BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 1333 (Blakeslee) - Employment: labor standards: consultation
unit.
Amended: May 2, 2012 Policy Vote: L&IR 5-0
Urgency: No Mandate: No
Hearing Date: May 24, 2012 Consultant: Bob Franzoia
SUSPENSE FILE.
Bill Summary: SB 1333 would establish within the Division of
Labor Standards Enforcement (division) in the Department of
Industrial Relations (department) a Labor Standards Consultation
Unit for the purpose of providing consulting services to
employee groups and employers regarding compliance with wage and
hour laws. This bill would require the division to develop
procedures for offering the consultation services to employer
and employee groups which shall include training efforts,
educational materials, and online resources.
Fiscal Impact: Costs of $200,000 or more from the Labor
Enforcement and Compliance Fund annually. Likely General Fund
costs beginning July 1, 2013 when authorization for the Labor
Enforcement and Compliance Fund sunsets.
Unknown costs to develop training efforts, educational
materials and online resources beyond those currently
available.
Unknown fee revenue and donations.
Background: The division adjudicates wage claims on the behalf
of workers who file claims for nonpayment of wages, overtime, or
vacation pay pursuant to Labor Code Sections 96 and 98.
Division deputies hold informal conferences between employers
and employees to resolve wage disputes. If a matter cannot be
resolved at the informal conference, an administrative hearing
is held to make a final determination on the matter.
The prevailing wage rate is the basic hourly rate paid on public
works projects 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 (if a majority of such workers are
paid at a single rate). If there is no single rate paid to a
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majority, then the single or modal rate being paid to the
greater number of workers is prevailing.
Proposed Law: The Labor Standards Consultation Unit created by
this bill would provide services including providing
information, advice, or recommendations on complying with wage
and hour laws. The unit may charge the requesting employer or
employee group a fee for consulting services not to exceed the
actual cost to the unit. The unit may fund its operation
through grants and fees, with the intent that this unit
ultimately be self-supporting through grants, donations, and
fees.
This service would be available to employers with 100 or fewer
employees.
Staff Comments: To assist awarding bodies, generally a unit of
state or local government, such as a city, county, school
district, water district, special district, or a state agency
(or in some cases a private entity that uses public funds for a
public works construction project) with prevailing wage
guidance, AB 436 (Solorio) Chapter 378/2011established a
compliance monitoring unit (unit) within the division to monitor
and enforce prevailing wage requirements on public works
projects that receive state bond funding and on other projects
that are legally required to use the unit. The unit began
operations on January 1, 2012. By actively monitoring
compliance on an ongoing basis while work is being performed,
the unit works to ensure that public works construction
employees are paid the proper prevailing wage rates and works to
maintain a level playing field for employers. This unit is
funded by a fee that is assessed for actual monitoring and
enforcement work performed by the department that is subject to
unit monitoring. The maximum fee is of 1 percent of the total
project costs or of 1 percent of the state bond proceeds
provided for the project, whichever is less and regardless of
whether the department's actual costs exceed this maximum.
In addition, the division operates 19 district offices. The
offices have general access telephone numbers and telephone
numbers that contain pre-recorded information and are arranged
in the following order:
(1) Termination, including the payment of final wages to
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employees when employment is terminated.
(2) Wage issues, including failing to pay minimum wage, overtime
and commissions.
(3) How to file a claim.
(4) Employee benefits, including vacation, sick leave,
retirement, holiday pay, medical/health coverage, bereavement
leaves, leaves of absence.
(5) Public works requirements and contractor license
requirements.
(6) Office locations and directions.
(7) Issues not handled by the division. For example, sexual
harassment and unemployment insurance.
Preliminary information indicates division district offices may
be contacted a few times a day (less than ten) to often (up to
one hundred), with daily variances, to provide information,
advice or recommendations on complying with wage and hour laws
and whether the employer or employee doing the contacting is
satisfied with the assistance received. Some offices have phone
hubs exclusively for incoming calls and all have at least two
phone lines at the office reception counter. Offices are open
five days a week and employers of fewer than 100 employees and
employees can get information from the deputy labor commissioner
on duty.
Also within the department, Division of Occupational Safety and
Health, commonly referred to as Cal/OSHA, staff provide free
consultations to employers. Employers wanting to obtain
assistance or to learn more about what services are available
may call a toll-free assistance number listed on the department
Web site.
Presumably, any inquiry that could not be handled at the
district office may be directed to the Labor Standards
Consultation Unit. Such inquiries would also likely be more
problematic and needing more staff time. For purposes of
providing a cost reference, this analysis assumes that if the
Labor Standards Consultation Unit received four inquiries daily
and each inquiry required one half day to research and respond
two Deputy Labor Commissioners would be needed. Assuming a
classification of Deputy Labor Commissioner III ($6,107
mid-range monthly plus 30 percent for benefits equals $95,269),
plus costs for operating expenses and equipment, the unit would
have annual costs of $200,000 or more. Any such unit or office
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would need a minimum of two Deputy Labor Commissioners in order
to provide public access.
Deputy Labor Commissioners I and II have monthly salary ranges
of $4,357 to $5,361 and $5,027 to $6,186 respectively.
As part of the state government trailer bill Chapter 12 /2009
(AB 12x4, Evans), the department was authorized to levy a
separate surcharge upon all employers, as defined, for the
purposes of deposit in the newly created Labor Enforcement and
Compliance Fund. The surcharge levied could not exceed
$37,000,000 in 2008-09 and is adjusted each year thereafter by
no more than the state-local government deflator. With this cap,
the division could be forced to begin prioritizing enforcement
activities if enforcement duties and costs exceed the cap as
adjusted by the deflator. This fund would be the appropriate
funding source for the consultation unit. This fund sunsets on
July 1, 2013. If the sunset is not extended, the Labor
Standards Consultation Unit, and like before 2008-09 the
activities of the division, will be a General Fund obligation.