AB 326: Public works: prevailing wage rates: wage and penalty assessments.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2016-09-14
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities within 30 days following either the conclusion of all administrative and judicial review or upon the department receiving written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued, as specified, or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued, as specified.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities within 30 days following either the conclusion of all administrative and judicial review or upon the department receiving written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued, as specified, or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued, as specified.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities within 30 days following either the conclusion of all administrative and judicial review or upon written notice being received by the department from the commissioner, his or her designee, or a representative of an authorized labor compliance program of an awarding body of a settlement or other final disposition of the assessment or notice. the department receiving written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued, as specified, or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued, as specified.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities within 30 days following either the conclusion of all administrative and judicial review. review or upon written notice being received by the department from the commissioner, his or her designee, or a representative of an authorized labor compliance program of an awarding body of a settlement or other final disposition of the assessment or notice.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities as expeditiously as possible within 30 days following the conclusion of all administrative and judicial review.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.
This bill would make technical, nonsubstantive changes to the latter provisions and delete obsolete provisions.
This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities as expeditiously as possible following the conclusion of all administrative and judicial review.
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 also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.
Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. 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 provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits 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.
This bill would make technical, nonsubstantive changes to the latter provisions and delete obsolete provisions.
(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 Department of Industrial Relations, 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, to the persons and entities that are found to be entitled to those funds, within 30 days following either of the specified events occurring:
(1)The conclusion of all administrative and judicial review.
(2)The department receives written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued pursuant to Section 1741 or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued pursuant to Section 1771.6.
(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.
(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 Department of Industrial Relations, 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, to the persons and entities that are found to be entitled to those funds, within 30 days following either of the specified events occurring:
(1)The conclusion of all administrative and judicial review.
(2)The department receives written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued pursuant to Section 1741 or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued pursuant to Section 1771.6.
(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.
(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 Department of Industrial Relations, 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, to the persons and entities that are found to be entitled to those funds, within 30 days following either of the specified events occurring:
(1)The conclusion of all administrative and judicial review.
(2)Written notice is received by the Department of Industrial Relations from the Labor Commissioner, his or her designee, or a representative of an authorized labor compliance program of an awarding body of a settlement or other final disposition of the assessment or notice.
(2)The department receives written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued pursuant to Section 1741 or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued pursuant to Section 1771.6.
(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.
(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 Department of Industrial Relations, 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, within 30 days following the conclusion of all administrative and judicial review to the persons and entities who are found to be entitled to those funds. to the persons and entities that are found to be entitled to those funds, within 30 days following either of the specified events occurring:
(1)The conclusion of all administrative and judicial review.
(2)Written notice is received by the Department of Industrial Relations from the Labor Commissioner, his or her designee, or a representative of an authorized labor compliance program of an awarding body of a settlement or other final disposition of the assessment or notice.
(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.
(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 Department of Industrial Relations, 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, as expeditiously as possible within 30 days following the conclusion of all administrative and judicial review to the persons and entities who are found to be entitled to those funds.
(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.
(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 Department of Industrial Relations, 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 as expeditiously as possible following the conclusion of all administrative and judicial review to the persons and entities who are found to be entitled to those funds.
(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.
(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 Department of Industrial Relations, 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 such 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 such those funds.
(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.
(d)This section shall become operative on January 1, 2007.
