BILL ANALYSIS
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THIRD READING
Bill No: AB 807
Author: Leno (D)
Amended: 4/30/03 in Assembly
Vote: 21
SENATE LABOR & IND. RELATIONS COMMITTEE : 5-3, 7/9/03
AYES: Alarcon, Dunn, Figueroa, Kuehl, Romero
NOES: Oller, Margett, McClintock
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 74-0, 5/22/03 (Passed on Consent) - See
last page for vote
SUBJECT : Public works: prevailing wage
SOURCE : California Building and Construction Trades
Council
DIGEST : This bill provides 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.
CONTINUED
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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
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.
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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 contributions. The Court ultimately ruled
against the employer, finding that the employer did not
intend to make the contributions.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/03)
California Building and Construction Trades Council
(source)
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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
ASSEMBLY FLOOR :
AYES: Aghazarian, Bates, Benoit, Berg, Bermudez, Bogh,
Calderon, Campbell, Canciamilla, Chan, Chavez, Chu,
Cogdill, Corbett, Correa, Cox, Diaz, Dutra, Dutton,
Dymally, Firebaugh, Frommer, Garcia, Hancock, Harman,
Haynes, Jerome Horton, Shirley Horton, Houston, Jackson,
Keene, Kehoe, Koretz, La Malfa, La Suer, Laird, Leno,
Leslie, Levine, Lieber, Liu, Longville, Lowenthal,
Maddox, Maldonado, Matthews, Maze, McCarthy, Montanez,
Mountjoy, Mullin, Nakanishi, Nakano, Nation, Negrete
McLeod, Oropeza, Pacheco, Parra, Pavley, Plescia, Reyes,
Richman, Ridley-Thomas, Runner, Salinas, Samuelian,
Spitzer, Steinberg, Strickland, Vargas, Wiggins, Wolk,
Wyland, Yee
NC:sl 8/20/03 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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