BILL ANALYSIS �
AB 551
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 551 (Campos)
As Amended August 24, 2011
Majority vote
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|ASSEMBLY: |50-26|(May 19, 2011) |SENATE: |22-13|(August 30, |
| | | | | |2011) |
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Original Committee Reference: L. & E.
SUMMARY : Increases the maximum penalty on contractors and
subcontractors who fail to pay the prevailing wage from $50 to
$200 a day and would increase the minimum penalty (except in
certain cases of a good faith mistake) from not less than $10 to
not less than $40 a day for prevailing wage violations on a
public work. Specifically this bill :
1)Increases the penalty assessed from $20 to $80 to contractors
and subcontractors with previous violations and from $30 to
$120 for willful violations.
2)Requires the Labor Commissioner (LC) to maintain a Web site
listing of contractors who are ineligible to bid on or be
awarded a public works contract and at least annually notify
awarding bodies of the availability of the list of disbarred
contractors.
3)States that the LC notify the contractor or subcontractor
that, in addition to any other penalties, the contractor shall
be subject to disbarment if certified payroll records are not
produced within 30 days after receipt of written notice.
Failure to comply by that deadline would prohibit the
contractor from bidding on or be awarded a contract for public
work or performing work as a subcontractor on a public works
project for three years.
The Senate amendments :
1)Increase the maximum penalty to $200 a day and would increase
the minimum penalty on contractors and subcontractors who fail
to pay the prevailing wage, except in certain cases of a good
faith mistake.
AB 551
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2)Require the LC to maintain a Web site listing of contractors
who are ineligible to bid on or be awarded a public works
contract and at least annually notify awarding bodies of the
availability of the list of disbarred contractors.
3)State the LC shall notify the contractor or subcontractor
that, in addition to any other penalties, the contractor shall
be subject to disbarment if certified payroll records are not
produced within 30 days after receipt of the written notice.
4)Incorporate changes to prevent a chaptering out conflict with
AB 766 (Monning) of 2011.
AS PASSED BY THE ASSEMBLY , this bill increased 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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the increased workload would be handled by up to one
Deputy Labor Commissioner l ($4,357-5,631; total compensation
$76,966 annually) in the Bureau of Field Enforcement (BFE) and
this bill may result in increased fines and penalties collection
which are deposited into the General Fund.
Additionally, there could be minor savings from not having to
distribute the list of ineligible contractors since the LC would
have the information posted on their Web site. However, the LC
would also have a new requirement to notify awarding bodies of
the availability of the list.
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 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
AB 551
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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 the Division of Labor Standards Enforcement (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:
0002136