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| May 10, 2016 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on L. & I.R. |
| Sep 14, 2016 | Chaptered by Secretary of State - Chapter 345, Statutes of 2016. |
| Sep 14, 2016 | Approved by the Governor. |
| Aug 24, 2016 | Enrolled and presented to the Governor at 11:45 a.m. |
| Aug 18, 2016 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 79. Noes 0. Page 5876.). |
| Aug 18, 2016 | Senate amendments concurred in. To Engrossing and Enrolling. |
| Aug 16, 2016 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 18 pursuant to Assembly Rule 77. |
| Aug 15, 2016 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0.). |
| Aug 15, 2016 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 4954.). |
| Aug 15, 2016 | Read third time. Passed. Ordered to the Assembly. |
| Jun 28, 2016 | Read second time. Ordered to third reading. |
| Jun 27, 2016 | From committee: Be placed on second reading file pursuant to Senate Rule 28.8. |
| Jun 9, 2016 | Read second time and amended. Re-referred to Com. on APPR. |
| Jun 8, 2016 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 4. Noes 0.) (June 8). |
| Feb 13, 2015 | Read first time. To print. |
| Jan 28, 2016 | Referred to Com. on L. & I.R. |
| Jan 15, 2016 | Read third time. Passed. Ordered to the Senate. (Ayes 70. Noes 0. Page 3426.) |
| Jan 15, 2016 | In Senate. Read first time. To Com. on RLS. for assignment. |
| Jan 7, 2016 | Read second time. Ordered to third reading. |
| Jan 6, 2016 | From committee: Do pass. (Ayes 7. Noes 0.) (January 6). |
| Jan 4, 2016 | Re-referred to Com. on L. & E. |
| Jan 4, 2016 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended. |
| May 5, 2015 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Apr 22, 2015 | Re-referred to Com. on L. & E. |
| Apr 21, 2015 | From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended. |
| Feb 23, 2015 | Referred to Com. on L. & E. |
| Feb 17, 2015 | From printer. May be heard in committee March 19. |
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|---|---|---|---|---|
| Aug 18, 2016 | AB 326 FRAZIER Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 15, 2016 | Assembly 3rd Reading AB326 Frazier By Cannella | Senate Floor |
Passed |
|
| Jun 8, 2016 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Labor and Industrial Relations |
Passed |
|
| Jan 15, 2016 | AB 326 FRAZIER Assembly Third Reading | Assembly Floor |
Passed |
|
| Jan 6, 2016 | Do pass. | Assembly Standing Committee on Labor and Employment |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Associated Builders & Contractors of California | ** Support | Aug 15, 2016 |
| Associated General Contractors | ** Support | Aug 15, 2016 |
| California Professional Association Of Specialty Contractors | ** Support | Aug 15, 2016 |
| Construction Employers' Association | ** Support | Aug 15, 2016 |
| Contractors Association of Plumbing, Heating, Cooling | * Support | Jun 8, 2016 |
| Southern California Contractors' Association | ** Support | Aug 15, 2016 |
| State Building & Construction Trades Council Of California | * Support | Jun 8, 2016 |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 326
Author:(Frazier)
As Amended Ver:June 9, 2016
Majority vote
ASSEMBLY: | 70-0 | (January 1, 2015) | SENATE: | 38-0 | (August 15, 2016) |
Original Committee Reference: L. & E.
SUMMARY: Amends existing law related to civil wage and penalty assessments for prevailing wage violations.
The Senate amendments provide that certain funds held in escrow by the Department of Industrial Relations (DIR) in specified prevailing wage proceedings shall be released "within 30 days" following either of the specified events occurring:
- The conclusion of all administrative and judicial review.
- DIR receives written notice from the Labor Commissioner of a settlement or other final disposition of an assessment or from the authorized representative of the awarding body of a settlement or other final disposition.
EXISTING LAW:
- Provides that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the affected contractor or subcontractor shall be liable for liquidated damages in an amount equal to the wages, or portion thereof, that still remain unpaid.
- Provides that if the contractor or subcontractor demonstrates to the satisfaction of the director of DIR 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.
- Provides that there shall be no liability for liquidated damages if the full amount of the assessment or notice, including penalties, has been deposited with DIR within 60 days following service of the assessment or notice, for DIR to hold in escrow pending administrative and judicial review.
- Requires DIR to release such funds, 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 such funds.
FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS: Under current law, if a wage and penalty assessment for prevailing wage law violations remains unpaid for a period of 60 days, the affected contractor or subcontractor is liable for liquidated damages in an amount equal to the wages that remain unpaid. The general purpose of this provision is to encourage prompt payment of wages following an assessment for violation of the law.
However, current law provides that there shall be no liability for liquidated damages if the contractor or subcontractor has deposited the full amount of the assessment (in cash) with DIR pending administrative and judicial review of the assessment.
Existing law requires DIR to release the funds, plus any interest earned, at the conclusion of all administrative and judicial review to the persons and entities found to be entitled to those funds.
