BILL ANALYSIS Ó
SB 376
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SENATE THIRD READING
SB
376 (Lara)
As Amended August 18, 2015
Majority vote
SENATE VOTE: 24-14
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Higher |9-3 |Medina, Bloom, Irwin, |Baker, Chávez, |
|Education | | |Harper |
| | | | |
| | | | |
| | |Jones-Sawyer, Levine, | |
| | |Linder, Santiago, | |
| | |Weber, Williams | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Accountability |6-3 |Salas, Burke, |Lackey, Brough, |
| | |Frazier, Irwin, |Beth Gaines |
| | |Medina, Rodriguez | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gomez, Bloom, Bonta, |Bigelow, Chang, |
| | |Calderon, Nazarian, |Gallagher, Jones, |
| | |Eggman, Eduardo |Wagner |
SB 376
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| | |Garcia, Holden, | |
| | |Quirk, Rendon, Weber, | |
| | |Wood | |
| | | | |
| | | | |
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SUMMARY: Requires bidders on University of California (UC)
contracts for specified types of personal services to certify
that their employees' total compensation does not undercut the
compensation of UC employees doing comparable work.
Specifically, this bill:
1)Applies the cost standard described above to the following
types of contracts: building maintenance, cleaning or
custodial services, call centers services, clerical services,
dining and food service, gardening, grounds keeping, and plant
nursery services, laborer services, mailroom services,
parking, shuttle bus, truck driving or transportation
services, security services, storekeeper services, patient
care technical employee services, patient billing services,
medical transcribing services, patient escort services, or
nursing assistance services.
2)Requires a bidder to certify that its total employee
compensation package, including fringe benefits and valued on
a per-employee basis, does not materially undercut UC's total
compensation for employees doing comparable work at the
relevant campus, medical center, or laboratory.
3)Requires UC to include in its request for proposals, a
calculation of the average per-employee value of total
compensation for UC employees relevant to a particular
contract, and to incorporate all known cost escalators for
projecting the rate of growth of average per-employee
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compensation.
4)Stipulates that the current requirement that UC service
contracts - other than for personal or professional services -
involving expenditures of $100,000 or more annually be awarded
to the lowest responsible bidder, includes the renewal or
extension of such contracts.
EXISTING LAW:
1)Outlines the requirements and procedures for competitive
bidding at the UC; and, outlines requirements and procedures,
specifically for the acquisition of materials, goods, and
services (Public Contract Code (PCC) Section 10500, et seq.).
2)Declares the intent of the Legislature to facilitate the
participation of small businesses, particularly small
disadvantaged or minority business enterprises, women business
enterprises, and disabled veteran business enterprises in
business contracting with the UC (PCC Section 10500.5).
3)Requires the UC to let any contract involving an expenditure
of $100,000 or more annually for goods and materials, or for
services to be performed (other than personal or professional
services) to the lowest responsible bidder (PCC Section
10507.7).
4)Authorizes the UC, when it determines that it can expect
long-term savings, as specified, to select the lowest
responsible bidder on the basis of the best value to the
university (PCC Section 10507.8).
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FISCAL EFFECT: According to the Assembly Appropriations
Committee, the UC estimates that, of its total annual spending
on service contracts ($1.2 billion), about $120 million, or 10%,
are for the specific types of services that would be subject to
the requirements of this bill. Assuming a 30% increase in costs
related to providing parity in benefits, total annual costs
would be $36 million. The additional costs to provide wage
parity, assuming a 10% to 20% cost impact, would be $12 million
to $24 million. This impact should diminish over time due to
implementation of UC's Fair Wage/Fair Work plan, which will be
applied to new contracts and as existing contracts are
renewed/extended. These costs will come from a variety of UC
fund sources, including the State General Fund, federal funds,
auxiliary funds, and enterprise funds, such as from the medical
centers.
COMMENTS: Background. According to a 2012 UC Berkeley Labor
Center report, entitled, "Temporary Workers in California are
Twice as Likely as Non-Temps to Live in Poverty: Problems with
Temporary and Subcontracted Work in California," in California
almost one-quarter of a million people worked in the temporary
help services industry in 2010. The report finds that temporary
and subcontracted workers on a whole, are more likely to be
female, less likely to be white non-Hispanic, and less likely to
have a high school diploma or equivalency certificate than the
average non-temporary employee.
Additionally, the report finds that temporary and subcontracted
employees are twice as likely as non-temporary employees to live
in poverty, receive food stamps, and be on Medicaid. The report
finds that temporary and subcontracted employees earned roughly
18% less than equivalent non-temporary employees of the same
age, gender, and ability.
The report also finds that temporary and subcontracted employees
were also more susceptible to workplace illness and injury, and
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were less likely to get benefits. The report notes that lowered
wages mean that temporary and subcontracted employees rely more
on the state safety net than their direct-hire counterparts and
that these employment arrangements undermine worker protections
by allowing employers to avoid certain provisions of worker
protection; making it difficult to enforce other protections.
Lastly, the report finds that these employment relationships
create downward pressure on wages.
Need for the measure. According to the author, "SB 376 seeks to
address the growing challenge to California of the use of
contingent workers to replace employees, and the consequential
effect it has on wages and worker protections." The author
contends that this measure will ensure that the UC evaluates the
total employee compensation package of bids for contract work in
order to ensure that employment that is contracted out to
contingent workers does not, "undercut the value of existing
university employees."
Fair Wage/Fair Work plan. The UC announced its Fair Wage/Fair
Work plan in July, which will establish the minimum wage for
contract workers at $13 per hour starting October 2015,
increasing to $15 per hour as of October 1, 2017. This plan
will also involve a monitoring and compliance program to ensure
contractors are complying with UC policies and all federal,
state, and local laws. Finally, the program will include annual
compensation audits of all contracts and spot audits of selected
contracts. The UC contends that this plan "substantially
addresses the concerns that prompted the introduction of SB 376,
in a way that is financially feasible to the university."
To note, according to the UC, some of its collective bargaining
agreements contain provisions stating that the UC will not
contract out for services solely on the basis that savings will
result from lower contractor pay rates and benefits for services
customarily performed by bargaining unit employees or that
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result in layoff of bargaining unit employees. These agreements
specify the instances in which UC may contract out for services
including, when there is a need for special expertise or
experience, for short-term or temporary staffing needs, for
special services and equipment that are not available
internally, or for services at a leased facility where the
services are provided by the owner.
Arguments in support. According to the California Labor
Federation, the UC continues to contribute to the problem of
regularly relying on a "subcontracted worker model, risking the
jobs and putting downward pressure on wages of direct hire
employees." The Labor Federation contends that, "SB 376
implements improved standards to pay its subcontracted employees
at a level that does not undercut the wages of comparable
regular UC employees in order for that bidder to qualify as a
'lowest responsible bidder' or best value awardee."
Arguments in opposition. The UC argues that, in addition to
increasing costs, the bill will create administrative burdens,
in part by requiring an analysis to determine per-employee
compensation for every type of contract and factoring in all
known cost escalators to project future per-employee costs.
Additionally, the UC contends that the bill will hinder its
ability to make its contracting more efficient by using
systemwide rather than site-specific contracts.
Analysis Prepared by:
Jeanice Warden / HIGHER ED. / (916) 319-3960
FN: 0001650
SB 376
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