BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 954|
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THIRD READING
Bill No: SB 954
Author: Hertzberg (D)
Introduced:2/4/16
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 3-1, 4/6/16
AYES: Mendoza, Leno, Mitchell
NOES: Stone
NO VOTE RECORDED: Jackson
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Public works: prevailing wage: per diem wages
SOURCE: State Building and Construction Trades Council
DIGEST: This bill redefines what benefits employers can pay
into as part of their obligation to pay workers on public works
projects the prevailing wage. Specifically, it qualifies certain
prevailing wage benefit payments only if they are required by a
collective bargaining agreement. This bill also eliminates
employer payments to benefits that are merely similar to those
described under existing law. Lastly, this bill does not allow
employers to take credit for paying workers the prevailing wage
if the abovementioned conditions are not met.
ANALYSIS:
Existing law:
1)Requires that the applicable general prevailing rate of per
diem wages be paid to workers employed on public works
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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).
2)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).
3)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).
4)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):
a) Health and welfare
b) Pension
c) Vacation
d) Travel
e) Subsistence
f) 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.
g) 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.
h) Industry advancement and collective bargaining
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agreements (CBAs) administrative fees, provided that these
payments are required under a CBA pertaining to the
particular craft, classification, or type of work within
the locality or the nearest labor market area at issue.
i) Other purposes similar to those specified in paragraphs
(a) to (h), inclusive.
This bill:
1)Redefines the prevailing wage to include industry advancement
and CBAs administrative fees, provided that the employer is
required by a CBA to pay them.
2)Revises the definition of the prevailing wage to exclude
employer payments for other purposes similar to:
a) Certain apprenticeship or other training programs.
b) Worker protection and assistance programs or committees
established under the federal Labor Management Cooperation
Act of 1978 (29 U.S.C. Sec. 175a).
c) Industry advancement and CBAs administrative fees.
3)Prevents the use of employer payments for industry advancement
as credit for paying the prevailing wage if those payments are
not required by a CBA.
Comments
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.
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This bill revises 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
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified 4/20/16)
State Building and Construction Trades Council (source)
California Labor Federation, AFL-CIO
Southern California Contractors Association
OPPOSITION:(Verified 4/20/16)
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
ARGUMENTS IN SUPPORT: The State Building and Construction
Trades Council states that 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
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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.
ARGUMENTS IN OPPOSITION: Opponents state that against the
total prevailing wage amount, contractors are allowed credits
for a range of cash wages and benefit 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. This 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.
Prepared by:Brandon Seto / L. & I.R. / (916) 651-1556
4/20/16 16:13:28
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