According to the author, although the statute stipulates that the cash funds deposited by the contractor in order to avoid liquidated damages shall be released at the conclusion of all administrative and judicial review, there is nothing in the statute that states such funds shall be released in an expedited manner. As a result, releasing such funds can take months before the contractor is reimbursed. The author states that in one case, the cash deposit was $93,608.01, and in another it was $284,873.21. In both cases, these amounts were in addition to at least the equivalent amount already being withheld by the awarding bodies from the general contractor's contract balance. In both cases, the claims against the contractor were dropped according to counsel. However, according to the author the task of getting the money back from DIR can take a long period of time.
This bill is sponsored by the Associated General Contractors who state:
It is not unusual to have contractors post significant cash deposits. An example, in one documented case the contractor's civil wage and penalty assessment was solely based on the misconduct of the subcontractor, yet the general contractor had to post $250,489 in order to avoid liquidated damages.
The cash deposit was held from February to August (six months), where it was dismissed, and then it took another three months to have the funds returned. This bill simply states that once the case has been decided that the funds should be returned within 30 days.
There is no opposition on file.
Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0003590
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB |
THIRD READING
Bill No: AB 326
:
SENATE LABOR & IND. REL. COMMITTEE: 4-0, 6/8/16
AYES: Mendoza, Stone, Leno, Mitchell
NO VOTE RECORDED: Jackson
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
ASSEMBLY FLOOR: 70-0, 1/15/16 - See last page for vote
SOURCE: Associated General Contractors
DIGEST: This bill requires that funds held as collateral by the Department of Industrial Relations (DIR) pending a prevailing wage proceeding be released back to the contractors who deposited them within 30 days of the conclusion of the proceeding, as specified.
Existing law:
- Requires the Labor Commissioner to issue civil wage and penalty assessments to contractors or subcontractors who violate prevailing wage laws (Labor Code §1741).
- States that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the contractors or subcontractors in question who have not yet paid the outstanding unpaid wages, are liable for additional penalties, called liquidated damages, equal to the amount of the wages that remain unpaid (Labor Code §1742.1).
- Allows contractors to appeal these decisions and obtain an administrative or judicial review. If review is granted, the Director of DIR may choose to waive liquidated damages (Labor Code §1742.1).
- Permits contractors or subcontractors to avoid paying liquidated damages if, pending administrative and judicial review, the full amount of the assessment or notice, including penalties, has been deposited with DIR to hold in escrow as collateral within 60 days following service of the wage penalty assessment or notice (Labor Code §1742.1).
- Requires the DIR to release these funds, 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 such funds (Labor Code §1742.1).
This bill creates a time limit that requires the DIR to release funds held in escrow for pending prevailing wage proceedings, plus any interest earned, to the persons and entities who are found to be entitled to such funds within 30 days following the occurrence of either:
- The conclusion of all administrative and judicial review.
- Receipt by the DIR of a written notice from the Labor Commissioner, his or her designee, of a settlement or other final disposition of an assessment issued pursuant to Labor Code §1741 or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued pursuant to Labor Code §1771.6.
Comments
Need for this bill? Currently, if the DIR finds that a contractor or subcontractor has violated prevailing wage laws they issue a penalty assessment notice that fines these contractors. In addition to fining these contractors and trying to recoup lost wages, the Labor Commissioner or the Division of Labor Standards Enforcement may impose additional penalties, called liquidated damages, if contractors do not pay these unpaid wages within 60 days. However, contractors can appeal these decisions, and while they are doing so, they can avoid liquidated damages by depositing the entire amount of the penalty assessment in cash with the DIR to hold in escrow pending their appeal and subsequent review.
