BILL ANALYSIS
AB 395
Page 1
Date of Hearing: April 1, 2009
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
William W. Monning, Chair
AB 395 (Fuentes) - As Introduced: February 23, 2009
SUBJECT : Apprenticeship programs.
SUMMARY : Authorizes an awarding body to assist the Director of
the Department of Industrial Relations (DIR) in the enforcement
of prevailing wage laws that apply to apprenticeships, through
the operation of the awarding body's approved labor compliance
program (LCP). Specifically, this bill :
1 Provides that an awarding body that implements a labor
compliance program may, with the approval of the Chief of the
Division of Apprenticeship Standards (DAS), assist the
Director of DIR in the enforcement of specified provisions of
law related to the employment of apprentices on public works
projects.
2)Specifies that a contractor may appeal the result of any
subsequent enforcement action through the appellate process
set forth under existing law.
3)States that where the involvement of the Chief of DAS has been
limited to a review of the assessment and the matter has been
resolved without litigation by or against DAS, the awarding
body shall deposit any penalties and forfeitures recovered
into its general fund.
EXISTING LAW :
1)Generally requires the payment of prevailing wages on public
works contracts over $1,000.
2)Provides that if an awarding body elects to initiate and
enforce its own labor compliance program, the prevailing wage
requirements shall not apply to projects of $25,000 or less
when the work is for construction work, or to any public works
project of $15,000 or less when the project is for alteration,
demolition, repair or maintenance work.
3)Requires awarding bodies on specified programs and public
works projects to initiate and enforce a labor compliance
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program .
4)Specifies that an approved LCP must meet the following
criteria:
a) All bid invitations and public works contracts issued
must contain appropriate language about the requirements of
the public works chapter of the Labor Code.
b) A pre-job conference shall be conducted with the
contractor or subcontractors to discuss federal and state
labor law requirements applicable to the contract.
c) Contractors and subcontractors shall maintain and
furnish to the LCP a certified copy of each weekly payroll
with a statement of compliance signed under penalty of
perjury.
d) The LCP shall review and, if appropriate, audit payroll
records to verify compliance with the public works chapter
of the Labor Code.
e) The LCP shall require the awarding body to withhold
contract payments when payroll records are delinquent or
inadequate.
f) The LCP shall require the awarding body to withhold
contract payments equal to the amount of underpayment and
applicable penalties when the LCP establishes that
underpayment has occurred.
5)Authorizes the Director of DIR to appoint assistants necessary
to effectuate the purposes of state law governing
apprenticeships.
FISCAL EFFECT : Unknown
COMMENTS : For more than sixty years, the California Labor Code
has required that workers employed by contractors or
subcontractors in the execution of public works contracts must
be paid the state-determined prevailing wage.
The Division of Labor Standards Enforcement (DLSE) within DIR is
the government agency primarily responsible for the enforcement
of prevailing wage requirements on California public works
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projects. Since 1989, the Legislature has provided a statutory
mechanism permitting political subdivisions of the state which
award public contracts (awarding bodies) to initiate and enforce
their own LCPs in conjunction with the DIR and the DLSE.
The DIR director has the authority to grant or revoke approval
of LCPs, and monitors the performance of programs in enforcing
the prevailing wage system. The DLSE, through the Office of the
Labor Commissioner, approves on a case-by-case basis the amounts
of unpaid penalty and wage money assessed by LCPs against public
works contractors. An approved LCP has a legal duty to the
director to enforce prevailing wage requirements "in a manner
consistent with the practice of DLSE" (8 CCR 16434).
Existing law requires awarding bodies on specified programs and
public works projects to initiate and enforce a LCP. These
programs currently include the Kindergarten-University Public
Education Facilities Bond Act of 2002, the
Kindergarten-University Public Education Facilities Bond Act of
2004, and the Water Security, Clean Drinking Water, Coastal and
Beach Protection Act of 2002. An awarding body may contract
with a third party to initiate and enforce the LCP.
An approved LCP must meet the following criteria:
All bid invitations and public works contracts issued
must contain appropriate language about the requirements of
the public works chapter of the Labor Code.
A pre-job conference shall be conducted with the
contractor or subcontractors to discuss federal and state
labor law requirements applicable to the contract.
