BILL ANALYSIS �
AB 1939
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1939 (Daly)
As Amended June 25, 2014
Majority vote
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|ASSEMBLY: |75-0 |(May 5, 2014) |SENATE: |36-0 |(June 30, |
| | | | | |2014) |
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Original Committee Reference: L. & E.
SUMMARY : Authorizes a contractor to bring an action against a
hiring party to recover increased costs as a result of a
subsequent decision that classifies a project, or any portion
thereof, as a public work, as specified.
The Senate amendments :
1)Specify that the action may be filed against the "hiring
party" that the contractor directly contracts with.
2)Define "hiring party" to mean the party that has a direct
contract for services provided by the contractor who is
seeking recovery on a public works project that was
subsequently determined to be a public work.
3)Specify that a contractor may seek recovery only from a hiring
party with whom the contractor has a direct contract.
4)Add a definition for "contractor" to mean a person or entity
licensed by the Contractors' State Licensing Board that has a
direct contract with the hiring party to provide services on
private property for the benefit of a private owner or
developer.
5)Specify that the notice provided by the contractor shall set
forth the legal name, address, and telephone number of the
contractor, and the name, address, and telephone number of the
contractor's representative, if any, and shall be given by
registered or certified mail, express mail, or overnight
delivery by an express service carrier.
6)Make related and conforming changes.
AB 1939
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AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized a contractor to bring an action to recover from the
party it directly contracts with, any specified increased
costs as a result of any decision by the Department of
Industrial Relations, the Labor and Workforce Development
Agency, or a court that classifies, after the time at which
the contracting party accepts the contractor's bid, awards the
contractor a contract under circumstances when no bid is
solicited, or otherwise allows construction by the contractor
to proceed, the work covered by the project, or any portion
thereof, as a "public work."
2)Provided that this authorization does not apply if either of
the following are true:
a) The developer of a construction project or its agent
expressly advised the contractor that the work to be
covered by the contract would be a "public work."
b) The party with whom the contractor has a direct contract
expressly advised the contractor that the work subject to
the contract would be a "public work."
3)Specified that, in order to be entitled to the recovery of
increased costs, the contractor shall notify the party with
whom the contractor has a direct contract and the developer
within 30 days after receipt of the notice of a decision by
the Department of Industrial Relations or the Labor and
Workforce Development Agency, or the initiation of any action
in a court alleging, that the work covered by the project, or
any portion thereof, is a "public work."
4)Provided that a contractor is not required to list any
prevailing wages or apprenticeship standard violations on a
prequalification questionnaire that are the direct result of
the failure of the developer of a construction project or its
agent, or a contractor, to notify contractors that the
project, or any portion thereof, should have been a "public
work."
5)Provided that these provisions do not apply to private
residential projects built on private property unless the
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project is built pursuant to an agreement with a state agency,
redevelopment agency, or local public housing authority.
6)Provided that these provisions do not apply if the conduct of
the contractor caused the project to be a "public work," or if
the contractor has actual knowledge that the work is a "public
work."
FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the
Legislative Counsel.
COMMENTS : Under existing law, contractors are generally
required to pay prevailing wages to workers on "public works"
projects. However, situations sometimes arise in which the
contractor was not informed that the project would be a "public
works" project, or a subsequent administrative or court decision
classifies the project, or a portion of the project, as a
"public works" project. In such a situation, the contractor may
be responsible for the payment of the difference between the
prevailing wages and the wages actually paid, and associated
penalties and other sums.
Existing law already provides remedies to contractors to recover
such increased costs on contracts awarded by an "awarding body"
(generally a public agency) under certain circumstances. This
bill proposes to establish similar remedies for a contractor to
recover increased costs from the party it directly contracts
with (such as a private developer) under similar circumstances.
This bill is jointly sponsored by the Associated General
Contractors and the Construction Employers' Association. They
argue that, because developers have no legal obligation to
inform contractors if they took public subsidies, contractors
have no way knowing if prevailing wages are required. This
means that workers may not receive the correct wages until and
if an enforcement action or legal action is taken.
Additionally, the contractor and subcontractors may be subject
to prevailing wage penalties, liquidated damages and legal fees,
simply because they were not informed that the developer took a
public subsidy that triggered a prevailing wage requirement.
Therefore, the sponsors state that this bill provides that if a
developer fails to inform a contractor that prevailing wages are
required and it is subsequently determined that prevailing wages
are required, the owner or developer must reimburse the
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contractor for unpaid wages, sums incurred pursuant to the Labor
Code and attorney's fees associated with their failure to
provide direction to the contractor. If an owner or developer
does inform a contractor that prevailing wages are required, and
the contractor fails to inform subcontractors about the
prevailing wage requirement, the contractor then will be liable
for unpaid wages, sums incurred pursuant to the Labor Code and
attorney's fees associated with their failure to provide
direction to the subcontractors.
The sponsors conclude that this bill will ensure the timely
payment of prevailing wages and reduce enforcement actions by
the Department of Industrial Relations.
There is no opposition on file.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0004128