Following resolution or settlement of these appeals, and/or payment of wages, contractors may recoup any remaining funds that they deposited as collateral with the DIR. However, there is no specified time limit for when these funds must be released by DIR. As a result, contractors in some cases must wait for an indeterminate period of time to recover their money. This bill creates a 30-day time limit for the release of these funds and specifies conditions for when the 30-day time limit commences.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
Associated General Contractors (source)
Associated Builders & Contractors of California
Construction Employers’ Association
California Professional Association of Specialty Contractors
Southern California Contractors Association
OPPOSITION: (Verified 6/27/16)
None received
ARGUMENTS IN SUPPORT: Proponents contend that construction, by its
nature, is a project-by-project business model with a unique set of rules it must
follow. Employees may file a claim with the Division of Labor Standards
Enforcement regarding the payment of prevailing wages. The contractor has a right
to appeal the claim; however, to avoid the additional penalty of liquidated damages
in addition to other penalties, the contractor must post a cash deposit, which
includes the full amount of the assessment notice, plus penalties. Proponents are
concerned that while statute stipulates that the cash funds deposited by the
contractor in order to avoid liquidated damages shall be released at the conclusion
of all administrative and judicial review, there is no deadline in the statute that
states such funds shall be released in an expedited manner. As a result, releasing
such funds can take months before a contractor is reimbursed. Unnecessarily tying
up cash can place innocent contractors in jeopardy of losing their business or
creating financial hardship. Even when a contractor is fully exonerated, it is often
difficult to receive reimbursement from the state in a timely manner.
ASSEMBLY FLOOR: 70-0, 1/15/16
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Gatto, Gipson, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Irwin, Jones, Kim, Lackey, Levine, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Rendon, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Williams, Wood, Atkins
NO VOTE RECORDED: Bloom, Chávez, Eduardo Garcia, Gomez, Holden, Jones-Sawyer, Linder, Ridley-Thomas, Wilk
6/29/16 15:45:48
**** END ****
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 326 Hearing Date: June 8, 2016
Author: | Frazier | ||
Version: | May 10, 2016 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Brandon Seto | ||
Subject: Public works: prevailing wage rates: wage and penalty assessments
KEY ISSUE
Should the Legislature require that funds held as collateral by the Department of Industrial Relations (DIR) pending a prevailing wage proceeding be released back to the contractors who deposited them within 30 days of the conclusion of the proceeding?
ANALYSIS
Existing law
- Requires the Labor Commissioner to issue civil wage and penalty assessments to contractors or subcontractors who violate prevailing wage laws (Labor Code §1741)
- States that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the contractors or subcontractors in question who have not yet paid the outstanding unpaid wages, are liable for additional penalties, called liquidated damages, equal to the amount of the wages that remain unpaid (Labor Code §1742.1).
- Allows contractors to appeal these decisions and obtain an administrative or judicial review. If review is granted, the Director of DIR may choose to waive liquidated damages (Labor Code §1742.1).
- Permits contractors or subcontractors to avoid paying liquidated damages if, pending administrative and judicial review, the full amount of the assessment or notice, including penalties, has been deposited with DIR to hold in escrow as collateral within 60 days following service of the wage penalty assessment or notice (Labor Code §1742.1).
- Requires the DIR to release these funds, 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 such funds (Labor Code §1742.1).
This Bill
- Creates a time limit that requires the DIR to release funds held in escrow for pending prevailing wage proceedings, plus any interest earned, to the persons and entities who are found to be entitled to such funds within 30 days following the occurrence of either:
- The conclusion of all administrative and judicial review.
- Receipt by the DIR of a written notice from the Labor Commissioner, his or her designee, or a representative of a DIR-authorized labor compliance program of a settlement or final resolution of the wage and penalty assessment.
COMMENTS
1. Need for this bill?
Currently, if the DIR finds that a contractor or subcontractor has violated prevailing wage laws they issue a penalty assessment notice that fines these contractors. In addition to fining these contractors and trying to recoup lost wages, the Labor Commissioner or the Division of Labor Standards Enforcement may impose additional penalties, called liquidated damages, if contractors do not pay these unpaid wages within 60 days. However, contractors can appeal these decisions, and while they are doing so, they can avoid liquidated damages by depositing the entire amount of the penalty assessment in cash with the DIR to hold in escrow pending their appeal and subsequent review.
Following resolution or settlement of these appeals, and/or payment of wages, contractors may recoup any remaining funds that they deposited as collateral with the DIR. However, there is no specified time limit for when these funds must be released by DIR. As a result, contractors in some cases must wait for an indeterminate period of time to recover their money. This bill creates a 30-day time limit for the release of these funds and specifies conditions for when the 30-day time limit commences.
