person is otherwise employed for compensation at any time (a) in the construction, alteration, demolition, installation, repair, or maintenance work on the same project, or (2) by a contractor, other than a 501(c)(3) tax-exempt organization, that is receiving payment to perform construction, alteration, demolition, installation, repair or maintenance work on the same project. AB 327 Page 3 10)Provides that the provisions of existing law dealing with the payment of prevailing wages on public works projects do not apply to work performed by members of the California Conservation Corps or a certified Community Conservation Corps. 11)Provides a January 1, 2017 sunset date to these provisions. FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel. COMMENTS: This bill revisits an issue that arose in 2004 concerning the use of volunteer labor on certain public works projects. Much of the attention that arose at that time was a result of an enforcement action taken by the Department of Industrial Relations (DIR) in July 2003 in relation to a stream restoration project in Shasta County. Brief Background on California Prevailing Wage Law A feature of California law since the 1930s, existing law generally requires that prevailing wages be paid to all workers employed on public works projects. (Labor Code Section 1771). Current law defines a "public work" as construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds. (Labor Code Section 1720). Advocates of prevailing wage laws generally argue that such AB 327 Page 4 protections serve two important functions. First, such laws ensure that skilled workers employed in public works projects are paid at least the wages and benefits that "prevail" in their local communities. Second, proponents of prevailing wages argue that such laws make sure that unscrupulous contractors do not import unskilled or low skilled workers from other parts of the country who would undercut the local workforce by working for lower pay. SB 975 (Alarcon), Chapter 1048, Statutes of 2002, among other things, established a definition of "paid for in whole or in part out of public funds" that conformed to several precedential coverage decisions made by DIR. These coverage decisions defined payment by land, reimbursement plans, installation, grants, waiver of fees, and other types of public subsidy as "public funds" for purposes of prevailing wage law. The Labor Code also sets forth a statutory methodology for determining the prevailing wage rate. (Labor Code Section 1773.9). This methodology defines the prevailing rate as the single rate being paid to a majority of workers engaged in a particular craft, classification, or type of work within the locality and in the nearest labor market area. Where no single rate is being paid to a majority of workers the prevailing rate is the single rate being paid to the greatest number of workers (also referred to as the "modal rate"). AB 327 Page 5 The Prior Labor Code Public Works "Volunteer" Exemption Prior to 2004, Section 1720.4 of the Labor Code, originally enacted in 1989, provided that "public works" shall not include any otherwise covered work that meets all of the following conditions: (a)The work is performed entirely by volunteer labor. (a)The work involves facilities or structures which are, or will be, used exclusively by, or primarily for or on behalf of, private nonprofit community organizations including, but not limited to, charitable, youth, service, veterans, and sports groups or associations. (b)The work will not have an adverse impact on employment. (c)The work is approved by the Director of Industrial Relations as meeting the requirements of this section. The previous section 1720.4 also required the Director of DIR to request information on whether or not the work will have an adverse impact on employment from the appropriate local or state organization of duly authorized employee representatives of workers employed on public works. The July 2003 DIR Enforcement Action AB 327 Page 6 Significant media attention and controversy over this issue following a July 2003 enforcement action by DIR stemming from a stream restoration project in Shasta County. In fiscal year 2000-01, the Department of Water Resources provided grant funding to the Sacramento Watersheds Action Group for a stream restoration project on Sulphur Creek in the City of Redding. According to media reports, students from nearby Shasta College were used for various activities including planting seeds, clearing brush, repairing culverts, installing rock beds to prevent erosion, and trash removal. The students reportedly earned course credit for classes in watershed restoration. Responding to a complaint from a local labor organization, DIR investigated and determined that, based on the submitted job descriptions of the work performed by students and volunteers, prevailing wages were required for the following work: willow staking, spreading seeds and mulch, planting shrubs, operating heavy equipment, site cleanup, off-hauling garbage, and planting vegetation. The subsequent DIR enforcement action assessed back wages and civil penalties. In September 2003, the Department of Water Resources (DWR) issued a memorandum that stated, "Due to the serious implications to our programs that would arise from being unable AB 327 Page 7 to support volunteerism, DWR is taking a conservative approach until these issues can be clarified?We will not enter into any new contracts possibly affected by these issues until we have a clearer picture of the obligations of DWR and the grantees under the Labor Code." The 2004 Legislative Amendments to Labor Code Section 1720.4 Following the July 2003 enforcement action, there was an outcry among many in the environmental community that the prior Labor Code Section 1720.4, as interpreted by DIR, effectively prohibited the mixed use of volunteer and paid labor on public works projects. After lengthy negotiations between the environmental community and representatives of organized labor, the Legislature enacted AB 2690 (Hancock), Chapter #330, Statutes of 2004. AB 2690 amended Labor Code Section 1720.4 into its current form. AB 327 Page 8 In order to address concerns that there may be abuses of any "volunteer" exemption to California's prevailing wage laws, AB 2690 contained a January 1, 2009 sunset date. The 2008 Sunset Extension and DIR Report AB 2537 (Furutani) of 2008 extended the sunset date until January 1, 2012. In addition, AB 2537 required DIR to submit a specified report to the Legislature before January 1, 2011, regarding volunteers on public works