BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: AB 1926 Hearing Date: June 8, 2016 ----------------------------------------------------------------- |Author: |Cooper | |-----------+-----------------------------------------------------| |Version: |March 30, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Alma Perez-Schwab | | | | ----------------------------------------------------------------- Subject: Public works: prevailing wage: apprentices KEY ISSUES Should the Legislature require contractors that request apprentices to work on a public works project to pay the apprentices for time spent traveling to the worksite, filling out an application, undergoing testing, training or examinations or other pre-employment processes? Should these requirements apply to all contractors unless otherwise provided for in a collective bargaining agreement? ANALYSIS Existing law: 1) Requires that not less than the general prevailing rate of per diem wages (as determined by the director of the Department of Industrial Relations) be paid to all workers employed on a "public works" project costing over $1,000 dollars and imposes misdemeanor penalties for violation of this requirement. (Labor Code §1771) AB 1926 (Cooper) Page 2 of ? 2) Defines "public work" to include, among other things, construction work done under contract and paid for in whole or in part out of public funds. (Labor Code §1720) 3) Requires a contractor on a public works project to employ registered apprentices, with some exceptions, at the rate of one hour of apprentice work for every five hours of labor performed by a journeyman for each separate craft. (Labor Code §1777.5) 4) Requires that apprentices employed on public works project be paid the prevailing rate of per diem wages for apprentices in the trade to which he or she is registered and shall be employed only at the work of the craft or trade to which he or she is registered. This Bill specifies that, unless otherwise provided by a collective bargaining agreement, when a contractor requests the dispatch of an apprentice to perform work on a public works project and requires the apprentice to fill out an application, or undergo testing, training, an examination, or other pre-employment process as a condition of employment, the apprentice shall be paid for time spent on the required activity, including travel time, at the prevailing wage rate for apprentices in the trade to which he or she is registered. COMMENTS 1. Background on Apprenticeship Programs: The Division of Apprenticeship Standards (DAS), within the Department of Industrial Relations, administers the state's apprenticeship laws and enforces apprenticeship standards for wages, hours, working conditions and the specific skills required for state certification as a journey person in an apprenticeable occupation. In general, apprenticeship programs provide instruction that combines a formal course of in-class instruction with practical "on-the-job" training. Driven and funded by industry, these programs are collaborations of industry, educational institutions, government, and the apprentice. The apprenticeship model of skill development, AB 1926 (Cooper) Page 3 of ? earn-while-you-learn, has been proven to work leading to well trained workers who are employed in lifetime careers. For employers, participation in apprenticeship programs help eliminate the need for expensive recruitment, creates a diversified and flexible workforce and a larger pool of employees with specific skills, reduces costs of high labor turnover and increases productivity. According to the DAS 2014 annual report, California continues to lead the nation with 53,366 apprentices registered in over 540 programs recognized by DAS. Becoming an apprentice requires hard work and training that is from 1 to 6 years, depending on the trade. The training is supervised by the Joint Apprenticeship Committee (JAC) - sometimes called Joint Apprenticeship and Training Committee (JATC), or a Unilateral Apprenticeship Committee (UAC). Training is "spelled out" in apprenticeship standards developed by the local apprenticeship committees, with the assistance of consultants from the Division of Apprenticeship Standards, and registered with the State. Each apprentice signs an apprentice agreement either with a JAC, UAC or an individual employer. Upon successful completion of training, they are issued a "Certificate of Completion" by the State. 2. Employing Registered Apprentices: Existing law defines "apprentice" as a person at least 16 years of age who has entered into a written apprentice agreement with an employer or program sponsor. (Labor Code §3077) A contractor on a public works project must employ one (1) hour of apprentice work for every five (5) hours performed by a journeyman. Contractors who do not meet the required ratio must request dispatch of an apprentice from an apprenticeship program (for each apprenticeable craft or trade) by giving the program written notice (mail, fax, or email) of at least 72 hours before the date on which apprentices are required. Apprentices employed on public works must be paid the applicable apprentice prevailing per diem wage rate, available from DAS, and derived from the Director's survey of wages paid on public works in the geographic area of the craft or trade. Except for projects with less than 40 hours of journeyman work, each request for apprentice dispatch shall be for not less than an 8 hour day per each apprentice, or 20% of the AB 1926 (Cooper) Page 4 of ? estimated apprentice hours to be worked for an employer in a particular craft or trade on a project, whichever is greater. 3. Background on Pay Requirements for Hired Employees: Existing law requires employers to pay employees (already hired) for any time they are suffered or permitted to work, if the employee is there because they are required to be there, then they must be paid. Below is a summary of requirements in existing law for some of the most common questions on this issue. "Hours Worked" Under Existing Law According to the Division of Labor Standards Enforcement's (DLSE's) Enforcement Policies and Interpretation Manual, "Under the basic definition set out in all of the IWC Orders, 'Hours Worked' means the time during which an employee is subject to the control of any employer, and includes all of the time the employee is suffered or permitted to work, whether or not required to do so?Where it is determined that the employee's time is subject to the control of the employer?the time constitutes 'hours worked'." (DLSE Manual Section 46.1). See also, Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000). Travel Time under Existing Law With respect to travel time, the DLSE Manual states, "If an employee is required to report to the employer's business premises before proceeding to an off-premises work site, all of the time from the moment of reporting until the employee is released to proceed directly to his or her home is time subject to the control of the employer, and constitutes hours worked." (DLSE