2. Committee Amendments
Amendments negotiated by the author, the DIR and other stakeholders will be taken as committee amendments should the bill be passed by this committee. These amendments (below) are technical clarifications to subsection (b)(2) regarding when the 30-day time limit would commence for the return of funds by the DIR.
(2) The department receives written notice from the Labor Commissioner or his or her designee of a settlement or other final disposition of an assessment issued pursuant to Section 1741 or from the authorized representative of the awarding body of a settlement or other final disposition of a notice issued pursuant to Section 1771.6.
3. Proponent Arguments:
Proponents contend that construction, by its nature, is a project-by-project business model with a unique set of rules it must follow. Employees may file a claim with the Division of Labor Standards Enforcement regarding the payment of prevailing wages. The contractor has a right to appeal the claim; however, to avoid the additional penalty of liquidated damages in addition to other penalties, the contractor must post a cash deposit, which includes the full amount of the assessment notice, plus penalties.
Proponents are concerned that while statute stipulates that the cash funds deposited by the contractor in order to avoid liquidated damages shall be released at the conclusion of all administrative and judicial review, there is no deadline in the statute that states such funds shall be released in an expedited manner. As a result, releasing such funds can take months before a contractor is reimbursed. Unnecessarily tying up cash can place innocent contractors in jeopardy of losing their business or creating financial hardship. Even when a contractor is fully exonerated, it is often difficult to receive reimbursement from the state in a timely manner.
4. Opponent Arguments:
None received.
5. Prior Legislation:
AB 1741 (Frazier) of 2014 - proposed to amend this same code section to allow a contractor or subcontractor in question to deposit the full amount of the wage and penalty assessment with the DIR in the form of a bond, instead of cash only, in order to avoid liability for liquidated damages. AB 1741 was held on suspense in the Assembly Appropriations Committee.
SUPPORT
Associated General Contractors (Sponsor)
Associated Builders & Contractors of California
California Professional Association of Specialty Contractors
Construction Employers’ Association
Southern California Contractors Association
The Associated General Contractors
OPPOSITION
None on file.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 326
Author:(Frazier)
As Amended Ver:January 4, 2016
Majority vote
Committee | Votes | Ayes | Noes |
Labor | 7-0 | Roger Hernández, Harper, Chu, Low, McCarty, Patterson, Thurmond |
SUMMARY: Amends existing law related to civil wage and penalty assessments for prevailing wage violations. Specifically, this bill:
- Provides that certain funds held in escrow by the Department of Industrial Relations (DIR) in specified prevailing wage proceedings shall be released "within 30 days" at the conclusion of all administrative and judicial review.
- Makes other technical changes.
EXISTING LAW:
- Provides that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the affected contractor or subcontractor shall be liable for liquidated damages in an amount equal to the wages, or portion thereof, that still remain unpaid.
- Provides that if the contractor or subcontractor demonstrates to the satisfaction of the director of DIR 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.
- Provides that there shall be no liability for liquidated damages if the full amount of the assessment or notice, including penalties, has been deposited with DIR within 60 days following service of the assessment or notice, for DIR to hold in escrow pending administrative and judicial review.
- Requires DIR to release such funds, 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 such funds.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.
COMMENTS: Under current law, if a wage and penalty assessment for prevailing wage law violations remains unpaid for a period of 60 days, the affected contractor or subcontractor is liable for liquidated damages in an amount equal to the wages that remain unpaid. The general purpose of this provision is to encourage prompt payment of wages following an assessment for violation of the law.
However, current law provides that there shall be no liability for liquidated damages if the contractor or subcontractor has deposited the full amount of the assessment (in cash) with DIR pending administrative and judicial review of the assessment.
Existing law requires DIR to release the funds, plus any interest earned, at the conclusion of all administrative and judicial review to the persons and entities found to be entitled to those funds.
According to the author, although the statute stipulates that the cash funds deposited by the contractor in order to avoid liquidated damages shall be released at the conclusion of all administrative and judicial review, there is nothing in the statute that states such funds shall be released in an expedited manner. As a result, releasing such funds can take months before the contractor is reimbursed. The author states that in one case, the cash deposit was $93,608.01, and in another it was $284,873.21. In both cases, these amounts were in addition to at least the equivalent amount already being withheld by the awarding bodies from the general contractor's contract balance. In both cases, the claims against the contractor were dropped according to counsel. However, according to the author the task of getting the money back from DIR can take a long period of time.
