Amended in Assembly April 7, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1741

Introduced by Assembly Member Frazier

February 14, 2014

An act to amend Section 1742.1 of the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

AB 1741, as amended, Frazier. Public works: prevailing wage rates: wage and penalty assessments.

Existing law generally requires the payment of the prevailing rate of per diem wages for work of a similar character in the locality in which the public work, as defined, is performed and the prevailing rate for holiday and overtime work fixed to employees employed on public works projects that cost more than $1,000. Existing law requires the Labor Commissioner to issue a civil wage and penalty assessment to a contractor or subcontractor, or both, if the Labor Commissioner determines, after investigation, that the contractor or subcontractor, or both, violated the laws regulating public works contracts, including the payment of prevailing wages. Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as defined. Existing law provides that, after 60 days following the service of a civil wage and penalty assessment or notice, the affected contractor, subcontractor, and surety on a bond issued to secure the payment of wages, as provided, become liable for liquidated damages in an amount equal to the amount of unpaid wages, as specified. Existing law authorizes a contractor, subcontractor, or surety to deposit the full amount of the assessment or notice, including penalties, with the Department of Industrial Relations to hold in escrow pending administrative or judicial review and to be distributed, as specified. Under existing law, if so deposited, there would be no liability for liquidated damages.

This bill would specify that a contractor, subcontractor, or surety may deposit the full amount of the assessment or notice with the Department of Industrial Relations in the form of cash or a begin delete bond. end delete begin insert bond issued by a surety company admitted to do business in California in a form acceptable to the Director of the Department of Industrial Relations. The bill would require the director to prescribe the requirements for a bond deposited pursuant to these provisions. end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1742.1 of the Labor Code is amended to
read:

1742.1.  

(a) After 60 days following the service of a civil wage
and penalty assessment under Section 1741 or a notice of
withholding under subdivision (a) of Section 1771.6, the affected
contractor, subcontractor, and surety on a bond or bonds issued to
secure the payment of wages covered by the assessment or notice
shall be liable for liquidated damages in an amount equal to the
wages, or portion thereof, that still remain unpaid. If the assessment
or notice subsequently is overturned or modified after
administrative or judicial review, liquidated damages shall be
payable only on the wages found to be due and unpaid.

Additionally, if the contractor or subcontractor demonstrates to
the satisfaction of the director that he or she had substantial grounds
for appealing the assessment or notice with respect to a portion of
the unpaid wages covered by the assessment or notice, the director
may exercise his or her discretion to waive payment of the
liquidated damages with respect to that portion of the unpaid
wages. Any liquidated damages shall be distributed to the employee
along with the unpaid wages. Section 203.5 shall not apply to
claims for prevailing wages under this chapter.

(b) Notwithstanding subdivision (a), there shall be no liability
for liquidated damages if the full amount of the assessment or
notice, including penalties, has been deposited with the begin delete Department
of Industrial Relations, end delete begin insert department, end insert in the form of cash or a bond
begin insert issued by a surety company admitted to do business in this state
in a form acceptable to the director end insert , within 60 days following
service of the assessment or notice, for the department to hold in
escrow pending administrative and judicial review. The department
shall release the funds in escrow, plus any interest earned, at the
conclusion of all administrative and judicial review to the persons
and entities who are found to be entitled to those funds. begin insert The
director shall prescribe the requirements for a bond deposited
pursuant to this subdivision. end insert

(c) The Labor Commissioner shall, upon receipt of a request
from the affected contractor or subcontractor within 30 days
following the service of a civil wage and penalty assessment under
Section 1741, afford the contractor or subcontractor the opportunity
to meet with the Labor Commissioner or his or her designee to
attempt to settle a dispute regarding the assessment without the
need for formal proceedings. The awarding body shall, upon receipt
of a request from the affected contractor or subcontractor within
30 days following the service of a notice of withholding under
subdivision (a) of Section 1771.6, afford the contractor or
subcontractor the opportunity to meet with the designee of the
awarding body to attempt to settle a dispute regarding the notice
without the need for formal proceedings. The settlement meeting
may be held in person or by telephone and shall take place before
the expiration of the 60-day period for seeking administrative
review. No evidence of anything said or any admission made for
the purpose of, in the course of, or pursuant to, the settlement
meeting is admissible or subject to discovery in any administrative
or civil proceeding. No writing prepared for the purpose of, in the
course of, or pursuant to, the settlement meeting, other than a final
settlement agreement, is admissible or subject to discovery in any
administrative or civil proceeding. The assessment or notice shall
advise the contractor or subcontractor of the opportunity to request
a settlement meeting.