BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: SB 599 Hearing Date: April 8, 2015 ----------------------------------------------------------------- |Author: |Mendoza | |-----------+-----------------------------------------------------| |Version: |February 27, 2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Deanna Ping | | | | ----------------------------------------------------------------- Subject: Employment: public transit service contracts KEY ISSUE Should the Legislature require a ten percent bid preference for bidders who agree to retain the employees of the prior contractor of subcontractor on all on public transit contracts awarded by the State of California? ANALYSIS Existing law requires that when a public entity puts out to bid a public service contract on public transit services, the bidder must state as part of the bid for a service contract whether or not he or she will retain the employees of the prior contractor or subcontractor for a period of not less than 90 days. (Labor Code § 1072) Existing law also requires that an awarding authority letting a service contract out to bid for public transit services shall give a 10 percent preference to any bidder who agrees to retain the employees of the prior contractor or subcontractor. (Labor Code § 1072) Existing law requires successor contractor or subcontractor for SB 599 (Mendoza) Page 2 of ? public transit services who agrees to retain employees must retain employees who have been employed by the prior contractor or subcontractors, except for reasonable and substantiated cause, which includes the particular employee's performance or conduct while working under the prior contract, as well as or the employee's failure of any controlled substances and alcohol test. (Labor Code § 1072) Existing law requires successor contractor or subcontractor for public transit services shall make a written offer of employment to each employee to be rehired. That offer shall state the time within which the employee must accept that offer, which may not be less than 10 days, and does not need to be at the same level of wages or benefits as provided by the previous contractor or subcontractor. (Labor Code § 1072) Existing law provides that if the successor contractor or subcontractor for public transit services determines that fewer employees are required than were required under the prior contract or subcontract, the successor contractor must retain qualified employees by seniority within the job classification. The successor contractor is permitted to consider licensing requirements when judging seniority. (Labor Code § 1072) Existing law also provides that an employee who was not offered employment or who has been discharged in violation of this chapter, or his or her agent, may bring an action against the successor contractor or subcontractor in any superior court having jurisdiction over the successor contractor or subcontractor. Upon finding a violation of this, the court must order reinstatement to employment with the successor contractor or subcontractor and award backpay, including the value of benefits, for each day of violation, as well as reasonable attorney fees. (Labor Code § 1073) Existing law also provides that, upon its own motion or upon the request of any member of the public, an awarding authority may terminate any service contract if both of the following occur: i. The contractor or subcontractor has substantially breached the contract; and ii. The awarding authority holds a public hearing within 30 days of the receipt of the SB 599 (Mendoza) Page 3 of ? request or its announcement of its intention to terminate. A contractor or subcontractor terminated as described above must be ineligible to bid on or be awarded a service contract or subcontract with that awarding authority for a period of not less than one year and not more than three years, to be determined by the awarding authority. (Labor Code § 1074) This Bill would apply the above-discussed bid preference to state agencies. COMMENTS 1. Need for this bill? The author notes that the current 10% bid preference for transit contracts applies to all public entities, except to the State of California and believes that extending this bid preference will support the state's continued economic recovery by rewarding contractors that retain the employees of the previous contractor. The author contends that this protects workers by giving them job stability while protecting good contractors from cross-cutting measures. The author specifically brings attention to an incident at Hearst Castle where the lowest bidder of the transit services terminated the employment of the existing drivers, leading to their unemployment and loss of benefits. SB 599 seeks to address this concern by making the 10% bid preference for transit contracts also applicable when the State of California contracts out for transit services and when a contractor voluntarily decides to retain the employees of the previous contractor. 2. Proponent Arguments : Proponents argue that the existing bid preference, which impacts public agencies that contract out for transit services, has a nearly ten year history of success on the local level. Proponents note that the law does not protect SB 599 (Mendoza) Page 4 of ? the wages or benefits of services, allowing those who seek the contract to bid the service at any price, but frequently all bidders decide to hire all of the incumbent employees in order to compete with the other bidders on a level playing field. Proponents believe that this bid preference should be extended to state transit contracts, and they cite the loss of employment and benefits by drivers formally employed at the Hearst Castle when the transit services were contracted out. 4. Prior Legislation : SB 263 (Monning) of 2014 was identical to this bill, but held in Assembly Appropriations Committee. SB 232 (Monning) of 2013 was identical to this bill. It passed the Senate and the first policy committee in the Assembly but was then amended to Military and Veterans code, relating to the California Central Coast State Veterans Cemetery at Fort Ord Endowment Fund. SB 158 (Alarcon), Statutes of 2003, Chapter 103, created the bid preference for contracted transit services for public agencies. SUPPORT California Teamsters Public Affairs Council (Co-Sponsor) International Longshore & Warehouse Union (Co-Sponsor) California Conference Board of the Amalgamated Transit Union California Conference of Machinists California Labor Federation, AFL-CIO Engineers and Scientists of California Professional and Technical Engineers, Local 21 The Northern California District Council of the International Longshore and Warehouse Union UNITE HERE! Utility Workers Union of America, Local 132 OPPOSITION None on File. SB 599 (Mendoza) Page 5 of ? -- END --