This bill is sponsored by the Associated General Contractors who state:
It is not unusual to have contractors post significant cash deposits. An example, in one documented case the contractor's civil wage and penalty assessment was solely based on the misconduct of the subcontractor, yet the general contractor had to post $250,489 in order to avoid liquidated damages.
The cash deposit was held from February to August (six months), where it was dismissed, and then it took another three months to have the funds returned. This bill simply states that once the case has been decided that the funds should be returned within 30 days.
There is no opposition on file.
Analysis Prepared by: Benjamin Ebbink / L. & E. / (916) 319-2091 FN: 0002541
Date of Hearing: January 6, 2016
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
ABPCA Bill Id:AB 326 (
Author:Frazier) – As Amended Ver:January 4, 2016
SUBJECT: Public works: prevailing wage rates: wage and penalty assessments
SUMMARY: Amends existing law related to civil wage and penalty assessments for prevailing wage violations. Specifically, this bill:
- Provides that certain funds held in escrow by the Department of Industrial Relations (DIR) in specified prevailing wage proceedings shall be released "within 30 days" at the conclusion of all administrative and judicial review.
- Makes other technical changes.
EXISTING LAW:
- Provides that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the affected contractor or subcontractor shall be liable for liquidated damages in an amount equal to the wages, or portion thereof, that still remain unpaid.
- Provides that if the contractor or subcontractor demonstrates to the satisfaction of the director of DIR 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.
- Provides that there shall be no liability for liquidated damages if the full amount of the assessment or notice, including penalties, has been deposited with DIR within 60 days following service of the assessment or notice, for DIR to hold in escrow pending administrative and judicial review.
- Requires DIR to release such funds, 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 such funds.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.
COMMENTS: Under current law, if a wage and penalty assessment for prevailing wage law violations remains unpaid for a period of 60 days, the affected contractor or subcontractor is liable for liquidated damages in an amount equal to the wages that remain unpaid. The general purpose of this provision is to encourage prompt payment of wages following an assessment for violation of the law.
However, current law provides that there shall be no liability for liquidated damages if the contractor or subcontractor has deposited the full amount of the assessment (in cash) with DIR pending administrative and judicial review of the assessment.
Existing law requires DIR to release the funds, plus any interest earned, at the conclusion of all administrative and judicial review to the persons and entities found to be entitled to those funds.
ARGUMENTS IN SUPPORT
According to the author, although the statute stipulates that the cash funds deposited by the contractor in order to avoid liquidated damages shall be released at the conclusion of all administrative and judicial review, there is nothing in the statute that states such funds shall be released in an expedited manner. As a result, releasing such funds can take months before the contractor is reimbursed. The author states that in one case, the cash deposit was $93,608.01, and in another it was $284,873.21. In both cases, these amounts were in addition to at least the equivalent amount already being withheld by the awarding bodies from the general contractor’s contract balance. In both cases, the claims against the contractor were dropped according to counsel. However, according to the author the task of getting the money back from DIR can take a long period of time.
This bill is sponsored by the Associated General Contractors who state:
"It is not unusual to have contractors post significant cash deposits. An example, in one documented case the contractor's civil wage and penalty assessment was solely based on the misconduct of the subcontractor, yet the general contractor had to post $250,489 in order to avoid liquidated damages.
The cash deposit was held from February to August (six months), where it was dismissed, and then it took another three months to have the funds returned. This bill simply states that once the case has been decided that the funds should be returned within 30 days."
PREVIOUS LEGISLATION
AB 1741 (Frazier) from 2014 proposed to amend this same section of the law to allow the contractor or subcontractor to post the full amount of the assessment in the form of a bond (in lieu of cash) in order to avoid liability for liquidated damages. Supporters of that bill argued that currently contractors are faced with having to post substantial amounts of cash at a time when cash flow is important. Unnecessarily tying up cash can place innocent contractors in jeopardy of losing their business or creating financial hardship.
