BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 954|
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UNFINISHED BUSINESS
Bill No: SB 954
Author: Hertzberg (D)
Amended: 6/14/16
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
SENATE FLOOR: 27-12, 4/21/16
AYES: Allen, Beall, Block, Cannella, De León, Galgiani,
Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso,
Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell,
Monning, Pan, Pavley, Roth, Wieckowski, Wolk
NOES: Anderson, Bates, Berryhill, Fuller, Gaines, Huff,
Moorlach, Morrell, Nguyen, Nielsen, Stone, Vidak
NO VOTE RECORDED: Runner
ASSEMBLY FLOOR: 52-22, 8/4/16 - See last page for vote
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, this bill qualifies
certain prevailing wage benefit payments only if they are made
by an employer obligated to do so pursuant to a collective
bargaining agreement (CBA). This bill also applies this same
standard to employer payments to benefits that are merely
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Page 2
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.
Assembly Amendments incorporate language that specifies that
certain payments only qualify as part of prevailing wage
requirements and as employer credits for these payments if they
are made pursuant to an employer's obligation to a CBA.
ANALYSIS:
Existing law:
1)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).
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):
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Page 3
a) Health and welfare.
b) Pension.
c) Vacation.
d) Travel.
e) Subsistence.
f) Apprenticeship or other training programs authorized by
Section 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 CBA 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 CBA administrative fees, provided that the employer is
obligated to do so pursuant to a CBA.
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2)Revises the definition of the prevailing wage to include
employer payments for other purposes similar to the following,
but only if they are made pursuant to an employer's obligation
to a CBA:
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 CBA administrative fees.
3)Prevents the use of employer payments for industry advancement
and CBA administrative fees as credit for paying the
prevailing wage unless those payments are made pursuant to an
employer's obligation to 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.
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
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definition of these employer payments allows non-union employees
who are not party to a CBA 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.
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Assembly Appropriations Committee, this bill
has no significant state fiscal impact.
SUPPORT: (Verified8/4/16)
State Building and Construction Trades Council (source)
Air Conditioning Sheet Metal Association
Air-Conditioning & Refrigeration Contractors Association
California Chapters of the National Electrical Contractors
Association
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California Labor Federation, AFL-CIO
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California State Council of Laborers
Finishing Contractors Association of Southern California
Northern California Allied Trades
Southern California Contractors Association
United Contractors
Wall and Ceiling Alliance
OPPOSITION: (Verified8/4/16)
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: Proponents state that existing law
permits employer credits for industry advancement purposes that
are "similar" to those in a 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
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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.
Finally, 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 and that this would not be possible under SB 954's
provisions.
ASSEMBLY FLOOR: 52-22, 8/4/16
AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chau, Chiu, Chu, Cooper, Dababneh,
Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,
Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Holden, Irwin,
Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Medina,
Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Weber,
Williams, Wood, Rendon
NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Dahle,
Beth Gaines, Gallagher, Grove, Harper, Jones, Kim, Lackey,
Maienschein, Mathis, Melendez, Obernolte, Olsen, Patterson,
Wagner, Waldron, Wilk
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NO VOTE RECORDED: Chang, Chávez, Cooley, Hadley, Roger
Hernández, Mayes
Prepared by:Brandon Seto / L. & I.R. / (916) 651-1556
8/5/16 11:09:18
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