BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
William W. Monning, Chair
Date of Hearing: June 26, 2013 2013-2014 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 454
Author: Dickinson
As Introduced/Amended: April 2, 2013
SUBJECT
Workers' compensation benefits: prevailing wages.
KEY ISSUE
Should the Legislature permit the Workers' Compensation Appeals
Board (WCAB) to make prevailing wage determinations for the
purposes of fixing appropriate indemnity benefit payments?
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
Existing law provides for the payment of indemnity benefits if
the occupational injury causes temporary or permanent disability
which prevents the worker from returning to his or her job. In
the case of temporary disability payments, the benefit is
two-thirds of the weekly loss in wages due to disability for up
to 104 weeks. (Labor Code ��4650, 4653, 4654 and 4656)
Existing law also requires the minimum and maximum average
weekly earnings for temporary disability benefits annually by an
amount equal to the percentage increase in the state average
weekly wage as compared to the prior year. (Labor Code �4453)
Existing law defines "public works" to include, among other
jobs, construction, alteration, demolition, installation, or
repair work done under contract and paid for in whole or in part
out of public funds. (Labor Code �1720)
Existing law requires all employees who work on public works
projects costing $1,000 or more to be paid the general
prevailing rate of per diem wages and the general prevailing
rate for holiday and overtime work for the specific location
where the public work is to be performed. (Labor Code �1771)
Existing law states that if the Labor Commissioner or his or her
designee determines after an investigation that there has been a
public works violation, the Labor Commissioner shall with
reasonable promptness issue a civil wage and penalty assessment
to the contractor or subcontractor or both. The assessment shall
be in writing and shall describe the nature of the violation and
the amount of wages, penalties, and forfeitures due. (Labor Code
�1741)
This bill requires that when temporary disability benefits (TD)
or permanent disability benefits (PD) are due to an injured
worker who earned less than the prevailing wage, but the work
performed was under a contract which was subject to a federal,
state, city, city and county, or county prevailing wage
requirement, the benefits shall be calculated using the
applicable prevailing wage, instead of the actual wages paid.
COMMENTS
1. Need for this bill?
As noted above, a worker's wages are used to calculate
workers' compensation indemnity benefits, such as temporary
disability and permanent disability. When a worker is
lawfully paid his or her wages, this is generally a
straightforward process. However, when a worker is unlawfully
underpaid, such as with prevailing wages, it creates a
situation where the worker and his or her representative is
forced to fight for an appropriate benefit before the Workers'
Hearing Date: June 26, 2013 AB 454
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
Compensation Appeals Board (WCAB), frequently against the
employer who underpaid the worker's wages in the first place.
Under existing law, this claim is pursued through the Labor
Commissioner's office. Once the Labor Commissioner has ruled,
this evidence can be presented to the WCAB, and if the worker
was inappropriately paid, his or her workers' compensation
benefit can be adjusted accordingly. According to proponents,
however, getting a final ruling from the Labor Commissioner's
office can take a long time.
AB 454 would allow the WCAB to make a ruling on a worker's
eligibility for prevailing wages, and adjust the worker's
indemnity benefits accordingly.
2. Possible Amendments :
The responsibility for determining prevailing wage rates and
enforcing prevailing wage statutes both rest within the
Department of Industrial Relations (DIR). Since the Workers'
Compensation Appeals Board is a separate appellate body, it is
unclear if they would have ready access to the expertise found
in the Department. Noting the fine points of trade
designations, geographical confines, and what qualifies as a
public works project, it may be asking too much of the WCAB
for the Board to weigh in on prevailing wage issues.
Instead, the Committee may wish to create an expedited hearing
process for prevailing wage issues before the WCAB in order to
ensure the timely transmittal of appropriate workers'
compensation benefits to injured workers. Therefore the
Committee may wish to consider the following amendments:
On page 2, line 11, strike "paid" and insert "paid, upon a
final ruling by the Labor Commissioner. The Labor
Commissioner shall give preference to prevailing wage
determinations before the appeals board through an expedited
hearing process."
3. Proponent Arguments :
According to the California Applicants Attorneys Association
Hearing Date: June 26, 2013 AB 454
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
(CAAA), workers who are often the most vulnerable - those with
poor English language skills particularly - can be taken
advantage of by an unscrupulous contractor. According to
CAAA, its members have encountered many cases where injured
workers have been paid substantially below the prevailing wage
that the law required. While there is a wage remedy in the
Labor Code, CAAA asserts that there is not a comparable remedy
in the workers' compensation law that ensures that benefits
are paid at the level that the injured worker was entitled to
be paid. This bill is designed to cure this loophole.
4. Opponent Arguments :
The California Coalition on Workers' Compensation and the
California Chamber of Commerce have adopted an 'oppose unless
amended' position . Opponents are concerned that AB 454 would
require either the claims administrator or the Workers'
Compensation Appeals Board (WCAB) to be the arbiter of
prevailing wage disputes that impact temporary disability
rates. While opponents absolutely understand the need to
ensure that injured workers are paid the correct wages and
temporary disability benefits, the opponents have a great deal
of concern with any requirement that claims administrators or
WCAB judges make determinations about prevailing wage
contracts. Opponents request that AB 454 be amended to
clarify that the Labor Commissioner, and not claims
administrators or the WCAB, make the determination about the
applicability of prevailing wage.
5. Current Legislation :
SB 377 (Lieu) would, among other things, require the Director
of Industrial Relations to issue a determination of whether a
project is deemed to be a "public work" within 60 days. SB
377 is set to be heard before the Assembly Committee on Labor
and Employment.
SUPPORT
California Applicants' Attorneys Association (Sponsor)
California Chiropractic Association
Hearing Date: June 26, 2013 AB 454
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
California Professional Firefighters
State Building and Construction Trades Council of California,
AFL-CIO
OPPOSITION
California Chamber of Commerce
California Coalition on Workers' Compensation
California Department of Finance
Hearing Date: June 26, 2013 AB 454
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations