Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Under existing law, an apprentice employed upon public works is required to be paid the prevailing rate of per diem wages for apprentices in the trade to which he or she is registered and to be employed only at the work of the craft or trade to which he or she is registered, as specified.

This bill would make technical, nonsubstantive changes to the above provision.

 THIRD READING  

Bill No: AB 1425

Author:

:

Vote:

SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/14/17

AYES: Bradford, Atkins, Jackson, Mitchell

NOES: Stone

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 52-23, 5/8/17 - See last page for vote

SUBJECT:

SOURCE: California State Association of Electrical Workers

DIGEST:

This bill increase the penalty from a monetary fine to a yearlong ban for contractors who fail to notify local apprenticeship programs of contract award information necessary to ensure compliance with the required apprentice ratio on the worksite.

ANALYSIS:

Existing law:

1. Defines “public works” to include, construction, alteration, demolition, or repair work done under contract and paid for, in whole or in part, out of public funds, including among other things the following:
   1. The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.
   2. The performance of construction work by the state or political subdivision in execution of the project.
   3. Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.
   4. Money loaned by the state or political subdivision that is to be repaid on a contingent basis.
      (Labor Code §1720)
2. Requires contractors to employ apprentices in a set one hour of apprentice work to five hours of journeyman work ratio on public works projects for on the job training. (Labor Code § 1777.5 (g))
3. Requires that before starting a public works project that every contractor submits contract award information, such as, an estimate of journeyman hours to be performed under the contract, the number of apprentices proposed to be employed, and the approximate dates the apprentices would be employed, to the applicable apprenticeship programs. (Labor Code § 1777.5 (e))
4. Requires that every apprentice employed on public works projects be paid the prevailing rate of per diem wages for the trade in which they are employed. (Labor Code § 1777.5 (b)(1))
5. Provides exemptions for a contractor not to have an apprentice on a specific public works projects if the following conditions are met.
   1. Unemployment for the previous three-month period in the area exceeds an average of 15 percent.
   2. The number of apprentices in training in the area exceeds a ratio of one to five.
   3. There is a showing that the apprenticeable craft or trade is replacing at least 1/30 of its journeymen annually through apprenticeship training, either on a statewide basis or on a local basis.
   4. Assignment of an apprentice to any work performed under a public works contract would create a condition that would jeopardize his or her life or the life, safety, or property of fellow employees or the public at large, or the specific task that the apprentice is to be assigned to is of a nature that training cannot be provided by a journeyman.
      (Labor Code § 1777.5 (k))
6. Excludes, for the purposes of these provisions, any contracts involving less than $30,000. (Labor Code § 1777.5 (o))
7. Provides that if the Labor Commissioner finds that a contractor violated Labor Code Section 1777.5 then a civil penalty of $100 can be imposed for each full calendar day of noncompliance. (Labor Code § 1777.7 (a)(1))
8. Provides that if a second violation within a three-year period is found the contractor shall forfeit no more than $300 for each full calendar day of noncompliance. (Labor Code § 1777.7 (a) (1))
9. Provides as an alternative to a penalty, that the Labor Commissioner may for a first-time violation, order the contractor or subcontractor to provide apprentice employment equal to the work hours during the period of noncompliance. (Labor Code § 1777.7 (a) (2))
10. Provides that if a subcontractor is found to have violated Labor Code Section 1777.5, the main contractor is not liable for any penalties unless the main contractor had knowledge of failure to comply or if the prime contractor fails to comply with other specified requirements. (Labor Code § 1777.7 (e))

This bill:

1. Requires contractors, within a specified amount of time, to provide the contract award information to the apprenticeship committees for each applicable apprenticeable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices.
2. Requires all contractors who are not approved to train an apprentice by an apprenticeship program sponsor, to provide contract award information to all of the applicable apprenticeship committees whose geographic area of operation includes the area of the public works project.
3. Requires contractors to provide the required information within 10 days of the date of execution of the prime contract or subcontract, but no later than the first day in which workers are employed on the public works project.
4. Requires a contractor to provide the required contract information in writing, containing all of the following information:
   1. Contractor’s name, address, telephone number, and state license number.
   2. Full name and address of the public work awarding body.
   3. Exact location of the public work site.
   4. Date of the contract award.
   5. Expected start date of the work.
   6. Estimated journeyman hours.
   7. Number of apprentices to be employed.
   8. Approximate dates apprentices will be employed.
5. Provides that the Department of Industrial Relations may create a form for contractors to use in order to comply with the required information sharing.
6. States that a contractor’s failure to provide contract award information that is known by the contractor shall be deemed a continuing violation for the duration of the contract, ending when a Notice of Completion (NOC) is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code.
7. Provides that a contractor or subcontractor that knowingly commits four or more violations within a three-year period shall be ineligible to bid on or to be awarded or perform work as a subcontractor on any public works contract for one year from the date the determination of noncompliance by the Labor Commissioner becomes a final order.

Comments

Apprenticeship programs. Under current public works requirements, all public works contracts valued at $30,000 or more are required to hire apprentices at the specified work hour ratio, unless that specific craft or trade does not require apprentices. The Department of Apprenticeship Standards (DAS), under the Department of Industrial Relations, aims to create opportunities for Californians to gain valuable skills for obtaining employment that strengthen our job force through apprenticeship programs. Some benefits of an apprenticeship programs are the opportunity to learn while you earn, career advancement opportunities, excellent wages and benefits, and safe working conditions which, as a result, has allowed these programs to become an integral part of shaping California’s workforce.

The goals of DAS are to match “the needs of workers in the acquisition of skills that allow them to obtain and keep a well-paying job with those of employers seeking motivated workers with the skills they need for open positions, and strengthening the alliance among industry, labor, education, and government to recruit workers and teach them the skills needed to support industry. Because it is funded and driven by the industry’s needs, the apprenticeship system provides an effective balance between learning-by-doing and theoretical instruction, thus developing workers with marketable skills.” One of the most important factors of the apprenticeship program is that the wages they are paid are a portion of the skilled wage rate that increases during the training program, which helps ensure that the apprentices are being properly paid for their labor and efforts.

By working with employers locally to develop new apprenticeship training programs these programs are able to teach the specific skills needed to perform a job at all levels. After completion of the apprenticeship program, apprentices are issued a certificate of completion from the State of California.

Need for this bill? Under California Labor Code, contractors are required to provide contract information to the appropriate apprenticeship committees. This contract information is required in writing and must be given within 10 days of an award, but no later than the first day that the contractor has employed other workers, so that apprenticeship committees have the time to place apprentices properly on the site to meet the ratio requirements and for appropriate on the job training. Apprenticeship programs offer on-the-job training for apprentices on public works projects, which gives them valuable job training and the chance to strengthen their skills in a specific trade. When contractors fail to give notice to the appropriate apprenticeship program of upcoming public works projects in a reasonable timeframe then this emerging workforce misses out on the chance to develop their skills further and the contractor risks being out of compliance per the required apprentice to worker ratio.

Under current law, a penalty is imposed on contractors who violate public works contract award notification requirements. The California Code of Regulations goes a step further by requiring that this information be shared within ten days of the award. Both current law and California Code of Regulations impose penalties for violators. However, according to the author, the existing penalty does not seem to discourage repeat offenders from violating this requirement. AB 1425 aims to rectify this by imposing a contracting ban in an effort to ensure that contractors will do their due-diligence and notify apprenticeship programs in the proper time frame in order to avoid incurring a ban to work on public works projects. This bill also codifies the 10-day submission deadline.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 6/26/17)

California State Association of Electrical Workers (source)

California Legislative Conference of Plumbing, Heating and Piping Industry

State Building and Construction Trades Council, AFL-CIO

OPPOSITION: (Verified 6/26/17)

American Fire Sprinkler Association

Associated Builders and Contractors

Associated General Contractors

Construction Employers’ Association

Independent Roofing Contractors of California, Inc.