Contractors and subcontractors shall maintain and
furnish to the LCP a certified copy of each weekly payroll
with a statement of compliance signed under penalty of
perjury.
The LCP shall review and, if appropriate, audit payroll
records to verify compliance with the public works chapter
of the Labor Code.
The LCP shall require the awarding body to withhold
contract payments when payroll records are delinquent or
inadequate.
The LCP shall require the awarding body to withhold
contract payments equal to the amount of underpayment and
applicable penalties when the LCP establishes that
underpayment has occurred.
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ARGUMENTS IN SUPPORT :
This bill is sponsored by the City of Los Angeles. The Labor
Compliance Section of the Bureau of Contract Administration's
Office of Contract Compliance is part of the City of Los
Angeles' Department of Public Works. The Section operates the
City's State-Certified LCP and is tasked with the enforcement of
the sections of the California Labor Code pertaining to the
payment of the prevailing wage on the City's public works
projects. According to the sponsor, the Labor Compliance
Section is very effective in its enforcement efforts; over the
past eight years, it has collected $4.3 million dollars in
restitution for 4,216 workers employed on the City's public
works projects.
According to the sponsor, while the City's Labor Compliance
Section has the authority to enforce provisions of the
California Labor Code relating to prevailing wage issues, the
enforcement of apprenticeship labor issues is under the
jurisdiction of the State's Division of Apprenticeship Standards
(DAS). As part of its routine enforcement activities, the Labor
Compliance Section occasionally encounters violations relating
to the payment of the prevailing wage to apprentices on public
works projects of the City. However, it does not currently have
the statutory authority to enforce those sections of the Labor
Code.
Therefore, the sponsor argues that this bill will allow it to
partner with DAS (which neither has the budget or staff to
adequately address apprenticeship standards violations
statewide) to enforce the sections of the Labor Code dealing
with apprenticeship issues, similar to what it currently enjoys
with the DLSE. This bill will allow certified LCPs (such as the
City of Los Angeles' Labor Compliance Section), with the
approval of DAS, to enforce specified laws pertaining to
apprenticeships. According to the sponsor, this authority would
not only benefit the apprentices, but the honest contractors
with whom they are working together to build new public works
projects, which ultimately benefit all Californians.
Other supporters similarly argue that LCPs often discover
violations of the laws pertaining to the employment of
apprentices, yet they have no jurisdiction in such matters.
Instead, they are required to forward their discoveries to DAS,
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who has neither the staff nor the budget to adequately address
the vast majority of such violations. While trained and
experienced LCPs have the staff and knowledge to address these
violations, there is currently no provision in existing law to
allow them to do so. This bill provides that necessary legal
authority.
RECENT LEGISLATION REGARDING LCPs
In the last round of budget negotiations in February,
legislation was adopted that makes dramatic changes to the LCP
system of prevailing wage enforcement. SB 9 X2 (Padilla) among
other things, amended state law to move away from the LCP model
and fund DIR directly to enforce prevailing wage requirements on
public works projects as specified. Contracts that have been
awarded prior to DIR's establishing a fee and specified
regulations will generally be subject to the current
requirements related to LCPs. However, new contracts will be
subject to this new model by which DIR will assess a fee,
deposit the fee into the Fund, and use the money only for
enforcement of the prevailing wage law on those projects.
In addition, SB 9 X2 contained "grandfathering" language by
which in-house LCPs (operated by awarding bodies) who have
previously been approved may request that DIR waive the fee and
that they be able to operate their LCP in lieu of paying a fee
under this new model. Therefore, programs like that run by the
City of Los Angeles may be able to continue to operate (with DIR
approval) even under this new model of enforcement.
According to the Chief Clerk of the Assembly, as a measure
adopted during an extraordinary session of the Legislature, SB 9
X2 goes into effect on the 91st day after adjournment of the
extraordinary session, or on May 21, 2009.
PRIOR LEGISLATION :
This bill is similar to AB 2369 (Fuentes) from 2008. That
measure was vetoed by Governor Schwarzenegger.
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REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
California Labor Federation, AFL-CIO
City of Los Angeles (Sponsor)
State Building and Construction Trades Council of California,
AFL-CIO (CoSponsor)
Opposition
None on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091