BILL ANALYSIS �
AB 551
Page 1
ASSEMBLY THIRD READING
AB 551 (Campos)
As Introduced February 16, 2011
Majority vote
LABOR & EMPLOYMENT 5-1 JUDICIARY 7-2
-----------------------------------------------------------------
|Ayes:|Swanson, Alejo, Allen, |Ayes:|Feuer, Atkins, Dickinson, |
| |Furutani, Yamada | |Huber, Huffman, Monning, |
| | | |Wieckowski |
|-----+--------------------------+-----+--------------------------|
|Nays:|Miller |Nays:|Wagner, Jones |
| | | | |
-----------------------------------------------------------------
APPROPRIATIONS 12-4
--------------------------------
|Ayes:|Fuentes, Blumenfield, |
| |Bradford, Charles |
| |Calderon, Campos, Davis, |
| |Gatto, Hall, Hill, Lara, |
| |Mitchell, Solorio |
| | |
|-----+--------------------------|
|Nays:|Harkey, Nielsen, Norby, |
| |Wagner |
| | |
--------------------------------
SUMMARY : Increases the penalties on contractors and subcontractors
who fail to pay the prevailing wage on public works projects and bars
repeat violators from bidding or working on public works projects for
three years. Specifically, this bill :
1)Increases the maximum penalty, from $50 to $100 per calendar day,
or portion thereof, for each worker paid less than the prevailing
wage, for contractors and subcontractors who fail to pay the
prevailing wage rate as determined by the director for the work or
craft in which the worker is employed for any public work done as
the contract by the contractor.
2)Increases the minimum penalty for contractors and subcontractors
who fail to pay the prevailing wage from $20 to $40 for each
AB 551
Page 2
calendar day, or portion thereof, for each worker paid less than
the prevailing wage rate unless the violation was a good faith
mistake and if so, the error was promptly and voluntarily corrected
when brought to the attention of the contractor or subcontractor.
3)Increases the minimum penalty, from $20 to $80, for each calendar
day, or portion thereof, for each worker paid less than the
prevailing wage, for contractors and subcontractors who have been
assessed penalties within the previous three years for failing to
meet its prevailing wage obligations on a separate contract, unless
those penalties were subsequently withdrawn or overturned.
4)Increases the minimum penalty, from $30 to $120, for each calendar
day, or portion thereof, for each worker paid less than the
prevailing wage rate if the Labor Commissioner determines that the
violation was willful, as defined in Labor Code Section 1777.1 (c).
5)Prohibits, for three years, a contractor or subcontractor from
performing a public works project when the contractor or
subcontractor has committed two or more separate willful prevailing
wage violations within a three year period.
6)Debars contractors working on public works projects when they or
their subcontractors fail to provide a timely response to a request
by the Division of Labor Standards Enforcement (DLSE), the Division
of Apprenticeship Standards or the awarding body to produce
certified payroll records.
a) Requires contractors and subcontractors to produce the
requested certified payroll records within 30 days.
b) Prohibits contractors and subcontractors who violate this
provision from bidding on, being awarded, or performing work on
a public works project for a minimum of one year and a maximum
of three years.
FISCAL EFFECT : According to the Assembly Appropriations Committee,
costs to enforce this measure are likely, minor, and absorbable.
COMMENTS : According to the Department of Industrial Relations (DIR),
California's prevailing wage laws were enacted to ensure that
contractors' abilities to get public works contracts were not based
on paying their workers lower wage rates than their competitors.
However, the author of this bill states that contractors are not
AB 551
Page 3
deterred by the current penalties assessed for violating the state's
prevailing wage law. The author states that the existing penalties
are too low and have not been raised or amended in years.
The Bureau of Field Enforcement (BFE) investigates complaints arising
from violations of the state's prevailing wage laws and conducts
payroll audits on behalf of California's workers for back wages owed.
According to the 2009 Annual Report on the Effectiveness of Bureau
of Field Enforcement (BFE Report), BFE opened 1,352 new cases
involving prevailing wage violations. In addition, a total of
$10,785,730 in back wages were found due to workers. Of the
$4,539,501 in penalties that BFE issued in 2009, $839,123 has been
collected in that year.
In addition, the 2009 BFE Report notes that the Labor Commissioner
signed Orders of Debarment for nine contractor companies and their
principles; the highest known number of debarments in a single year.
The 2009 BFE Report also states that DSLE initiated debarment actions
against three additional contractors and their principles for several
Labor Code violations, including the failure to pay correct
prevailing wage rates.
In their letter expressing sponsorship of this bill, the State
Building and Construction Trades Council of California (SBCTCC)
states that the intent of this bill is to deter contractors from
simply treating the current minimal fines levied for abuses of the
prevailing wage as a cost of doing business. SBCTCC asserts that the
penalties for failing to provide certified payroll records in a
timely manner upon request from a state agency are ineffective and
hinder the ability of the state to investigate claims of wage
violations by unscrupulous employers. In addition, SBCTCC writes
that making it easier for the state to bar unscrupulous contractors
from bidding on public works projects for three years and increasing
the monetary fines for other violations will put teeth back into the
enforcement of state law. The California Teamsters Public Affairs
Council writes that this bill will strengthen prevailing wage laws by
enhancing enforcement.
Analysis Prepared by : Shannon McKinley / L. & E. / (916) 319-2091
FN:
0000614
AB 551
Page 4