Plumbing-Heating-Cooling Contractors Association

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: According to proponents, this bill will ensure that a contractor, within a designated time period, will provide notice to applicable local apprenticeship committees that a project has been awarded in their area and that the contractor has been approved to train apprentices.

They note that the importance of this notice cannot be overstated. In order for an apprentice to journey through their apprenticeship training they must complete a certain number of hours of on the job training. This hands-on training makes up the bulk of an apprentice’s training program and if their apprenticeship program is not aware of where and to which contractor they can send apprentices that training will be hindered.

The California State Association of Electrical Workers is the sponsor of this bill and argues that although current law requires reporting, this bill goes further and enhances the penalties for failure to comply with the statute. If a contractor or subcontractor knowingly commits four or more violations within a three-year period, they shall be ineligible to bid on or to be awarded to perform work on a public works contract for one year.

ARGUMENTS IN OPPOSITION: Opponents of AB 1425 argue that, although they believe that contractors should be held to a high standard of compliance in regards to the apprenticeship requirements, that this bill is duplicative of existing regulations and its penalties are too severe and could constitute a death penalty for a contractor who makes an unintentional mistake in their paperwork.

Opponents claim that under AB 1425 a contractor’s failure to provide contract award information that is known by the contractor is a continuing violation for the duration of the contract, ending when a NOC is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code. For a multi-year project, a contractor could be liable for hundreds of thousands of dollars in penalties even if they have completed their work because the penalties do not end until the NOC is filed by the public agency. It is worth noting that ministerial errors are commonplace as the DAS 140 form must be submitted by every general contractor and subcontractor prior to commencement of work. Changes in start dates and estimations of manpower are normal and most mistakes related to the DAS 140 form are ministerial. To the extent that there are ministerial violations that are not corrected, such as listing the wrong address, this bill will subject the violator to penalties until the NOC is filed. They also question what could potentially happen if the public agency never files a NOC and who would be liable.

Additionally, opponents note that AB 1425 amends Labor Code Section 1777.7 to debar a contractor who knowingly commits four or more violations within a three-year period. It is important to remember that California Courts have concluded that “knowing” does not mean the contractor actually “knows” his or her conduct is illegal – only that the conduct was intentional.

Opponents also argue that there appears to be a misconception that mistakes are limited to non-union employers. This bill will likely result in the debarment of more signatory entities versus non-signatory entities because signatory employers tend to be larger and preform more public work than their non-union counterparts.

ASSEMBLY FLOOR: 52-23, 5/8/17

AYES: Aguiar-Curry, Arambula, Berman, Bloom, Bocanegra, Bonta, Burke, Caballero, Calderon, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Eggman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gomez, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Levine, Limón, Low, McCarty, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon

NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chen, Choi, Cunningham, Dahle, Flora, Fong, Gallagher, Harper, Kiley, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Steinorth, Voepel, Waldron

NO VOTE RECORDED: Chávez, Frazier, Friedman, Medina, Patterson

Prepared by:

6/27/17 16:57:52

**** END ****

FSENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS

Senator Steven Bradford, Chair

2017 - 2018 Regular

Bill No: AB 1425 Hearing Date: June 14, 2017

Subject: Apprentices

KEY ISSUE

Should the Legislature increase the penalty from a monetary fine to a yearlong ban for contractors who fail to notify local apprenticeship programs of contract award information necessary to ensure compliance with the required apprentice ratio on the worksite?

ANALYSIS

Existing law

1. Defines “public works” to include, construction, alteration, demolition, or repair work done under contract and paid for, in whole or in part, out of public funds, including among other things the following:
   1. The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer.
   2. The performance of construction work by the state or political subdivision in execution of the project.
   3. Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision.
   4. Money loaned by the state or political subdivision that is to be repaid on a contingent basis.