The committee analysis of AB 1741 noted the following relevant legislative and administrative history:
"Legislation enacted in 2001 (AB 1646) established automatic liquidated damages for wage and penalty assessments that remain unpaid for a period of 60 days. This was enacted as part of a broader measure to replace the prior system of de novo court review of prevailing wage disputes with a formal administrative procedure, followed by limited judicial review.
However, following the enactment of the automatic liquidated damages provision, some contractors raised concerns that this provision placed them in a difficult situation regarding assessments for which they were filing appeals with DIR. For example, they argued that contractors and subcontractors who wish to contest a citation with DIR were faced with two choices - they pay the disputed wages in order to avoid possible liquidated damage assessments and try to collect the wages from workers if the contractor or subcontractor prevail at DIR, or, refuse to pay the disputed wages and risk a liquidated damages assessment if DIR rules against them. They argued that neither choice affords the contractor or subcontractor reasonable due process because they are effectively penalized prior to a determination of guilt.
These concerns led to the enactment of SB 1352 (Wyland) from 2008 which established the provisions of current law that allow a contractor to avoid liability for liquidated damages if they post the full amount of the assessment with DIR in an escrow account while an administrative appeal is pending.
Earlier versions of SB 1352 would have allowed a contractor to post any of the following with DIR to avoid liability for liquidated damages: "cash, a letter of credit, a payment bond, or negotiable securities" in the amount of wages covered by the assessment. However, that language was subsequently amended out of the bill and the enacted version of the bill contained only the current language requiring the full amount of the assessment to be posted.
Despite the aforementioned legislative history, on March 30, 2009, the Chief Deputy Director of DIR issued a memorandum in which he stated that, in lieu of a cash deposit, a contractor may post a payment bond with DIR as long as the bond satisfied specified criteria. There is some question regarding whether DIR had the legal authority to do so in light of the fact that the enabling legislation (SB 1352) had specifically considered, but then deleted, the ability to submit payment to DIR in the form of a bond.
In 2013, when DIR revised its' Public Works Manual, it deleted the prior references to payment to DIR in the form of a bond."
AB 1741 was held on suspense in the Assembly Appropriations Committee. There are some indications that the administration may have had some policy concerns about the proposal to allow the posting of a bond in lieu of cash. This bill would not provide for a bond, but would instead merely require DIR to release such funds within 30 days of a final adjudication.
REGISTERED SUPPORT / OPPOSITION:
Support
Associated General Contractors (sponsor)
California Professional Association of Specialty Contractors
Construction Employers' Association
Opposition
None on file.
Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091
AB 326
Page 3
Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 326
(Frazier) – As Amended April 21, 2015
SUBJECT: Public works: prevailing wage rates: wage and penalty assessments
SUMMARY: Amends existing law related to civil wage and penalty assessments for prevailing wage violations. Specifically, this bill:
Provides that certain funds held in escrow by the Department of Industrial Relations (DIR) in specified prevailing wage proceedings shall be released "as expeditiously as possible" at the conclusion of all administrative and judicial review.
Makes other technical changes.
EXISTING LAW:
Provides that after 60 days following the service of a civil wage and penalty assessment for prevailing wage violations, the affected contractor or subcontractor shall be liable for liquidated damages in an amount equal to the wages, or portion thereof, that still remain unpaid.
Provides that if the contractor or subcontractor demonstrates to the satisfaction of the director of DIR 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.
Provides that there shall be no liability for liquidated damages if the full amount of the assessment or notice, including penalties, has been deposited with DIR within 60 days following service of the assessment or notice, for DIR to hold in escrow pending administrative and judicial review.
Requires DIR to release such funds, 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 such funds.
FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.
COMMENTS: Under current law, if a wage and penalty assessment for prevailing wage law violations remains unpaid for a period of 60 days, the affected contractor or subcontractor is liable for liquidated damages in an amount equal to the wages that remain unpaid. The general purpose of this provision is to encourage prompt payment of wages following an assessment for violation of the law.
However, current law provides that there shall be no liability for liquidated damages if the contractor or subcontractor has deposited the full amount of the assessment (in cash) with DIR pending administrative and judicial review of the assessment.
Existing law requires DIR to release the funds, plus any interest earned, at the conclusion of all administrative and judicial review to the persons and entities found to be entitled to those funds.
