BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 2675
                                                                  Page  1

          Date of Hearing:   May 2, 2012

                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
                                Sandre Swanson, Chair
               AB 2675 (Labor Committee) - As Amended:  April 16, 2012
           
          SUBJECT  :   Public works: prevailing wage rates: penalty 
          assessment.

           SUMMARY  :   Clarifies that portions of payments withheld to 
          satisfy civil wage and penalty assessments are deemed forfeited 
          upon receipt of a final order that is no longer subject to 
          judicial review.

           EXISTING LAW:

           1)Specifies that, before making payments to the contractor of 
            money due under a contract for public work, the awarding body 
            shall withhold and retain therefrom all amounts required to  
             satisfy any civil wage and penalty assessment issued by the 
            Labor Commissioner under existing law.
           
           2)Provides that the amounts required to satisfy a civil wage and 
            penalty assessment shall not be disbursed by the awarding body 
            until receipt of a final order that is no longer subject to 
            judicial review.

          3)Provides that if the awarding body has not retained sufficient 
            money under the contract to satisfy a civil wage and penalty 
            assessment based on a subcontractor's violations, the 
            contractor shall, upon the request of the Labor Commissioner, 
            withhold sufficient money due the subcontractor under the 
            contract to satisfy the assessment and transfer the money to 
            the awarding body. These amounts shall not be disbursed by the 
            awarding body until receipt of a final order that is no longer 
            subject to judicial review.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   This bill makes a technical change to current law 
          which was brought to the Committee's attention through 
          discussions with the Department of Industrial Relations.

          Current Labor Code Section 1727 is entitled, "Withholding 
          payment of amounts forfeited."  The existing law requires 








                                                                  AB 2675
                                                                  Page  2

          awarding bodies and contractors to withhold from specified 
          payments amounts necessary to satisfy civil wage and hour 
          penalties issued by the Labor Commissioner.  The final outcome 
          is resolved when there is a final order that is no longer 
          subject to judicial review.  However, despite the fact that the 
          title to Labor Code Section 1727 states "forfeited," the actual 
          text of the law does not refer to these amounts as "forfeited."  
          The courts have previously characterized the amounts withheld or 
          retained under Section 1727 as a "forfeiture." (J & K Painting 
          Co. v. Bradshaw (1996) 45 Cal.App.4th 1394, 1404-1405).

          Therefore, to avoid any potential confusion, this bill simply 
          clarifies that once there is a final order that is no longer 
          subject to judicial review, these amounts withheld are indeed 
          deemed forfeited.




           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file.

           Opposition 
           
          None on file.

           
          Analysis Prepared by  :    Ben Ebbink / L. & E. / (916) 319-2091