BILL ANALYSIS                                                                                                                                                                                                    �




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair


          AB 1598 (Buchanan) - Public contracts: public works: 
          installation.
          
          Amended: April 26, 2012         Policy Vote: L&IR 5-1
          Urgency: No                     Mandate: No
          Hearing Date: August 16, 2012                     Consultant: 
          Bob Franzoia  
          
          SUSPENSE FILE.


          Bill Summary: AB 1598 would modify the definition of 
          installation to include the assembly and disassembly of 
          freestanding and affixed modular office systems.

          Fiscal Impact: Unknown, potentially significant to major costs 
          to the General Fund or special funds in any year for the 
          assembly and disassembly of freestanding modular office systems 
          at prevailing wages.
              Minor, absorbable costs to the Labor Enforcement and 
              Compliance Fund for oversight and enforcement.  Potentially 
              General Fund costs beginning July 1, 2013 when authorization 
              for the Labor Enforcement and Compliance Fund sunsets.

          Background: Existing law requires that not less than the general 
          prevailing wage rate of per diem wages, as determined by the 
          Department of Industrial Relations (DIR), be paid to all workers 
          employed on a public works project.  The prevailing wage rate is 
          the hourly rate paid on a public works project to a majority of 
          workers engaged in a particular craft, classification or type of 
          work within the locality and in the nearest labor market area. 

          Existing law defines public works as construction, alteration, 
          demolition, installation, or repair work done under contract and 
          paid for in whole or in part out of public funds.  At issue with 
          this bill is work that may or may not be "installation."  There 
          have been administrative decisions concerning the assembly of 
          modular office systems and whether such work constitutes a 
          public work under state prevailing wage law.  Chapter 938/2001, 
          SB 975 (Alarcon), amended Labor Code 1720 to add "installation," 
          in part, to clarify that such work would be covered by 
          prevailing wage law.  Despite the addition of "installation," 








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          DIR maintained a distinction between freestanding and affixed 
          modular office systems when determining whether such 
          installation was covered by prevailing wage law.  

          Modular office system assembly is generally done as part of new 
          construction for the purpose of creating work stations and 
          disassembly and assembly is generally done as part of renovation 
          when carpet is replaced or painting is done.  Often, modular 
          office system assembly or disassembly is obtained by purchase 
          contract with office furniture equipment suppliers, not under a 
          public works construction contract.  

          Proposed Law: This bill would amend Labor Code 1720 (a) to read:

             1720. (a) As used in this chapter, "public works" means:
             (1) Construction, alteration, demolition, installation, or 
          repair work done under contract and paid for in whole or in part 
          out of public funds, except work done directly by any public 
          utility company pursuant to order of the Public Utilities 
          Commission or other public authority.  For purposes of this 
          paragraph, "construction" includes work performed during the 
          design and preconstruction phases of construction including, but 
          not limited to, inspection and land surveying work.  For 
          purposes of this paragraph, "installation" includes, but is not 
          limited to, the assembly and disassembly of freestanding and 
          affixed modular office systems.

          Staff Comments: The state pays prevailing wages on public works 
          projects or if prevailing wages are required because of the 
          nature of the work.  For example, in commercial moving services 
          agreements, even though it is not a public works project, the 
          state pays prevailing wages for workers as directed by 
          Government Code 14920.

          Generally, the Department of General Service contracts for both 
          assembly of free-standing and for affixed modular office 
          systems.  Department staff may do some non contract assembly of 
          these systems but there is no differential in compensation.   
          When the modular office systems are affixed, the prevailing 
          wages for carpenters and modular furniture installers are paid.  
          When the modular office systems are free-standing assembly, 
          prevailing wages are not paid pursuant to decisions issued by 
          DIR.









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