BILL ANALYSIS �
SB 776
Page 1
SENATE THIRD READING
SB 776 (Corbett)
As Amended April 15, 2013
Majority vote
SENATE VOTE :24-10
LABOR & EMPLOYMENT 5-2 APPROPRIATIONS 12-5
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|Ayes:|Roger Hern�ndez, Alejo, |Ayes:|Gatto, Bocanegra, |
| |Chau, Gomez, Holden | |Bradford, |
| | | |Ian Calderon, Campos, |
| | | |Eggman, Gomez, Hall, |
| | | |Holden, Pan, Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Morrell, Gorell |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
| | | | |
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SUMMARY : Establishes additional restrictions on credit granted
against the obligation to pay prevailing wages for employer
payments made to monitor and enforce public works laws.
Specifically, this bill :
1)Prohibits credit from being granted for employer payments made
to monitor and enforce law related to public works if those
payments are not made to a program or committee established
under the federal Labor Management Cooperation Act of 1978.
2)Provides that an employer may take credit for those specified
employer payments, even if those payments are not made (or
costs are not paid) during the same pay period for which
credit is taken, if the employer regularly makes those
payments on no less than a quarterly basis.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill will result in minor and absorbable costs
to the Department of Industrial Relations.
COMMENTS : Existing law requires that not less than the general
prevailing wage rate of per diem wages be paid to all workers
employed on a "public works" projects. Under existing
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California law, bona fide fringe benefits allowed to count as
credit against the obligation to pay prevailing wages includes
eight enumerated examples (such as health and welfare, pension,
vacation, etc.) and a ninth category described in the code as
"Other purposes similar to those specified in paragraphs (1) to
(8), inclusive." This category of "other" allows employers to
make payments against the prevailing wage obligation for other
similar purposes; however, the author believes that this broad
category has allowed some employers to reduce an employee's
wages to pay for public works compliance without the employee's
involvement in this decision.
This bill would prohibit credit from being granted for employer
payments made to monitor and enforce laws related to public
works if those payments are not made to a program or committee
established under the federal Labor Management Cooperation Act
of 1978 - ensuring both labor and management involvement in the
decision.
In addition, this bill would also conform state law to federal
law by providing that qualifying fringe benefit payments may
constitute a credit as long as the contractor transmits payments
at least on a quarterly basis. Federal law (29 Code of Federal
Regulation (CFR) 5.5(a)(1)(i)) allows contractors to take a
credit against their obligation to pay prevailing wages for
fringe benefit payments even if the payments are not transmitted
during the same payroll period in which the wages are paid - as
long as this is done on at least a quarterly basis. This bill
would conform California law to this federal requirement.
According to the author, this bill would protect the wages and
fringe benefits of workers on public works projects by
clarifying the requirements for bona fide fringe benefits. The
author argues that, increasingly, contractors selected for a
prevailing wage project that do not typically provide employee
benefits equal to the level required by prevailing wage laws are
claiming credit against their obligation to pay prevailing wages
for payments to an employer-sponsored "contract compliance
committee," asserting that these payments are for "other"
purposes within Labor Code Section 1773.1.
The author argues that such payments are problematic for four
reasons: 1) there is nothing joint about these employer
committees as only management participates; 2) workers do not
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choose to have a portion of their prevailing wages sent to the
employer committee; 3) the primary purpose of the employer
committee is to minimize payroll taxes, not to help workers, who
did not create the committee or choose to fund it; and 4) the
employer committees appear to be more focused on trying to
repeal prevailing wage laws, instead of prevailing wage law
compliance.
Opponents assert that this bill is a direct effort to eliminate
independent compliance enforcement by defunding it and otherwise
seeking to limit the operation of such programs. They argue
that independent compliance efforts deserve credit in the exact
same way as the union contractor for the monies that collective
bargaining agreements collect. Additionally, opponents argue
that in many cases, the violations have not been reported by a
joint program supposedly in charge of such monitoring, but
discovered by - and subsequently reported to the Labor
Commissioner's office - an independent compliance programs for
action. Opponents further argue that public works compliance is
made more effective by having as wide a universe as possible to
audit and subsequently report violations.
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091
FN: 0001414