BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 454 (Dickinson) - Workers' Compensation Benefits: Prevailing
Wages
Amended: July 2, 2013 Policy Vote: L&IR 4-0
Urgency: No Mandate: No
Hearing Date: August 12, 2013
Consultant: Robert Ingenito
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 454 would require that if an employee is
employed on a project subject to a federal, state, city, or
local prevailing wage requirement, but is paid less than the
prevailing wage entitled to be paid, any disability benefits
(temporary or permanent) for injuries incurred on that job shall
be calculated using the applicable prevailing wage rate, instead
of the actual wages paid.
Fiscal Impact: The Department of Industrial Relations indicates
that it would incur costs of $250,000 (special funds) to
implement the provisions of the bill.
Background: DIR enforces prevailing wage law in the State.
Toward that end, DIR's Director makes public works coverage
determinations on request, issuing letter decisions stating
whether a given project or type of work is subject to prevailing
wages and often defends those decisions in court.
Current law requires the prevailing wage rate to be paid to
workers on public works projects over $1,000. Statute 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, except work done directly
by any public utility company, as specified.
California's 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 majority, the single or modal rate being paid to
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the greater number of workers is prevailing. The prevailing
wage is determined by DIR in written determinations issued
annually on February 22 and August 22.
Current law requires California employers to provide workers'
compensation benefits to their employees. Employers must
purchase workers' compensation insurance from either a licensed
insurance company, or through the State Compensation Insurance
Fund (SCIF), or employers may choose to self-insure, which means
they use a pay-as-you-go model, paying benefits to and on behalf
of workers as the costs are incurred.
SCIF, created by the Legislature in 1914, is the insurer of last
resort in California's private insurance market and is now the
largest workers' compensation insurer in the country. However,
SCIF is not part of state government. It is a quasi-state agency
with a board of directors appointed by the governor and the
Legislature (11 total members, nine appointed by the governor
and two appointed by the Legislature). SCIF is a non-profit,
independent organization funded by premiums paid by businesses
purchasing workers compensation insurance policies.
Proposed Law: This bill would require that when temporary
disability benefits or permanent disability benefits 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.
Related Legislation: SB 377 (Lieu) would, among other things,
require DIR 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.
Staff Comments: An employee's wages are used to determine
temporary disability and permanent disability. When a worker is
unlawfully underpaid with respect to wages, such as with
prevailing wages, the worker and his or her representative is
forced to appear before the Workers' Compensation Appeals Board
(WCAB), frequently against the employer who underpaid the
worker's wages in the first place.
This claim, under current law, is pursued through the Labor
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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. Getting a final ruling
from the Labor Commissioner's office can reportedly be lengthy.
AB 454 would allow WCAB to make a ruling on a worker's
eligibility for prevailing wages, and adjust the worker's
indemnity benefits accordingly.
DIR's estimated costs of $250,000 to implement the current
version of the bill reflect (1) rulemaking requirements and (2)
increased workload requirements due to the expedited hearing
process, as provided.