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
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|Author: |Mendoza |
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|Version: |February 27, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Deanna Ping |
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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
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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
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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
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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.
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