projects. According to this report, there was one complaint involving volunteer labor on public works projects in 2009 and 2010. In that case, a complaint was filed against a contractor for failing to provide payroll reports for electrical work done in a firehouse. However, the fire chief for that district issued a statement confirming that eight volunteer firefighters were completing the electrical work on the firehouse. Prior to that complaint, the only report of abuse received by DIR was the initial complaint from 2003. AB 587 (Gordon) from 2011 AB 587 (Gordon) from 2011 extended the sunset on the volunteer exemption until January 1, 2017. AB 587 also deleted the obsolete language in the law that required the DIR to submit a specified report to the Legislature before January 1, 2011, regarding volunteers on public works projects. AB 327 Page 9 ARGUMENTS IN SUPPORT According to the author, for more than 10 years, this exemption has proven a vital tool in keeping Californians connected to both their local community and our state's environment and natural resources in a meaningful, productive way - and without any examples of abuse having arisen. This bill would extend that exemption until 2024. The author states that even though California is currently experiencing a period of economic recovery, extending this important provision will allow California to continue to tap into one of our greatest resources for healthy communities and the environment - volunteerism. The California State Parks Foundation and others argue more than 39,000 volunteers provide their time, talent and energy to the state park system on a regular basis. Especially as public funding to our state parks has stretched existing staff thin, it is important that this type of volunteerism continue and, in fact, be encouraged by the state. For this to continue, however, it is critical that nonprofit organizations be able to continue to recruit and deploy volunteers without the requirement that those volunteers be paid prevailing wages. REGISTERED SUPPORT / OPPOSITION: Support Amigos de Bolsa Chica Amigos de los Rios AB 327 Page 10 Anahuak Youth Sports Association Anderson Marsh Interpretive Association Arroyos & Foothill Conservancy Benicia State Parks Association Benicia Tree Foundation Big Sur Land Trust Bolsa Chica Land Trust Cache Cree Conservancy California Association of Local Conservation Corps California Association of School Business Officials California Council of Land Trusts (sponsor) California Environmental and Energy Consulting California Invasive Plant Council AB 327 Page 11 California League of Conservation Voters California League of Park Associations & Friends of Pio Pico California Native Plant Society California Park and Recreation Society California ReLeaf California Special Districts Association California State Association of Counties California State Parks Foundation California State Railroad Museum Foundation California Urban Forests Council California Urban Streams Partnership California Waterfowl Association California Watershed Network AB 327 Page 12 CalNonprofits Canopy Catalina Island Conservancy Cayucos Land Conservancy Chino Hills State Park Interpretive Association Citizens for East Shore Parks City of Burbank City of Indian Wells Common Vision Community Services Employment Training Construction Employers' Association Council for Watershed Health, Board of Directors Defenders of Wildlife AB 327 Page 13 Ducks Unlimited East Bay Municipal Utility District East Bay Regional Park District Empire Mine Park Association Environment California Friends of Allensworth Friends of Balboa Park Friends of China Camp Friends of Harbors, Beaches and Parks Friends of Lakes Folsom and Natoma Friends of Mt Tam Friends of Palomar Mountain State Park Friends of the Urban Forest AB 327 Page 14 Friends4Picacho Habitat for Humanity, California Hendy Woods Community Hollywood Beautification Team Huntington Beach Tree Society International Society of Arboriculture, Western Chapter Just One Tree Keep Eureka Beautiful Koreatown Youth and Community Center Lake County Land Trust Land Conservancy of San Luis Obispo County Land Trust of Santa Cruz County Lassen Land and Trails AB 327 Page 15 League of California Cities League to Save Lake Tahoe, Keep Tahoe Blue Los Angeles Conservation Corps Los Angeles Neighborhood Land Trust Malibu Adamson House Foundation Marin Agricultural Land Trust McKinleyville Land Trust Mendocino Land Trust Mojave River Natural History Association Mountain Parks Foundation Mountains Recreation and Conservation Authority Mountains Restoration Trust Mounted Assistance Unit, California State Parks AB 327 Page 16 Muir Heritage Land Trust Napa County Regional Park and Open Space District National Trust for Historic Preservation Natural Resources Defense Council North East Trees North Lake Tahoe Resort Association Northcoast Regional Land Trust Ojai Valley Land Conservancy Our City Forest Pacific Forest Trust Palos Verdes Pennisula Land Conservancy Peninsula Open Space Trust Pismo Beach CVB AB 327 Page 17 Placer Land Trust Planning and Conservation League Poppy Reserve Mojave Desert Interpretive Association Redwood Parks Association Richmond Trees Riverside Land Conservancy Roseville Urban Forest Foundation Rural County Representatives of California Sacramento Tree Foundation San Joaquin River Parkway and Conservation Trust Santa Clara Valley Audubon Society Save Mount Diablo Save Our Forests AB 327 Page 18 Save Our Heritage Organization Save the Bay Save the Redwoods League Sea and Desert Interpretive Association Sequoia Riverlands Trust Sierra Cascade Land Trust Council Sierra Club California Sierra Foothill Conservancy So. California Mountains Foundation Solano Advocates Green Environments Solano Land trust Sonoma County Water Agency Sonoma Land Trust AB 327 Page 19 Sports Leisure Vacations, LLC State Park Partners Coalition Tahoe Resource Conservation District The Wilderness Institute Torrey Pines Docent Society Tree Davis Tree Foundation of Kern Tree Fresno Tree Lodi Tree Musketeers Tree Partners Foundation Tree San Diego TreePeople AB 327 Page 20 Trout Unlimited Truckee Donner Land Trust Trust for Public Land Urban Conservation Corps of the Inland Empire Urban Corps of San Diego County Urban ReLeaf Urban Tree Foundation Victoria Avenue Forever Waddell Creek Association West Hollywood Tree Preservation Society Western Chapter, International Society of Aboriculture Wildlife Heritage Foundation Woodland Tree Foundation AB 327 Page 21 Your Children's Trees Opposition None on file. Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091