BILL ANALYSIS
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THIRD READING
Bill No: AB 1563
Author: Assembly Labor and Employment Committee
Amended: 7/23/09 in Senate
Vote: 21
SENATE LABOR & INDUST. RELATIONS COMMITTEE : 4-2, 7/8/09
AYES: DeSaulnier, Ducheny, Leno, Yee
NOES: Wyland, Hollingsworth
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 48-29, 5/18/09 - See last page for vote
SUBJECT : Employment: contracts or agreements for labor
or services
SOURCE : California Rural Legal Assistance Foundation
DIGEST : This bill codifies an enforcement protocol for a
provision of existing law dealing with
financially-insufficient contracts for labor or services.
ANALYSIS :
Existing law, Section 2810 of the Labor Code:
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
CONTINUED
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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/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 or the Bureau of Field
Enforcement 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.
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
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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, but not limited to, the following violations
which are within the jurisdiction of DLSE:
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.
C. Multiple serious overtime violations over a period
of one or more months.
3. Requires 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
SB 179 (Alarcon), Chapter 908, Statutes of 2003, enacted
Section 2810 of the Labor Code, 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 Section 2810 of the Labor Code, some
worker advocates have questioned whether DLSE is properly
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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
Section 2810 of the Labor Code.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/17/09)
California Rural Legal Assistance Foundation (source)
California Applicants' Attorneys Association
National Employment Law Project
Service Employees International Union
Worksafe
ARGUMENTS IN SUPPORT : The bill's sponsor, the California
Rural Legal Assistance Foundation (CRLAF), states that the
purpose of the bill is to codify the investigation protocol
adopted by DLSE effective July 1, 2008. CRLAF argues that
Section 2810 of the Labor Code 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.
ASSEMBLY FLOOR :
AYES: Ammiano, Arambula, Beall, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Coto, Davis, De La Torre, De Leon, Evans, Feuer,
Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Krekorian, Lieu,
Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, John A.
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Perez, V. Manuel Perez, Portantino, Ruskin, Salas,
Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,
Yamada, Bass
NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,
Blakeslee, Conway, Cook, DeVore, Duvall, Emmerson,
Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman,
Harkey, Jeffries, Knight, Logue, Miller, Nestande,
Niello, Nielsen, Silva, Smyth, Audra Strickland, Tran,
Villines
NO VOTE RECORDED: Eng, Price, Saldana
AGB:mw 8/17/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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