BILL ANALYSIS
AB 1563
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GOVERNOR'S VETO
AB 1563 (Labor and Employment Committee)
As Amended July 23, 2009
2/3 vote
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|ASSEMBLY: |48-29|(May 18, 2009) |SENATE: |23-15|(September 1, |
| | | | | |2009) |
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|ASSEMBLY: |51-28|(September 8, | | | |
| | |2009) | | | |
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Original Committee Reference: L. & E.
SUMMARY : Codifies an enforcement protocol for a provision of
existing law dealing with financially-insufficient contracts for
labor or services.
The Senate amendments change the code section proposed to be
added by this bill to avoid a chaptering conflict with AB 1288
(Fong), and make other technical changes.
EXISTING LAW :
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
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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, in addition to injunctive
relief.
AS PASSED BY THE ASSEMBLY , this bill:
1 Provided 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)Defined a violation of "financial significance" to include the
following violations which are within the jurisdiction of the
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; and,
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c) Multiple serious overtime violations over a period of
one or more months.
3)Required 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 : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : 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 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.
This bill is sponsored by the California Rural Legal Assistance
Foundation (CRLAF). CRLAF states that the purpose of the bill
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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.
GOVERNOR'S VETO MESSAGE :
This bill would require the Labor Commissioner to
develop and implement a specified enforcement protocol
to be used in an Economic and Employment Enforcement
Coalition or Bureau of Field Enforcement investigation
involving a labor contractor employing 15 or more
workers in the field of construction, farm labor,
garment, janitorial, or security guard service when
the Division of Labor Standards Enforcement has a
reasonable suspicion that violations of potential
financial significance are involved as specified. The
proposed new law is unnecessary and would inhibit the
Department of Industrial Relations' (DIR's ) ability
to respond to changing enforcement issues.
During 2008, DIR implemented an investigative protocol
which mirrors the protocol proposed by this bill and
which will ensure full compliance with Labor Code
section 2810. Therefore, provisions of this bill are
already operational. Further, the statutory creation
of operational enforcement policy limits flexibility
needed to respond to shifting enforcement needs.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
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