(Labor Code §1720)

1. Requires contractors to employ apprentices in a set 1 hour of apprentice work to 5 hours of journeyman work ratio on public works projects for on the job training. [Labor Code § 1777.5 (g)]
2. Requires that before starting a public works project that every contractor submits contract award information, such as, an estimate of journeyman hours to be performed under the contract, the number of apprentices proposed to be employed, and the approximate dates the apprentices would be employed, to the applicable apprenticeship programs.

[Labor Code § 1777.5 (e)]

1. Requires that every apprentice employed on public works projects be paid the prevailing rate of per diem wages for the trade in which they are employed.

[Labor Code § 1777.5 (b)(1)]

1. Provides exemptions for a contactor not to have an apprentice on a specific public works projects if the following conditions are met.
   1. Unemployment for the previous three-month period in the area exceeds an average of 15 percent.
   2. The number of apprentices in training in the area exceeds a ratio of 1 to 5.
   3. There is a showing that the apprenticeable craft or trade is replacing at least one-thirtieth of its journeymen annually through apprenticeship training, either on a statewide basis or on a local basis.
   4. Assignment of an apprentice to any work performed under a public works contract would create a condition that would jeopardize his or her life or the life, safety, or property of fellow employees or the public at large, or the specific task that the apprentice is to be assigned to is of a nature that training cannot be provided by a journeyman.

[Labor Code § 1777.5 (k)]

1. For the purposes of these provisions, excludes any contracts involving less than $30,000. [Labor Code § 1777.5 (o)]
2. Provides that if the Labor Commissioner finds that a contractor violated 1777.5 then a civil penalty of $100 can be imposed for each full calendar day of noncompliance. [Labor Code § 1777.7 (a)(1)]
3. Provides that if a second violation within a three-year period is found the contractor shall forfeit no more than $300 for each full calendar day of noncompliance.

[Labor Code § 1777.7 (a) (1)]

1. Provides as an alternative to a penalty, that the Labor Commissioner may for a first- time violation, order the contractor or subcontractor to provide apprentice employment equal to the work hours during the period of noncompliance.

[Labor Code § 1777.7 (a) (2)]

1. Provides that if a subcontractor is found to have violated §1777.5, the main contractor is not liable for any penalties unless the main contractor had knowledge of failure to comply or if the prime contractor fails to comply with other specified requirements. [Labor Code § 1777.7 (e)]

This Bill

1. Requires contractors, within a specified amount of time, to provide the contract award information to the apprenticeship committees for each applicable apprenticeable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices.
2. Requires all contractors who are not approved to train an apprentice by an apprenticeship program sponsor, to provide contract award information to all of the applicable apprenticeship committees whose geographic area of operation includes the area of the public works project.
3. Requires contractors to provide the required information within 10 days of the date of execution of the prime contract or subcontract, but no later than the first day in which workers are employed on the public works project.
4. Requires a contractor to provide the required contract information in writing, containing all of the following information:
   1. Contractor’s name, address, telephone number, and state license number.
   2. Full name and address of the public work awarding body.
   3. Exact location of the public work site.
   4. Date of the contract award.
   5. Expected start date of the work.
   6. Estimated journeyman hours.
   7. Number of apprentices to be employed.
   8. Approximate dates apprentices will be employed.
5. Provides that the Department of Industrial Relations may create a form for contractors to use in order to comply with the required information sharing.
6. States that a contractor’s failure to provide contract award information that is known by the contractor shall be deemed a continuing violation for the duration of the contract, ending when a Notice of Completion is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code.
7. Provides that a contractor or subcontractor that knowingly commits four or more violations within a three-year period shall be ineligible to bid on or to be awarded or perform work as a subcontractor on any public works contract for one year from the date the determination of noncompliance by the Labor Commissioner becomes a final order.

