BILL ANALYSIS Ó
AB 1233
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Date of Hearing: January 21, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
1233 (Levine) - As Amended January 4, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill statutorily defines when a public subsidy is "de
minimis" for the purpose of determining when prevailing wage law
applies to certain projects. Specifically, this bill:
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1)Defines "de minimis" to mean a public subsidy that is both
less than $250,000 and less than two percent of the total
project cost.
2)Specifies that this bill does not apply to a project that was
advertised for bid, or a contract that was awarded, before
July 1, 2017.
FISCAL EFFECT:
Minor, absorbable costs to the Department of Industrial
Relations (DIR). To the extent the definition of "de minimis"
leads to the payment of a prevailing wage, private project costs
will likely increase.
COMMENTS:
1)Purpose. Under current law, if the state or a political
subdivision reimburses a private developer for costs that
would normally be borne by the public, or provides a public
subsidy to a private development project that is "de minimis"
in the context of the project, the private development project
is not subject to public works requirements, including paying
a prevailing wage.
The term "de minimis" is not defined in statute. DIR has made
various coverage determinations attempting to define the term
"de minimus". The author notes that DIR's determinations of
"de minimus" have ranged from $65,710 to $4.5 million or from
.5 percent to 2 percent of a project's total cost. The State
Building Construction and Trades Council of California are
sponsoring this bill to clearly define when a public subsidy
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is "de minimis" for the purpose of determining when prevailing
wage law applies to certain projects.
2)Prior Legislation. This bill is identical to AB 251 (Levine)
of 2015. Governor Brown vetoed AB 251 and provided the
following message:
This measure seeks to codify a definition of the term 'de
minimis' to determine what level of public subsidy triggers
prevailing wage requirements on an otherwise private
project.
Longstanding practice has been to view the subsidy in
context of the project and use 2% as a general threshold
for determinations. There has been no showing that the
current practice is unreasonable. While I remain a staunch
supporter of prevailing wages I am concerned that this
measure is too restrictive and may have unintended
consequences. Two years ago, I cited the same concerns when
I returned a similar bill without my signature. This
measure does not adequately address those concerns.
AB 302 (Chau) of 2013 is the similar bill that was also vetoed
by Governor Brown.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081
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