BILL ANALYSIS �
AB 436
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ASSEMBLY THIRD READING
AB 436 (Solorio)
As Amended May 27, 2011
Majority vote
LABOR & EMPLOYMENT 5-1 APPROPRIATIONS 12-5
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|Ayes:|Swanson, Alejo, Allen, |Ayes:|Fuentes, Blumenfield, |
| |Furutani, Yamada | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Miller |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Provides that specified work related to renewable
energy generation is considered "public works" for purposes of
prevailing wage law. Specifically, this bill provides that
"public works" includes construction, alteration, demolition,
installation or repair work done under private contract when the
work is performed in connection with the construction or
maintenance of renewable energy generation capacity, located on
property wholly or partially owned by a school district or
community college district, or on public property, specifically
to serve a school district or community college district.
EXISTING LAW :
1) Requires the prevailing wage rate to be paid to all workers
on "public works" projects over $1,000.
2) Defines "public work" to include, among other things,
construction, alteration, demolition, installation or repair
work done under contract and paid for in whole or in part out
of public funds.
3) Defines "paid for in whole or in part out of public funds" as
used in public works as the following:
a) Payment of money or the equivalent of money by a state
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or political subdivision directly to or on behalf of the
public works contractor, subcontractor, or developer;
b) Construction work performed by a state or political
subdivision in execution of a project;
c) Transfer of an asset of value for less than fair market
value;
d) Fees, costs, rents, insurance or bond premiums, loans,
interest rates, or other obligations normally required in
the execution of a contract that are paid, reduced, charged
at less than fair market value, waived or forgiven;
e) Money loaned that is to be repaid on a contingent basis;
and,
f) Credits applied against repayment obligations.
4) Exempts from the definition of "paid for in whole or in part
out of public funds" specified types of affordable housing,
private residential housing, private development projects,
qualified residential projects, low-income housing projects,
state manufacturing tax credits, and single family
residential projects.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, enforcement costs, likely less than $75,000, to the
Department of Industrial Relations (DIR).
COMMENTS : This bill is sponsored by the State Building and
Construction Trades Council. The sponsor and the author state
that in February of 2009, Chevron announced the completion of
what is believed to be the largest K-12 solar and energy
efficiency project in the United States. Chevron installed solar
panel roofs on 14 sites in the San Jose Unified School District.
The project, which includes a total of 5.5 megawatts of solar
power at 14 district sites, is expected to reduce the district's
energy costs by more than 30% and help save the district $25
million over the 25-year life of the project. Furthermore,
conversion to the solar power will help reduce carbon dioxide
emissions by more than 100,000 metric tons-equivalent to
planting more than 1,400 acres of trees. Most significantly,
the project was built profitably by construction workers earning
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the prevailing wage.
The sponsor and author state that this partnership could also
potentially be a huge bonus to a number of unemployed workers
suffering through these difficult times. Current law requires
that all contractors on public works pay their workers based on
prevailing wage rates, which are established and issued by the
DIR, Division of Labor Statistics and Research.
However, the sponsor and author contend that, unfortunately, the
definition of public work projects is currently too narrow,
which consequently denies many workers the right to a fair wage.
In California, construction workers who are hired on to
complete public work projects at sites performed in connection
with the construction or maintenance of renewable energy
generation capacity are not currently protected under prevailing
wage stipulations. Prevailing wage law is meant to protect
workers in a time of rapidly growing unemployment and government
involvement in the economy. They argue that, without these
provisions contractors bidding for state money could undercut
prevailing wages in any given area by 20 to 30 % and ultimately
hurt vulnerable workers and their families.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0000910