BILL ANALYSIS Ó SB 954 Page 1 Date of Hearing: June 29, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair SB 954 (Hertzberg) - As Amended June 14, 2016 ----------------------------------------------------------------- |Policy |Labor |Vote:| 6-1 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: NoReimbursable: No SUMMARY: This bill qualifies which employer payments may be included as per diem wages for purposes of an employer's obligation to pay prevailing wages on public works projects. Specifically, this bill: SB 954 Page 2 1)Redefines the prevailing wage to include industry advancement and collective bargaining agreement (CBA) administrative fees, provided that the employer is required by a CBA to pay them. 2)Provides that per diem wages may include employer payments for "other purposes similar" to certain apprenticeship or other training programs, worker protection and assistance programs or committees established under the federal Labor Management Cooperation Act of 1978, and industry advancement and CBA administrative fees, only if such payments are made pursuant to a CBA to which the employer is obligated. FISCAL EFFECT: No significant state fiscal impact. COMMENTS: 1)Background. Current law requires the applicable general prevailing rate of per diem wages to 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. 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. 2)Purpose. This bill, sponsored by the State Building and Construction Trades Council, revises the definition of acceptable employer payments toward benefits, and thus what SB 954 Page 3 counts as payment of the prevailing wage. Supporters state 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. Supporters also seek to clarify that the employer must actually be a party to a CBA that requires such contributions. According to supporters, this ambiguity has been used by contractors to reduce worker's wages to fund the contractors' own "industry advancement." 3)Opposition. Opposition, including the Associated Builders and Contractors of California, are concerned this bill will 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. Analysis Prepared by:Misty Feusahrens / APPR. / (916) 319-2081