COMMENTS

1. Background on Apprenticeship Programs

Under current public works requirements, all public works contracts valued at $30,000 or more are required to hire apprentices at the specified work hour ratio, unless that specific craft or trade does not require apprentices. The Department of Apprenticeship Standards (DAS), under the Department of Industrial Relations, aims to create opportunities for Californians to gain valuable skills for obtaining employment that strengthen our job force through apprenticeship programs. Some benefits of an apprenticeship programs are the opportunity to learn while you earn, career advancement opportunities, excellent wages and benefits, and safe working conditions which, as a result, has allowed these programs to become an integral part of shaping California’s workforce.

The goals of DAS are to match “the needs of workers in the acquisition of skills that allow them to obtain and keep a well-paying job with those of employers seeking motivated workers with the skills they need for open positions, and strengthening the alliance among industry, labor, education, and government to recruit workers and teach them the skills needed to support industry. Because it is funded and driven by the industry’s needs, the apprenticeship system provides an effective balance between learning-by-doing and theoretical instruction, thus developing workers with marketable skills.” One of the most important factors of the apprenticeship program is that the wages they are paid are a portion of the skilled wage rate that increases during the training program, which helps ensure that the apprentices are being properly paid for their labor and efforts.

By working with employers locally to develop new apprenticeship training programs these programs are able to teach the specific skills needed to perform a job at all levels. After completion of the apprenticeship program, apprentices are issued a certificate of completion from the State of California.

1. Need for this bill?

Under California Labor Code, contractors are required to provide contract information to the appropriate apprenticeship committees. This contract information is required in writing and must be given within ten days of an award, but no later than the first day that the contractor has employed other workers, so that apprenticeship committees have the time to place apprentices properly on the site to meet the ratio requirements and for appropriate on the job training. Apprenticeship programs offer on-the-job training for apprentices on public works projects, which gives them valuable job training and the chance to strengthen their skills in a specific trade. When contractors fail to give notice to the appropriate apprenticeship program of upcoming public works projects in a reasonable timeframe then this emerging workforce misses out on the chance to develop their skills further and the contractor risks being out of compliance per the required apprentice to worker ratio.

Under current law, a penalty is imposed on contractors who violate public works contract award notification requirements. The California Code of Regulations goes a step further by requiring that this information be shared within ten days of the award. Both current law and California Code of Regulations impose penalties for violators. However, according to the author, the existing penalty does not seem to discourage repeat offenders from violating this requirement. AB 1425 aims to rectify this by imposing a contracting ban in an effort to ensure that contractors will do their due-diligence and notify apprenticeship programs in the proper time frame in order to avoid incurring a ban to work on public works projects. This bill would also codify the 10-day submission deadline.

3. Proponent Arguments:

According to proponents, this bill will ensure that a contractor, within a designated time period, will provide notice to applicable local apprenticeship committees that a project has been awarded in their area and that the contractor has been approved to train apprentices.

They note that the importance of this notice cannot be overstated. In order for an apprentice to journey through their apprenticeship training they must complete a certain number of hours of on the job training. This hands-on training makes up the bulk of an apprentice’s training program and if their apprenticeship program is not aware of where and to which contractor they can send apprentices that training will be hindered.

The California State Association of Electrical Workers is the sponsor of this measure and argues that although current law requires reporting, this bill goes further and enhances the penalties for failure to comply with the statute. If a contractor or subcontractor knowingly commits four or more violations within a three-year period, they shall be ineligible to bid on or to be awarded to perform work on a public works contract for one year.

4. Opponent Arguments:

Opponents of AB 1425 argue that, although they believe that contractors should be held to a high standard of compliance in regards to the apprenticeship requirements, that this bill is duplicative of existing regulations and its penalties are too severe and could constitute a death penalty for a contractor who makes an unintentional mistake in their paperwork.

