BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: June 22, 2011 2011-2012 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 508
Author: Swanson
Version: As Introduced February 15, 2011
SUBJECT
Displaced public transit, solid waste handling, and recycling
services employees.
KEY ISSUE
Should the Legislature extend a bid preference to contractors
and subcontractors who pledge to not terminate any existing
employees for up to 90 days when bidding for solid waste
handling and recycling services?
PURPOSE
To extend bid preferences and termination protections found in
public transit contract bidding to solid waste handling and
recycling services contract bidding.
ANALYSIS
Existing law requires that when a public entity puts out to bid
a public service contract on public transit services, the bidder
must state as part of the bid for a service contract whether or
not he or she will retain the employees of the prior contractor
or subcontractor for a period of not less than 90 days. (Labor
Code � 1072)
Existing law also requires that an awarding authority letting a
service contract out to bid for public transit services shall
give a 10 percent preference to any bidder who agrees to retain
the employees of the prior contractor or subcontractor. (Labor
Code � 1072)
Existing law requires successor contractor or subcontractor for
public transit services who agrees to retain employees must
retain employees who have been employed by the prior contractor
or subcontractors, except for reasonable and substantiated
cause, which includes the particular employee's performance or
conduct while working under the prior contract, as well as or
the employee's failure of any controlled substances and alcohol
test. (Labor Code � 1072)
Existing law requires successor contractor or subcontractor for
public transit services shall make a written offer of employment
to each employee to be rehired. That offer shall state the time
within which the employee must accept that offer, which may not
be less than 10 days, and does not need to be at the same level
of wages or benefits as provided by the previous contractor or
subcontractor. (Labor Code � 1072)
Existing law provides that if the successor contractor or
subcontractor for public transit services determines that fewer
employees are required than were required under the prior
contract or subcontract, the successor contractor must retain
qualified employees by seniority within the job classification.
The successor contractor is permitted to consider licensing
requirements when judging seniority. (Labor Code � 1072)
Existing law also provides that an employee who was not offered
employment or who has been discharged in violation of this
chapter, or his or her agent, may bring an action against the
successor contractor or subcontractor in any superior court
having jurisdiction over the successor contractor or
subcontractor. Upon finding a violation of this, the court must
order reinstatement to employment with the successor contractor
or subcontractor and award backpay, including the value of
benefits, for each day of violation, as well as reasonable
attorney fees. (Labor Code � 1073)
Existing law also provides that, upon its own motion or upon the
request of any member of the public, an awarding authority may
terminate any service contract if both of the following occur:
Hearing Date: June 22, 2011 AB 508
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
i. The contractor or subcontractor has substantially
breached the contract; and
ii. The awarding authority holds a public hearing within 30
days of the receipt of the
request or its announcement of its intention to terminate.
A contractor or subcontractor terminated as described above must
be ineligible to bid on or be awarded a service contract or
subcontract with that awarding authority for a period of not
less than one year and not more than three years, to be
determined by the awarding authority.
(Labor Code � 1074)
This bill would expand the above-described requirements for
public transit contracts to also include solid waste handling
and recycling services .
COMMENTS
1. Need for this bill?
The author of this bill states that the genesis for the bill
lies in the significant unemployment rate in California and
the fiscal constraints facing cities and counties. The author
notes that California's unemployment rate has been
consistently above 12% since the start of the Great Recession,
which has made it nearly impossible for workers to find new
jobs and significantly increased long-term unemployment.
The author notes that for specialized and experienced workers,
this can be particularly difficult. In the case of employees
specialized in solid waste handling and recycling services,
these individuals are frequently the highest paid and
therefore at the greatest risk when a city or county opts to
contract out services. The author believes that the
significant fiscal pressures cities are facing can lead to a
focus on the lowest possible bid, which can lead to the needs
of workers and their families to fall between the cracks.
Hearing Date: June 22, 2011 AB 508
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
AB 508 seeks to address these concerns by expanding existing
provisions on contracts for public transit providers to
include solid waste handling and recycling services. The
author believes that the bill would encourage contractors to
keep necessary employees on contract for at least 90 days,
while also giving employees who are soon to be terminated time
to adjust and look for work.
2. Proponent Arguments :
This bill is co-sponsored by the California Labor Federation,
AFL-CIO and the California Teamsters Public Affairs Council.
The sponsors state that this bill is intended to reduce
unemployment by keeping workers from being displaced when a
city's contract for garbage and recycling changes companies.
The sponsors argue that when cities and counties contract for
services like garbage and recycling disposal, they are often
focused on the costs of the bids, the level of service
provided, and the type of diversion offered. In many cases,
the workers fall through the cracks when contracts change
hands. The existing workforce, trained and experienced, is
summarily laid off and replaced.
The sponsors argue that these mass layoffs hurt individual
families, but also impact the local economy. The sponsors
also believe that this bill promotes a stable workforce that
allows workers to invest in and contribute to their community
3. Opponent Arguments :
Opponents contend that this bill is designed to ensure that a
union, who has been elected as the bargaining representative
through the proper procedures for the prior contractor, will
remain the bargaining representative for the subsequent
employer. Since this bill mandates that subsequent employers
/ contractors, who want to obtain a bid preference for a
public contract, must agree to hire the predecessor's
employees, opponents argue that it basically forces a
successor employer/contractor into a union workforce.
Additionally, opponents argue that this bill does not provide
Hearing Date: June 22, 2011 AB 508
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
protection for all employees of the solid waste handling and
recycling, but rather only those employees of the prior
contractor. By forcing a subsequent contractor to promise to
hire the prior contractor's employees, it places the
subsequent employer in the untenable position of either: (1)
losing the contract in order to save his/her existing
workforce; or (2) promising to terminate his existing
employees and hire the prior contractor's employees in order
to obtain the bid preference.
4. Prior Legislation :
SB 158 (Alarcon), Statutes of 2003, Chapter 103, establishes
the above-discussed bid preferences and hiring procedures for
public transit contracts.
SUPPORT
California Labor Federation (Co-Sponsor)
California Teamsters Public Affairs Council (Co-Sponsor)
OPPOSITION
California Business Properties Association
California Chamber of Commerce
California Disability Services Association
California Independent Grocers Association
California Manufacturers & Technology Association
Desert Arc.
Vocational Improvement Program Inc.
Hearing Date: June 22, 2011 AB 508
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations