BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Richard Alarcon, Chair
Date of Hearing: July 9, 2003 2003-2004 Regular
Session
Consultant: Liberty Reiter Sanchez Fiscal:Yes
Urgency:No
Bill No: AB 807
Author: Leno
Amended: April 30, 2003
Subject: Public works: prevailing wage.
Purpose:
To provide that an employer may only credit pension or
other contributions against their prevailing wage
obligations when the employer makes such contributions on
at least a quarterly basis.
Analysis:
Existing Law:
1.Requires the payment of the general prevailing rate of
per diem wages to workers employed on public works
projects costing over $1,000, as determined by the
Director of the Department of Industrial Relations.
2.Provides that per diem wages shall be deemed to include
employer payments for health and welfare, pension,
vacation, travel, and subsistence pay apprenticeship or
other training programs, and similar purposes.
3.Provides that employer payments include the following:
a. The rate of contribution irrevocably made by the
employer to a trustee or third person pursuant to a
plan, fund or program.
b. The rate of actual costs to the employer reasonably
anticipated in providing benefits to workers pursuant
to an enforceable commitment to carry out a
financially responsible plan or program communicated
in writing to the workers affected.
c. Statutorily required payments to the California
Apprenticeship Council.
1.Provides that employer payments are a credit against the
obligation to pay the general prevailing rate of per diem
wages.
2.Prohibits credit from being granted for benefits required
to be provided by other state or federal law, and
provides that credits for employer payments may not
reduce the obligation to pay the hourly straight time or
overtime wages found to be prevailing.
This Bill , provides that an employer may take a credit for
employer payments even if contributions are not made or
costs are not paid, during the same pay period for which
credits are taken, so long as the employer regularly makes
the contributions, or regularly pays the costs, for the
plan, fund, or program on no less than a quarterly basis.
Comments:
1. Federal Law:
The bill's language is modeled after a federal labor
regulation, 29 CFR 5.5(a)(1)(i), relating to labor
standards applicable to construction contracts that are
federally financed and assisted.
2. Case Law:
A recent judgment relating to the subject matter of the
bill was issued in the case of IBEW Local 595 and IBEW
Local 6 v. LIS Electric, Inc. and Vladimir Litvak , San
Francisco Superior Court, Case No. 310466. In that case,
the employer claimed a credit against the prevailing wage
for pension contributions that were not made. At trial,
the employer's lawyer argued that the state prevailing
wage law does not contain any deadline for making the
Hearing Date: July 9, 2003 AB
807
Consultant: Liberty Reiter Sanchez
Page 2
Senate Committee on Labor and Industrial Relations
contributions. The Court ultimately ruled against the
employer, finding that the employer did not intend to
make the contributions.
3. Proponents :
The sponsor of this bill, the California Building and
Construction Trades Council, contends that there is no
requirement under existing law for contractors on public
works projects to pay the health and welfare portion of
prevailing wage in a timely manner, and that accordingly,
some contractors have been found skirt their health and
welfare payment responsibilities.
This bill is intended to address the problem by providing
that employers are unable to credit the health and
welfare portion of their prevailing wage obligations if
they pay on at least a quarterly basis.
Supporters, the California State Pipe Trades Council, the
California State Association of Electrical Workers and
the Western States Council of Sheet Metal Workers contend
that good unionized contractors who make their payments
in a timely manner are placed at a disadvantage as their
competitors withhold their contributions.
The California Labor Federation asserts that this bill
would establish a more level playing field and help to
ensure that an unscrupulous contractor is not tempted to
withhold their required healthcare and pension payments.
4. Opponents :
There is no opposition to this bill, which passed out of
the Assembly on consent.
5. Vote History: This bill passed out of the Assembly with
a vote of 74 - 0.
Support:
Hearing Date: July 9, 2003 AB
807
Consultant: Liberty Reiter Sanchez
Page 3
Senate Committee on Labor and Industrial Relations
California Building and Construction Trades Council
California Labor Federation, AFL-CIO
California State Association of Electrical Workers
California State Pipe Trades Council
Construction Employers' Association
Western States Council of Sheet Metal Workers
Opposition:
None received as of July 3, 2003
* * *
Hearing Date: July 9, 2003 AB
807
Consultant: Liberty Reiter Sanchez
Page 4
Senate Committee on Labor and Industrial Relations