Opponents claim that under AB 1425 a contractor’s failure to provide contract award information that is known by the contractor is a continuing violation for the duration of the contract, ending when a Notice of Completion (NOC) is filed by the awarding body, for the purpose of determining the accrual of penalties under §1777.7 of the Labor Code. For a multi-year project, a contractor could be liable for hundreds of thousands of dollars in penalties even if they have completed their work because the penalties do not end until the NOC is filed by the public agency. It is worth noting that ministerial errors are commonplace as the DAS 140 form must be submitted by every general contractor and subcontractor prior to commencement of work. Changes in start dates and estimations of manpower are normal and most mistakes related to the DAS 140 form are ministerial. To the extent that there are ministerial violations that are not corrected, such as listing the wrong address, this measure will subject the violator to penalties until the NOC is filed. They also question what could potentially happen if the public agency never files a NOC and who would be liable.

Additionally, opponents note that AB 1425 amends LC§1777.7 to debar a contractor who knowingly commits four or more violations within a three-year period. It is important to remember that California Courts have concluded that “knowing” does not mean the contractor actually “knows” his or her conduct is illegal – only that the conduct was intentional.

Opponents also argue that there appears to be a misconception that mistakes are limited to non-union employers. This measure will likely result in the debarment of more signatory- entities versus non-signatory entities because signatory employers tend to be larger and preform more public work than their non-union counterparts.

SUPPORT

California State Association of Electrical Workers (Sponsor)

California State Pipe Trades Council

California State Pipe and Trades Council

International Union of Elevator Constructors

State Building and Construction Trades Council

The Western States Council of Sheet Metal Workers

OPPOSITION

American Fire Sprinkler Association

Associated Builders and Contractors

Construction Employers’ Association

Independent Roofing Contractors of California, Inc.

Plumbing- Heating- Cooling Contractors Association of California

Western Electrical Contractors Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1425

Author:(Kalra)

As Amended Ver:March 28, 2017

Majority vote

SUMMARY: Requires a contractor within a designated time period, to provide specific written information to applicable apprenticeship committees whose geographic area of operation includes the area of the public works project and, would impose additional penalties for a violation of these provisions. Specifically, this bill:

1. Requires a contractor to provide contract award information to the apprenticeship committee for each applicable apprenticeable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices.
2. Mandates a contractor who is not approved to train an apprentice by an apprenticeship program sponsor, to provide contract award information to all of the applicable apprenticeship committees who geographic area of operation includes the area of the public works project.
3. Requires a contractor to provide the information, as specified, within 10 days of the date of the execution of the prime contract or subcontract, but in no event later than the first day in which a contractor has workers employed upon the public work.
4. Mandates a contractor to provide the information required in these provisions in a writing that contains all of the information, as specified.
5. Provides that the Department of Industrial Relations may create a form for a contractor to use to comply with these provisions.
6. States that a contractor's failure to provide contract award information that is known by the contractor shall be deemed a continuing violation for the duration of the contract, ending when a Notice of Completion (NOC) is filed by the awarding body, for the purpose of determining the accrual of penalties under Labor Code Section 1777.7 .
7. Provides that a contractor or subcontractor that knowingly commits four or more violations within a three-year period shall be ineligible to bid on or to be awarded or perform work as a subcontractor on any public works contract for one year from the date the determination of noncompliance by the Labor Commissioner becomes a final order.

FISCAL EFFECT: According to the Assembly Appropriations Committee, this bill has minor and absorbable costs for the Department of Industrial Relations (DIR).

COMMENTS: The author argues, "AB 1425 will ensure the state's apprenticeship programs are operating to their fullest potential. Contractors need to be fully aware and committed to their requirements, codifying them in statute will assist in this effort and increase the likelihood that contractors adhere to these practices. While current law imposes a penalty fee for contractors that violate the 10-day apprenticeship notification regulation, the fee alone is not enough to tackle the issue for repeat offenders. AB 1425 raises the stakes on these contractors that violate their requirements by denying bids on future public works projects if they are in violation over four times in a three-year period. AB 1425 protects an existing gateway for those entering steady careers through apprenticeships and provides adequate deterrence against those contractors from skirting the law. Because every public works project utilizes taxpayer money, it is important that these projects provide a benefit to the state's emerging workforce."