Manual Section 46.2) However, an employer may establish different pay rates for travel time. As the DLSE Manual provides, "The employer may establish a different pay scale for travel time (not less than minimum wage) as opposed to the regular work time rate. The employee must be informed of the different pay rate for travel before the travel beings." (DLSE Manual Section 46.3.2) Training Time under Existing Law According to the DLSE Manual, "The Division utilizes the standards announced by the U.S. Department of Labor contained at 29 CFR §§ 785.27 through 785.31 in regard to lectures, meetings and training programs: AB 1926 (Cooper) Page 5 of ? Time spent by employees attending training programs, lectures and meetings are not counted as hours worked if the attendance is voluntary on the part of the employee and all the following criteria are met: 1. Attendance is outside regular working hours; 2. Attendance is voluntary: attendance is not voluntary if the employee is led to believe that present working conditions or the continuation of employment would be adversely affected by nonattendance; 3. The course, lecture, or meeting is not directly related to the employee's job: training is directly related to an employee's job if it is designed to make the employee handle his job more effectively as distinguished from training him for another job or to a new or additional skill; and 4. The employee does not perform any productive work during such attendance. (DLSE Manual Section 46.6.5) All training programs, lectures, meetings, etcetera which do not meet the above criteria are hours worked. If any one of the above listed criterion is not met, the time is to be considered 'hours worked'." (DLSE Manual Section 46.6.7) 4. Need for this bill? In order to be admitted into an apprenticeship program, an applicant must take several steps that can include taking an aptitude test among other requirements. By the time that a contractor requests a dispatch of apprentices, the apprentice would have been vetted, training in a state approved program and ready to work and learn. The contractor simply calls the approved apprenticeship program or committee, relays his or her request for apprentices, and the program dispatches the apprentices to the contractor. According to the author and sponsors, in some instances, apprentices will travel to the project location ready and able to work, only to find out they are not put to work and instead are required to partake in other pre-employment activities without any compensation for their time. This bill would require that apprentices dispatched to non-union contractors be paid the prevailing wage rate in the event a contractor does not use the apprentice for construction work, but requires the apprentice to undergo testing, added safety training, or other pre-employment requirements instead. AB 1926 (Cooper) Page 6 of ? 5. Proponent Arguments : The author and sponsors argue that when requested by a contractor, an apprentice is completely responsible to arrive on time and ready for work. Often, just to arrive at work, apprentices are required to travel to where the project is which can sometimes be over one hundred miles from their home. However, proponents argue, when an apprentice is dispatched, but not put to work they lose out on an entire day's wages and miss the opportunity to learn new skills to advance in their training. According to the author and sponsors, this bill provides apprentices dispatched to contractors with their properly owed prevailing wage rate in the event a contractor does not use the apprentice for construction work, but requires the apprentice to undergo testing, added safety training, or other pre-employment requirements. According to proponents, the apprentice would receive payment only for the time spent on the required activity. 6. Opponent Arguments : Opponents argue that mandating payment of wages before a hiring decision is made seems contrary to most usual interpretations of an employment relationship. A contractor requests apprentices to satisfy the requirements of prevailing wage law but for a number of possible reasons, the contractor may ultimately choose not to use the apprentice or may not even be lawfully able to employ the apprentice. For example, they note that under the Education Code contractors working on school property are required, with some exceptions, to pass a criminal background check. An apprentice that cannot satisfy this requirement may not be employed - yet would be required to be paid pursuant to this bill. Likewise, many public works projects have "drug free" requirements and an apprentice that does not pass or will not submit to a drug/alcohol screen would still be entitled to be paid under this bill. Additionally, they argue that there could be situations where a contractor chooses not to hire an apprentice for justifiable reasons, being late for example, and this bill would require the contractor to pay for the travel time and time spent undergoing pre-employment processing even if they were not hired. They also question how the travel time will be confirmed; wondering what a reasonable amount of travel time AB 1926 (Cooper) Page 7 of ? is and what the consequences would be should an apprentice get into an accident on the way, would they be able to file for workers' compensation? Furthermore, they argue that in the circumstance when a contractor decides not to employ the apprentice, it is unclear as to when their wages would be due, and if not paid immediately, the contractor could be subject to penalties for failure to pay. Opponents also argue that this bill creates a double standard for union and non-union contractors. Non-signatory contractors would be obligated to pay a dispatched apprentice before it has been determined the apprentice is suitable or eligible to be hired while signatory contractors are not similarly required to pay apprentices if "otherwise provided by a collective bargaining agreement." They argue that if a collective bargaining agreement mentions pre-hire obligations - even if it does not specifically require the payments mandated by this bill - they would seem to satisfy the requirement of exemption. This, they argue, is an extraordinarily unreasonable and unequal mandate that only non-union contractors would be subject to which could result in many potential claims and lawsuits. SUPPORT State Building and Construction Trades Council of California (Sponsor) California Labor Federation California State Association of Electrical Workers California State Pipe Trades Council International Union of Elevator Constructors International Union of Operating Engineers Western States Council of Sheet Metal Workers OPPOSITION Air Conditioning Trade Association American Fire Sprinkler Association Associated Builders and Contractors - San Diego Chapter Associated Builders and Contractors of California Plumbing-Heating-Cooling Contractors Association of California Western Electrical Contractors Association AB 1926 (Cooper) Page 8 of ? -- END --