BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: July 8, 2009 2009-2010 Regular
Session
Consultant: Rodger Dillon Fiscal:Yes
Urgency: No
Bill No: AB 1563
Author: Assembly Labor and Employment Committee
Version: June 18, 2009
SUBJECT
Employment: contracts or agreements for labor or services.
KEY ISSUE
Should certain labor standards enforcement personnel be required
to obtain and record specified factual information regarding
labor contractors in the construction, farm labor, garment,
janitorial, or security guard service industries where labor law
violations may be occurring, as defined.
PURPOSE
To enhance enforcement of labor law in industries known for
frequent violations.
ANALYSIS
Existing law, Labor Code 2810 (see attachment) :
1.Prohibits a person or entity from entering into a contract or
agreement for labor or services with a construction, farm
labor, garment, janitorial, or security guard contractor where
the person or entity knows or should know that the contract or
agreement does not include funds sufficient to allow the
contractor to comply with applicable laws governing the labor
or services to be provided.
2.Establishes a rebuttable presumption that there has been no
violation of the law where the contract or agreement is in
writing and meets specified conditions.
3.Authorizes an aggrieved employee to bring an action to recover
the greater of his or her actual damages or $250 per employee
per violation for an initial violation and $1,000 per employee
for each subsequent violation where the employee is injured as
a result of the violation, in addition to injunctive relief,
reasonable costs, and attorney's fees.
This Bill codifies an enforcement protocol for provisions of
existing law dealing with financially-insufficient contracts for
labor or services. Specifically, this bill:
1.Provides that, in any investigation 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, if the Division of
Labor Standards Enforcement (DLSE) has a reasonable suspicion
that violations of "financial significance" have been
committed (or have been cited but not set aside within 15
days), it shall do the following:
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;
and,
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.
2.Defines a violation of "financial significance" to include the
following violations which are within the jurisdiction of the
Division of Labor Standards Enforcement (DLSE):
Hearing Date: July 8, 2008 AB 1563
Consultant: Rodger Dillon Page 2
Senate Committee on Labor and Industrial Relations
a) Failure to have a workers' compensation insurance policy
covering all employees
b) Multiple minimum wage violations over a period of one or
more months; and,
c) Multiple serious overtime violations over a period of one
or more months.
3.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.
COMMENTS
1. Need for this bill?
SB 179 (Alarcon) of 2003 enacted Labor Code Section 2810,
which prohibits a person or entity from entering into a
contract or agreement for labor or services with a
construction, farm labor, garment, janitorial, or
security guard contractor where the person or entity knows or
should know that the contract or agreement does not include
funds sufficient to allow the contractor to comply
with applicable laws governing the labor or service to be
provided. At the time, the author and supporters of the bill
argued that the legislation was necessary to protect workers
and law-abiding employers from employers and contractors that
knowingly enter into contracts and agreements that are
financially inadequate to permit compliance with applicable
laws. 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 Labor Code Section 2810, some worker
advocates have questioned whether the DLSE is properly
enforcing the provisions of the law, or even investigating
potential violations. In recent years, these advocates have
Hearing Date: July 8, 2008 AB 1563
Consultant: Rodger Dillon Page 3
Senate Committee on Labor and Industrial Relations
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. Proponent Arguments :
This bill is sponsored by the California Rural Legal
Assistance Foundation (CRLAF). CRLAF states that the purpose
of the bill is to codify the investigation protocol adopted by
DLSE effective July 1, 2008. CRLAF argues that Labor Code
Section 2810 is a powerful legal tool that allows DLSE to 'go
up the chain' in illegal under-funded contract situations to
reach those who actually set the terms of the contract, and to
hold them responsible (along with the contractors) for the
labor law violations which flowed from the contract. CRLAF
contends that codification of the protocol will send an
important message to unscrupulous employers in the five
targeted industries that California intends to vigorously
enforce its labor laws, and that it will reach past labor
contractor intermediaries to get at the true authors of
widespread wage-gouging in the underground economy.
3. Opponent Arguments :
None received.
SUPPORT
California Rural Legal Assistance Foundation (Sponsor)
California Applicants' Attorneys Association
National Employment Law Project
Service Employees International Union
Worksafe
OPPOSITION
None received.
Hearing Date: July 8, 2008 AB 1563
Consultant: Rodger Dillon Page 4
Senate Committee on Labor and Industrial Relations
* * *
Hearing Date: July 8, 2008 AB 1563
Consultant: Rodger Dillon Page 5
Senate Committee on Labor and Industrial Relations