BILL ANALYSIS �
AB 1294
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Date of Hearing: April 24, 2013
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hern�ndez, Chair
AB 1294 (Grove) - As Introduced: February 22, 2013
SUBJECT : Public works: civil wage and penalty assessments.
SUMMARY : Amends existing law related to civil wage and penalty
assessments related to alleged violations of public works law.
Specifically, this bill provides that the Labor Commissioner
(LC) shall have the burden of proving that the basis for an
assessment is correct.
EXISTING LAW :
1)Requires the LC to issue a civil wage and penalty assessment
to a contractor or subcontractor, or both, if, after an
investigation, he or she determined that there has been a
violation of the laws related to public works.
2)Provides a procedure for the affected contractor or
subcontractor to obtain review of the assessment by written
request asking for a hearing, as specified.
3)Provides that at the hearing the contractor or subcontractor
shall have the burden of proving that the basis for the
assessment is incorrect.
4)Requires a decision affirming, modifying, or dismissing the
assessment to be issued within 45 days of the hearing.
5)Authorizes the affected contractor or subcontractor to obtain
review of the decision by fling a writ of mandate with the
superior court, as specified.
FISCAL EFFECT : Unknown
COMMENTS : Prevailing wages are generally required to be a paid
on public works projects that are paid for in whole or in part
out of public funds. If the LC determines that there has been a
violation of the law, he or she issues a civil wage and penalty
assessment against the contractor or subcontractor, or both.
The assessment is required to be in writing and must describe
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the nature of the violation and the amount of wages, penalties,
and forfeitures due and must include the basis for the
assessment. The assessment also must advise the contractor and
subcontractor of the procedure for obtaining review of the
assessment.
Existing law provides that an affected contractor or
subcontractor may obtain review of a civil wage and penalty
assessment by transmitting a written request to the LC within 60
days after service of the assessment. If no hearing is
requested within 60 days after service of the assessment, the
assessment shall become final.
If a hearing is requested, existing law requires it to be
commenced within 90 days before an impartial hearing officer.
Existing law provides that the contractor or subcontractor shall
be provided an opportunity to review evidence to be utilized by
the LC at the hearing within 20 days of the receipt of the
written request for a hearing.
Existing law provides that the contractor or subcontractor shall
have the burden of proving that the basis for the civil wage and
penalty assessment is incorrect. The law requires the
assessment to be sufficiently detailed to provide fair notice to
the contractor or subcontractor of the issues at the hearing.
Current law requires a decision to be issued within 45 days of
the conclusion of the hearing. The decision is required to be
in writing and must affirm, modify or dismiss the assessment.
The decision is required to consist of a notice of findings,
findings, and an order. An affected contractor or subcontractor
may obtain review of this decision by filing a petition for a
writ of mandate to the appropriate superior court.
ARGUMENTS IN SUPPORT :
This bill is sponsored by the Western Electrical Contractors
Association (WECA), who states the following:
"California jurisprudence is based upon the presumption of
innocence?
Under this concept - the burden of proof is on the
prosecution, which has to collect and present enough
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compelling evidence to convince the trier of fact that the
accused is guilty beyond a reasonable doubt. If reasonable
doubt remains, the accused is to be acquitted.
Unique in California law is Labor Code Section 1742 that
places the burden of proof on the accused. To the best of
our knowledge, this is the only example in California law
that 'stands on its head' the principle that the
prosecution - in the case of Section 1742 - the California
Labor Commissioner - must prove its allegations?
?An administrative agency exercises its judicial function
through its enforcement activities. The decision to
institute proceedings is discretionary with the agency.
Therefore, there must be checks and balances such that the
administrative body is not vested with absolute power over
the people and entities it regulates. But Labor Code
section 1742 has a reverse onus provision, which is
antithetical to the balance of power vested in our
administrative agencies. A reverse onus clause is a
provision within a statute that shifts the burden of proof
on to the individual specified to disprove an element of
the information. It is only fair that the charging party
must bear the burden of proof, which is why such reverse
onus provisions are exceedingly rare. The charging party
has to prove by some acceptable standard or level of proof
that the charge has merit. Currently, section 1742 places
the entire evidential burden of proof on the party charged,
namely California's contractors who are in most cases
simply trying to follow California's extremely complicated
wage and hours laws."
WECA argues that this bill makes civil wage and penalty
assessments "consistent with other provisions in civil and
criminal law - by requiring the prosecutor to 'prove' the
contractor has erred." WECA contends that, by passing this
bill, the Legislature can send a strong signal to California
builders, contractors, and subcontractors that the state is not
out to punish them and will work to treat them as an ally in
putting Californians back to work and growing our economy.
ARGUMENTS IN OPPOSITION :
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This bill is opposed by the State Building and Construction
Trades Council of California, who states the following:
"When the Legislature established a system for the
administrative enforcement of the prevailing wage law in AB
1646 (1999 - Steinberg), it considered that system very
carefully. The Ninth Circuit had recently ruled in G&G
Fire Sprinklers, Inc., v. Bradshaw, 1 56 F.3d 893 (1998) (a
case subsequently overruled by the U.S. Supreme Court),
that there were due process problems with the existing
enforcement scheme, and the Legislature carefully
considered how to fix them.
AB 1646 required the LC, if the LC's investigation
determined that the prevailing wage had been violated, to
serve the contractor with a civil wage and penalty
assessment that is "sufficiently detailed to provide fair
notice to the contractor or subcontractor of the issues at
the hearing." Labor Code 1742(b). AB 1646 placed the
burden on a contractor that contested the assessment to
"prove that the basis for the civil wage and penalty
assessment is incorrect." Labor Code 1742(b). The
contractor is in control of its own payroll records and the
other evidence necessary to establish the work performed by
its employees and the amount it paid them. Therefore, it
is fair to place the burden on the contractor to show that
the Labor Commissioner's assessment is wrong. The
assessment must be sufficiently detailed to allow the
contractor to do this.
In the 14 years since AB 1646 was adopted, many
administrative hearings have been conducted on civil wage
and penalty assessments, and the system is working well.
Contractors receive a fair hearing, and some assessments
have been overturned or reduced by the hearing officers.
Contractors dissatisfied with the result are entitled to
judicial review. No court has held that the current system
is unfair.
[This bill] would change the burden of proof, so the LC has
the burden of proving at a hearing that the basis for the
civil wage and penalty assessment is correct. Because the
contractor will have control over the relevant evidence,
this would make enforcement much more difficult. The LC
would have to subpoena witnesses and documents before every
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administrative hearing, greatly raising the costs to the
State. If contractors failed to respond to subpoenas,
administrative hearings would have to be delayed while the
Labor Commissioner sought relief in court to compel
compliance. More contractors would file appeals in the
hope that the LC would have problems gathering admissible
evidence of the contractor's violations of law. The
increased burdens of litigation would force the LC to
settle claims for pennies on the dollar.
In short, [this bill] would hurt workers who are victims of
wage theft on public works projects by making enforcement
more difficult. The present system was carefully thought
out by the Legislature and should not be changed."
REGISTERED SUPPORT / OPPOSITION :
Support
Air Conditioning Trade Association
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
Opposition
American Federation of State, County and Municipal Employees
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Labor Federation, AFL-CIO
California School Employees Association
California State Council of the Service Employees International
Union
California Teamsters Public Affairs Council
Engineers and Scientists of California
International Longshore & Warehouse Union
Professional & Technical Engineers, Local 21
State Building and Construction Trades Council of California
UNITE HERE!
United Food and Commercial Workers, Western States Council
Utility Workers Union of America, Local 132
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
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