BILL ANALYSIS
AB 1563
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Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 1563 (Committee on Labor and Employment) - As Amended:
April 14, 2009
Policy Committee: Labor and
Employment Vote: 5-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill codifies an existing Division of Labor Standards
Enforcement (DLSE) protocol relating to financially-insufficient
contracts for labor or services. Specifically, this bill:
1)Applies to investigations by the Economic and Employment
Enforcement Coalition (EEEC) or the Bureau of Field
Enforcement (BOFE) involving a labor contractor employing 15
or more employees in the construction, farm labor, garment,
janitorial or security guard industries.
2)Requires that, if the Division of Labor Standards Enforcement
(DLSE) has a reasonable suspicion that violations of
"financial significance" have been committed, it shall:
a) Issue an administrative subpoena for the relevant
portions of any written contract covering the work
performed by the contractor.
b) If there is no written contract, obtain from the
contractor the relevant terms of any oral contract and make
a written record of the information provided by the
contractor.
c) Record whether the terms of an applicable contract
appear to violate the provisions of current law and, if so,
whether the DLSE filed a legal action. If no legal action
was filed, the record shall explain the reasons why DLSE
chose not to do so.
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3)Defines a violation of "financial significance" to include
failure to have a workers' compensation insurance policy
covering all employees, multiple minimum wage violations over
a period of one or more months, or multiple serious overtime
violations over a period of one or more months.
4)Requires the DLSE to make a record, including a brief analysis
and explanation of reasons, in each instance that provisions
of specified current law were violated but it determined that
implementation of these requirements was not feasible or
practicable.
FISCAL EFFECT
No direct effect on DLSE, to the extent that the law merely
codifies existing practices.
COMMENTS
1)Background. Senate Bill 179 (Alarcon), Chapter 908/2003,
prohibits an entity from entering into an agreement with a
contractor providing construction, farm labor, garment,
janitorial, or security guard service if the entity knows, or
should know, that the contract does not include adequate funds
to allow the contractor to comply with applicable laws
governing the labor or service contractors - including
maintenance of workers' compensation insurance and payment of
minimum wage and overtime. The purpose of this bill was to
establish state policy regarding financially insufficient
contracts in industries most associated with the underground
economy.
Since the enactment of this law, some worker advocates have
questioned whether the Division of Labor Standard Enforcement
(DLSE) is properly enforcing the provisions of the law, or
even investigating potential violations. In recent years,
these advocates have been working with DLSE on the
establishment of an "enforcement protocol" that would outline
DLSE's formal policy for investigating and enforcing
violations of Labor Code Section 2810.
2)Rationale . This bill is sponsored by the California Rural
Legal Assistance Foundation (CRLAF), which states that its
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purpose is to codify the investigation protocol adopted by
DLSE effective July 1, 2008. CRLAF contends that codification
of the protocol will send an important message to employers in
the five targeted industries that California intends to
vigorously enforce its labor laws.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081