BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: SB 954 Hearing Date: April 6,
2016
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|Author: |Hertzberg |
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|Version: |February 4, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Brandon Seto |
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Subject: Public works: prevailing wage: per diem wages
KEY ISSUE
Should the Legislature redefine what type of employer
contributions to benefits count toward the requirement to pay
workers the prevailing wage on public works projects?
Should the Legislature prohibit employers from taking credit for
paying the prevailing wage by contributing to certain employee
benefits, if those contributions are not required by a
collective bargaining agreement?
ANALYSIS
Existing law
Requires that the applicable general prevailing rate of
per diem wages be paid to workers employed on public works
projects in California. This rate is determined by the
Director of the Department of Industrial Relations for each
locality in which the public work is to be performed and
for each craft, classification, or type of worker needed to
execute the public works project (Labor Code §1773).
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Defines "public work" to include, among other things,
construction, alteration, demolition, installation or
repair work done under contract and paid for in whole or in
part out of public funds (Labor Code §1720).
Requires that employers pay the general prevailing rate
of per diem wages to all workers employed on a public works
project costing over $1,000 (Labor Code §1771).
Allows employers, in addition to paying these workers
basic straight-time and overtime pay, to use payments to
the following as a credit against the obligation to pay the
general prevailing rate of per diem wages (Labor Code
§1773.1).
1) Health and welfare
2) Pension
3) Vacation
4) Travel
5) Subsistence
6) Apprenticeship or other training programs
authorized by §3093 of the Labor Code, to the extent
that the cost of training is reasonably related to the
amount of contributions.
7) Worker protection and assistance programs or
committees established under the federal Labor
Management Cooperation Act of 1978 (29 U.S.C. Sec.
175a), to the extent that the activities of the
programs or committees are directed to the monitoring
and enforcement of laws related to public works.
8) Industry advancement and collective bargaining
agreements administrative fees, provided that these
payments are required under a collective bargaining
agreement pertaining to the particular craft,
classification, or type of work within the locality or
the nearest labor market area at issue.
9) Other purposes similar to those specified in
paragraphs (1) to (8), inclusive.
This Bill
Redefines the prevailing wage to include industry
advancement and collective bargaining agreements
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administrative fees, provided that the employer is required
by a collective bargaining agreement to pay them.
Revises the definition of the prevailing wage to exclude
employer payments for other purposes similar to:
1) Certain apprenticeship or other training
programs.
2) Worker protection and assistance programs or
committees established under the federal Labor
Management Cooperation Act of 1978 (29 U.S.C. Sec.
175a).
3) Industry advancement and collective bargaining
agreements administrative fees.
Prevents the use of employer payments for industry
advancement as credit for paying the prevailing wage if
those payments are not required by a collective bargaining
agreement.
COMMENTS
1. Need for this bill?
The prevailing wage is derived from the basic hourly rate paid
on public works projects to a majority of workers engaged in a
particular type of work within the locality and in the nearest
labor market area. This ensures, among other things, that
government funds do not become tangled up in competitive
under-bidding which can reduce worker wages. The prevailing
wage in both federal and California law can include two parts:
1) a basic hourly rate of pay and 2) employer payment of
various benefits for the employee such as health and life
insurance, pension, vacation, among others. In short, rather
than just money, these employers can give their employees
money and bona fide benefits as long as the value of both
components add up to the prevailing wage rate.
This bill would revise the definition of acceptable employer
payments toward benefits, and thus what counts as payment of
the prevailing wage. The author feels that the current broad
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definition of these employer payments allows non-union
employees who are not party to a collective bargaining
agreement to have part of their wages deducted for industry
advancement purposes. As such, employers can deduct and use
these wages without the input or consent of the employees or
their labor representatives. The law's uncertainty regarding
benefits is compounded by the inclusion of employer payments
for other purposes similar to industry advancement as part of
the prevailing wage.
2. Proponent Arguments :
Existing law permits employer credits for industry advancement
purposes that are "similar" to those in a collective
bargaining agreement (CBA) pertaining to a particular craft,
classification, or type of work in the nearest labor market.
This credit, a reduction in the amount of an employee's check,
is diverted into a fund that can be used for lobbying or other
activities that are not subject to a specific CBA.
Proponents further argue that current law is not sufficiently
clear that the employer must actually be a party to a CBA that
requires such contributions. This ambiguity has been used by
contractors to reduce worker's wages to fund the contractors'
own "industry advancement." This is done without worker
representation or a say as to whether employees want these
deductions to occur, for what purposes the money can be used,
and the amount of the deduction. In fact, these funds are
often used to support activities that are contrary to the
interests of workers, such as efforts to weaken health and
safety standards or to reduce wages on public works and
apprenticeship training standards.
Finally, proponents state that the collective bargaining
process is essential to level the playing field between
management and labor, so that any payments that reduce
workers' wages are actually in the interests of workers. SB
954 protects worker wages and clarifies the list of credits an
employer may claim when reducing per diem wages.
3. Opponent Arguments :
Against the total prevailing wage amount, contractors are
allowed credits for a range of cash wages and benefit
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payments. Funds deposited by both union and non-union
contractors into the "other payments" category, which include
benefits, may be used for "industry advancement." Opponents
claim that SB 954 is now trying to eliminate non-union
contractors' ability to fund industry advancement as part of
their permitted credits when calculating the prevailing wage
for their workers.
Opponents contend that the Legislature should not be singling
out prevailing wage contributions based on the union or
non-union status of the contractor. The bill is devoid of
conditions that empower workers represented by a union to have
democratic control and proper accounting of trusts and
committees that receive these employer payments. Instead,
opponents believe that SB 954 simply bans any payments not
made pursuant to a CBA.
Opponents claim that California can assist in building a
skilled-workforce through education and hands-on training
utilizing funds from the "other payments" category for
industry advancement. SB 954 takes much of that away by saying
only union contractors may use these funds for industry
advancement.
4. Prior Legislation :
SB 776 (Corbett), Chapter 169, Statutes of 2013 -
prohibited credit from being granted for employer payments
made to monitor and enforce laws related to public works if
those payments are not made to a program or committee
established under the federal Labor Management Cooperation
Act of 1978 and provided that an employer may take credit
for those specified employer payments, even if those
payments are not made, or costs are not paid, during the
same pay period for which credit is taken, if the employer
regularly makes those payments on no less than a quarterly
basis.
SUPPORT
State Building and Construction Trades Council (sponsor)
OPPOSITION
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Air Conditioning Trade Association
Associated Builders and Contractors of California
Associated Builders and Contractors - San Diego Chapter
California Construction Advancement Group
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
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