BILL ANALYSIS Ó
SB 954
Page 1
SENATE THIRD READING
SB
954 (Hertzberg)
As Amended June 14, 2016
Majority vote
SENATE VOTE: 27-12
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Labor |6-1 |Roger Hernández, Chu, |Patterson |
| | |Linder, McCarty, | |
| | |O'Donnell, Thurmond | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |12-5 |Gonzalez, Bloom, |Bigelow, Gallagher, |
| | |Bonta, Calderon, |Jones, Obernolte, |
| | |Daly, Eggman, |Wagner |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Quirk, | |
| | |Santiago, Weber, Wood | |
| | | | |
| | | | |
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SB 954
Page 2
SUMMARY: 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:
1)Provides that those per diem wages may include employer
payments for industry advancement and collective bargaining
agreement administrative fees only if such payments are made
pursuant to a collective bargaining agreement to which the
employer is obligated.
2)Provides that those 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 collective bargaining agreements
administrative fees, only if such payments are made pursuant
to a collective bargaining agreement to which the employer is
obligated.
3)Prevents the use of employer payments for industry advancement
and collective bargaining agreement administrative fees from
being used as a credit against the obligation to pay
prevailing wages if those payments are not made pursuant to a
collective bargaining agreement to which the employer is
obligated.
FISCAL EFFECT: According to the Assembly Appropriations
Committee, no significant state fiscal impact.
COMMENTS: According to the author, the current broad definition
of these "employer payments" allows non-union employees who are
SB 954
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not party to a collective bargaining agreement to have their per
diem wage rates include employer payments used for industry
advancement purposes. As such, employers can credit these
payments towards their prevailing wage obligation without the
input or consent of the employees or their labor
representatives. In addition, 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.
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. Proponents of prevailing wage laws contend
that 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.
Arguments in Support
The State Building and Construction Trades Council of California
is the sponsor of this bill and writes in support:
"This bill will protect construction workers on public works
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projects by ensuring they receive their rightfully owed wages.
The bill prohibits contractors/employers from, without the
consent of the worker or worker's collective bargaining
representative, deducting a portion of the worker's hourly wages
for use by contractor associations.
"The sanctity of the collective bargaining process is essential
to level the playing field between management and labor by
giving workers a strong voice and a seat at the negotiating
table, so that any payments that reduce workers' wages are
actually in the interests of workers."
Arguments in Opposition
Opponents state that contractors are allowed credits toward
their prevailing wage obligation 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 this bill 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.
Finally, opponents express particular concern about the most
recent amendments to this bill that provide that per diem wages
may include employer payments for "other purposes similar" to
certain apprenticeship or other training programs only if such
payments are made pursuant to a collective bargaining agreement
to which the employer is obligated. They argue that this new
amendment essentially says that individual and non-union
contractors will no longer be able to include their
apprenticeship training contributions as part of the prevailing
wage calculations because they are not party to a collective
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bargaining agreement.
Analysis Prepared by:
Taylor Jackson / L. & E. / (916) 319-2091 FN:
0003555