BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 599|
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VETO
Bill No: SB 599
Author: Mendoza (D)
Introduced:2/27/15
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 4/8/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SENATE FLOOR: 23-14, 6/1/15
AYES: Allen, Beall, Block, De León, Galgiani, Hall, Hancock,
Hernandez, Hertzberg, Hill, Jackson, Lara, Leno, Leyva, Liu,
McGuire, Mendoza, Monning, Pan, Pavley, Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Cannella, Fuller, Gaines,
Huff, Moorlach, Morrell, Nguyen, Nielsen, Runner, Stone, Vidak
NO VOTE RECORDED: Glazer, Hueso, Mitchell
ASSEMBLY FLOOR: 52-28, 9/1/15 - See last page for vote
SUBJECT: Employment: public transit service contracts
SOURCE: California Teamsters Public Affairs Council
International Longshore and Warehouse Union
DIGEST: This bill applies an existing 10 percent bid preference
to transit contracts for the State of California when a
contractor voluntarily decides to retain the employees of the
previous contractor.
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Page 2
ANALYSIS:
Existing law, under Labor Code § 1072:
1)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.
2)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.
3)Requires successor contractor or subcontractor for 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.
4)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.
5)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.
Existing law, under Labor Code § 1073:
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Page 3
6)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.
Existing law, under Labor Code § 1074:
7)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:
a) The contractor or subcontractor has substantially
breached the contract; and
b) The awarding authority holds a public hearing within 30
days of the receipt of the request or its announcement of
its intention to terminate.
This bill makes the 10 percent 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.
Comments
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
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drivers, leading to their unemployment and loss of benefits.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, the fiscal
impacts of SB 599 are unknown, but potentially significant to
the extent that state contracts are awarded to other than the
lowest bidder due to the preference. The State contracts out
for relatively few transit services compared to local agencies.
Based on currently-available information, the provisions of this
bill appear only to affect the transit operation at Hearst San
Simeon State Historical Monument (Hearst Castle). Hearst
Castle's current transit contract is valued at roughly $22
million over 10 years, and is up for renewal in eight years.
Assuming the subsequent contract is for the same amount and
duration, the 10 percent bid preferential could lead to an
increased costs to the Department of Parks and Recreation of
$2.2 million, or an average of $220,000 annually (special
funds).
SUPPORT: (Verified10/26/15)
California Teamsters Public Affairs Council (co-source)
International Longshore and Warehouse Union (co-source)
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation
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: (Verified10/26/15)
None received
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ARGUMENTS IN SUPPORT: Proponents argue that the existing bid
preference, which impacts public agencies that contract out for
transit services, has a nearly 10-year history of success on the
local level. Proponents note that the law does not protect 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. Proponents bring attention to a case
at Hearst Castle where a new contractor took over the transit
services, resulting in the loss of employment and benefits for
many drivers.
GOVERNOR'S VETO MESSAGE:
I am returning Senate Bill 599 without my signature.
This bill expands a local bid preference requirement to the
state for public transit services.
By simply expanding this local requirement to the state,
this bill would significantly limit the state's current
contracting authority to determine who would be eligible
for the bid preference and how to calculate it if applied.
I do not believe such a broad change is needed at this
time.
ASSEMBLY FLOOR: 52-28, 9/1/15
AYES: Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,
Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd,
Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto,
Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,
Holden, Irwin, Jones-Sawyer, Levine, Lopez, Low, McCarty,
Medina, Mullin, Nazarian, O'Donnell, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Weber, Williams, Wood, Atkins
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NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chang,
Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper,
Jones, Kim, Lackey, Linder, Maienschein, Mathis, Mayes,
Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner,
Waldron, Wilk
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
11/13/15 16:03:39
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