ARGUMENTS IN SUPPORT
According to the author, although the statute stipulates that the cash funds deposited by the contractor in order to avoid liquidated damages shall be released at the conclusion of all administrative and judicial review, there is nothing in the statute that states such funds shall be released in an expedited manner. As a result, releasing such funds can take months before the contractor is reimbursed. The author states that in one case, the cash deposit was $93,608.01, and in another it was $284,873.21. In both cases, these amounts were in addition to at least the equivalent amount already being withheld by the awarding bodies from the general contractor’s contract balance. In both cases, the claims against the contractor were dropped according to counsel. However, according to the author the task of getting the money back from DIR can take a long period of time.
This bill is sponsored by the Associated General Contractors who state:
"It is not unusual to have contractors post significant cash deposits. An example, in one documented case the contractor's civil wage and penalty assessment was solely based on the misconduct of the subcontractor, yet the general contractor had to post $250,489 in order to avoid liquidated damages.
The cash deposit was held from February to August (six months), where it was dismissed, and then it took another three months to have the funds returned. This bill simply states that once the case has been decided that the funds should be returned in an expeditious manner."
PREVIOUS LEGISLATION
AB 1741 (Frazier) from 2014 proposed to amend this same section of the law to allow the contractor or subcontractor to post the full amount of the assessment in the form of a bond (in lieu of cash) in order to avoid liability for liquidated damages. Supporters of that bill argued that currently contractors are faced with having to post substantial amounts of cash at a time when cash flow is important. Unnecessarily tying up cash can place innocent contractors in jeopardy of losing their business or creating financial hardship.
The committee analysis of AB 1741 last year noted the following relevant legislative and administrative history:
"Legislation enacted in 2001 (AB 1646) established automatic liquidated damages for wage and penalty assessments that remain unpaid for a period of 60 days. This was enacted as part of a broader measure to replace the prior system of de novo court review of prevailing wage disputes with a formal administrative procedure, followed by limited judicial review.
However, following the enactment of the automatic liquidated damages provision, some contractors raised concerns that this provision placed them in a difficult situation regarding assessments for which they were filing appeals with DIR. For example, they argued that contractors and subcontractors who wish to contest a citation with DIR were faced with two choices - they pay the disputed wages in order to avoid possible liquidated damage assessments and try to collect the wages from workers if the contractor or subcontractor prevail at DIR, or, refuse to pay the disputed wages and risk a liquidated damages assessment if DIR rules against them. They argued that neither choice affords the contractor or subcontractor reasonable due process because they are effectively penalized prior to a determination of guilt.
These concerns led to the enactment of SB 1352 (Wyland) from 2008 which established the provisions of current law that allow a contractor to avoid liability for liquidated damages if they post the full amount of the assessment with DIR in an escrow account while an administrative appeal is pending.
Earlier versions of SB 1352 would have allowed a contractor to post any of the following with DIR to avoid liability for liquidated damages: "cash, a letter of credit, a payment bond, or negotiable securities" in the amount of wages covered by the assessment. However, that language was subsequently amended out of the bill and the enacted version of the bill contained only the current language requiring the full amount of the assessment to be posted.
Despite the aforementioned legislative history, on March 30, 2009, the Chief Deputy Director of DIR issued a memorandum in which he stated that, in lieu of a cash deposit, a contractor may post a payment bond with DIR as long as the bond satisfied specified criteria. There is some question regarding whether DIR had the legal authority to do so in light of the fact that the enabling legislation (SB 1352) had specifically considered, but then deleted, the ability to submit payment to DIR in the form of a bond.
In 2013, when DIR revised its' Public Works Manual, it deleted the prior references to payment to DIR in the form of a bond."
AB 1741 was held on suspense in the Assembly Appropriations Committee. There are some indications that the administration may have had some policy concerns about the proposal to allow the posting of a bond in lieu of cash.
REGISTERED SUPPORT / OPPOSITION:
Support
Associated General Contractors (sponsor)
Opposition
None on file.
Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091
Discussed in Hearing
54SEC
Assembly Floor
34SEC
Senate Floor
4MIN
Senate Standing Committee on Labor and Industrial Relations
1MIN
Assembly Floor
Bill Author
Bill Co-Author(s):