BILL ANALYSIS Ó
SB 959
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Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 959
(Lara) - As Amended May 31, 2016
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| |Accountability and | | 6 - 2 |
| |Administrative Review | | |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill, effective January 1, 2018, requires bidders on
University of California (UC) contracts for specified types of
personal services to certify that their employees' total
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compensation does not significantly undercut the total
compensation of UC employees doing comparable work.
Specifically, this bill:
1)Applies the cost standard described above to the following
types of contracts: building maintenance, cleaning or
custodial services, call centers services, clerical services,
dining and food services, gardening, grounds keeping, and
plant nursery services, laborer services, mailroom services,
parking, shuttle bus, and transportation services, security
services, storekeeper services, patient care technical
employee services, patient billing services, medical
transcribing services, patient escort services, or nursing
assistance services.
2)Requires a bidder to certify the following:
a) That its total employee compensation package, including
fringe benefits, that is valued on a per-employee basis,
does not materially undercut UC's total compensation for
employees doing comparable work at the relevant campus,
medical center, or laboratory by more than five percent.
b) That the bidder has not been found liable for violation
of compensation, work hours, or working conditions related
provisions of the Penal Code, or Labor Code, as specified,
or any Wage Order Issued by the Industrial Welfare
Commission for specified amounts, within the prior five
years.
3)Requires the bidder to provide the UC: a) spreadsheets showing
all applicable compensation and benefits, as specified, for
each position and employee supplied to the University; b) an
organization chart showing the bidder's supervisory structure;
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and, c) any applicable collective bargaining agreements and
all employee handbooks applicable to the contracted employees.
4)Requires a successful bidder, once under contract, to notify
the UC of any changes to the information provided within 30
days of the change, and provide UC copies of notices provided
to employees in compliance with existing labor code provisions
outlining the obligations of the employer prior to the
employees beginning UC campus work.
5)Requires UC to include in its request for proposals, a
calculation of the average per-employee value of total
compensation for UC employees relevant to a particular
contract, and to incorporate all known cost escalators for
projecting the rate of growth of average per-employee
compensation.
6)Declares the records provided by the bidder/contractor to be
subject to Public Records Act laws and authorizes the UC to
redact any confidential information and to delay responses to
public records requests until after a bid process is complete,
if applicable.
7)Stipulates that, effective January 1, 2018, the current
requirement that UC service contracts-other than for personal
or professional services-involving expenditures of $100,000 or
more annually be awarded to the lowest responsible bidder,
includes the renewal or extension of such contracts.
FISCAL EFFECT:
UC estimates that its total annual spending on service contracts
of the types that would be subject to the provisions of this
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bill is $345 million, with just over one half of this amount
representing contracts at UC's 10 campuses and the remainder
representing contracts at UC's five medical centers. Of this
total, an estimated 60% ($207 million) constitutes labor costs.
Assuming a 30% increase in costs related to providing parity in
benefits and a 12.5% increase in costs related to wage parity,
total annual costs would be $88 million. These costs will come
from a variety of UC fund sources, including the State General
Fund, federal funds, auxiliary funds, and enterprise funds, such
as funds from the medical centers.
In addition to increased contract costs, UC will incur
administrative costs of several hundred thousand dollars to
calculate average per-employee compensation for every type of
contract and to factor in all known cost escalators to project
future per-employee costs. There will be additional
administrative costs, likely in the millions of dollars over
time, associated with revising contract bid specifications,
maintaining information provided by prospective and successful
bidders for potential Public Records Act requests, and
performing additional bidding due to the bill's restrictions on
contract renewals or extensions.
COMMENTS:
1)Purpose. According to the author, this bill "seeks to address
the growing challenge to California of the use of contingent
workers to replace employees, and the consequential effect it
has on wages and worker protections." The author further
states such workers generally receive lower wages and less
workplace protections, and that government must assume some of
the burden of providing benefits and support to these
employees.
In support, the American Federation of State, County, and
Municipal Employees (AFSCME) contends that, "If enacted, this
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bill would help to stem the troubling and growing trend of
depressed wages and labor abuse among contracted out workers,
by requiring California's third-largest employer, the
University of California, to hold contract labor firms
accountable around compensation and treatment of workers."
2)Opposition. In July 2015, UC announced its Fair Wage/Fair Work
plan, which will established the minimum wage for contract
workers at $13 per hour starting October 2015, increasing to
$15 per hour as of October 1, 2017. This plan also involves a
monitoring and compliance program to ensure contractors are
complying with UC policies and all federal, state, and local
laws. Finally, the program includes annual compensation audits
of all contracts and spot audits of selected contracts.
UC notes that it only contracts out for services when there is
a need for special expertise or experience, for short-term or
temporary staffing needs, for special services and equipment
that are not available internally, or for services at a leased
facility where the services are provided by the owner.
UC argues that, in addition to increasing costs, the bill will
create administrative burdens, in part by requiring an
analysis to determine per-employee compensation for every type
of contract and factoring in all known cost escalators to
project future per-employee costs. UC also asserts the bill
will hinder its ability to make its contracting more efficient
by using systemwide rather than site-specific contracts.
3)Prior Legislation. In 2015, SB 376 (Lara), which was very
similar to this bill, though lacking some of the
administrative requirements of SB 959, was vetoed.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
SB 959
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