Background on existing law, public works, per diem wages and apprenticeship programs can be found in the policy committee analysis.

Arguments in Support

The California State Association of Electrical Workers is the sponsor of this measure and writes in support, "AB 1425 adds to the Labor Code the requirement that a contractor shall provide award information to the apprenticeship committee for each applicable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices. This mandate is currently found at 8 California Code of Regulations 230, but the bill goes further and enhances the penalties for failure to comply with the statute. If a contractor or subcontractor knowingly commits four or more violations within a three-year period, they shall be ineligible to bid on or to be awarded to perform work on a public works contract for one year. It is critical to a successful apprenticeship program to dispatch these men and women to actual job sites. The purpose behind notifying apprenticeship committees is to ensure that they have time to ensure that apprentices will be available."

Arguments in Opposition

The Western Electrical Contractors Association (WECA), Plumbing-Heating-Cooling Contractors Association of California (CAPHCC), American Fire Sprinkler Association (AFSA), Independent Roofing Contractors of California, Inc. and Associated Builders and Contractors write in opposition that, "While my clients are sponsors of apprenticeship programs and believe that contractors should be held to a high standard of compliance with apprenticeship requirements, they believe elements in AB 1425 are duplicative of existing regulations, confusing and the penalties are too severe and could constitute a "death penalty" for a contractor who makes even unintentional mistakes in their paperwork associated with apprenticeship utilization. Under AB 1425 a contractor's failure to provide contract award information that is known by the contractor is a continuing violation for the duration of the contract, ending when a Notice of Completion is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code. For a multi-year project, a contractor could be liable for hundreds of thousands of dollars in penalties even if they have completed their work because the penalties do not end until the NOC is filed by the public agency. AB 1425 debars a contractor who knowingly commits four or more violations within a three-year period. As I am sure you know, California Courts have concluded that knowing does not mean the contractor actually knows his or her conduct is illegal only that the conduct was intentional."

Analysis Prepared by: Taylor Jackson / L. & E. / 916-319-2091 FN: 0000231

Date of Hearing: May 3, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1425

Author:(Kalra) – As Amended Ver:March 28, 2017

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires a contractor to provide specific written information to apprenticeship committees and imposes additional penalties for a violation of these provisions. Specifically, this bill:

1. Requires a contractor to provide contract award information to the apprenticeship committee for each applicable apprenticeable craft or trade within the geographic area of the public works project. This information has to be provided within 10 days of executing the contract, but cannot be later than the first day in which a worker becomes employed for the project.
2. States that a contractor’s failure to provide the specified information is a continuing violation for the duration of the contract, ending when a Notice of Completion is filed by the awarding body.
3. Prohibits a contractor or subcontractor that knowingly commits four or more violations with a three-year period from bidding or performing work as a subcontractor on any public works contract for one year.

FISCAL EFFECT:

Minor and absorbable costs for the Department of Industrial Relations (DIR).

COMMENTS:

Background and Purpose. Under existing regulations, contracts that are awarded a prime contract must provide the contract information to apprenticeship committees. Failure to comply with these requirements results in a $100 penalty per day for every full day violation and $300 per day for each subsequent violation within a three-year period.

According to the author, AB 1425 will help ensure that apprenticeship programs are operating to their fullest potential. The author notes that job-site training is a critical component of any apprenticeship program, and it is vital for apprenticeship committees to be properly informed of contracts in order to prepare the adequate number of apprentices for that project. AB 1425 aims to achieve these goals by putting existing regulatory requirements for contractors to notify apprenticeship committees into statute and by strengthening the penalties for not doing so.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: April 19, 2017

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Tony Thurmond, Chair

ABPCA Bill Id:AB 1425 (

Author:Kalra) – As Amended Ver:March 28, 2017

SUBJECT: Apprentices

SUMMARY: Requires a contractor with a designated time period, to provide specific written information to applicable apprenticeship committees whose geographic area of operation includes the area of the public works project and, would impose additional penalties for a violation of these provisions. Specifically, this bill:

1. Requires a contractor to provide contract award information to the apprenticeship committee for each applicable apprenticeable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices.
2. Mandates a contractor who is not approved to train an apprentice by an apprenticeship program sponsor, to provide contract award information to all of the applicable apprenticeship committees who geographic area of operation includes the area of the public works project.
3. Requires a contractor to provide the information, as specified, within 10 days of the date of the execution of the prime contract or subcontract, but in no event later than the first day in which a contractor has workers employed upon the public work.
4. Mandates a contractor to provide the information required in these provisions in a writing that contains all of the information, as specified.
5. Provides that the Department of Industrial Relations may create a form for a contractor to use to comply with these provisions.
6. States that a contractor’s failure to provide contract award information that is known by the contractor shall be deemed a continuing violation for the duration of the contract, ending when a Notice of Completion is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code.
7. Provides that a contractor or subcontractor that knowingly commits four or more violations within a three-year period shall be ineligible to bid on or to be awarded or perform work as a subcontractor on any public works contract for one year from the date the determination of noncompliance by the Labor Commissioner becomes a final order.

EXISTING LAW:

1. Requires contractors on public works projects to comply with various requirements for employing apprentices, including, among others, requiring every contractor to submit contract award information to an applicable apprenticeship program that can supply apprentices to the site of the public work.
2. Defines public works, to include among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except as specified. 
3. Provides that private residential projects built on private property are not subject to the requirements of public works provisions, unless the projects are built pursuant to an agreement with a state agency, redevelopment agency, or local public housing authority.
4. Requires that the applicable general prevailing rate of per diem wages for apprentices in the trade to which he or she is registered be paid to apprentices employed on public works projects in California.
5. Provides that this rate is determined by the Director of the Department of Industrial Relations (DIR) for each locality in which the public work is to be performed and for each craft, classification, or type of apprentice needed to execute the public works project.
6. Provides for penalties for a violation of requirements relating to apprentices.

FISCAL EFFECT: Unknown

COMMENTS: The author argues, “California Code of Regulations, Title 8, Section 230, requires that contractors awarded a prime contract shall provide contract information to the appropriate apprenticeship committee for each applicable craft or trade in the area of the site. The contract award information is required to be in writing and provided within ten days of the award but in no event later than the first day in which the contractor has workers employed on the public work. Contractors that fail to comply with these requirements are penalized $100 per day for every full day violation and $300 per day for subsequent violations within a three-year period.

The purpose of notifying apprenticeship committees is to ensure that they have adequate time to place apprentices on job-sites for public works projects. This job-site training is a critical component of the apprenticeship program and ensures that the programs can provide the apprentices. Apprenticeships for public works provide invaluable opportunities for many in the crafts and trades to activate their careers. As such, it is important for apprenticeship committees to be properly informed of newly awarded contracts in order to prepare the adequate amount of apprentices for the job-site. By requiring public works contractors to provide contract information to the apprenticeship committee within a reasonable time-frame, AB 1425 will ensure the state’s apprenticeship programs are operating to their fullest potential.

Contractors need to be fully aware and committed to their requirements. Codifying them in statute will assist in this effort and increase the likelihood that contractors adhere to these practices. While current law imposes a penalty fee for contractors that violate the 10-day apprenticeship notification regulation, the fee alone is not enough to tackle the issue for repeat offenders.

AB 1425 raises the stakes on these contractors that violate their requirements by denying bids on future public works projects if they are in violation over four times in a three-year period. AB 1425 protects an existing gateway for those entering steady careers through apprenticeships and provides adequate deterrence against those contractors from skirting the law.

Because every public works project utilizes taxpayer money, it is important that these projects provide a benefit to the state’s emerging workforce.

While current law imposes a penalty fee for contractors that violate the 10-day apprenticeship notification regulation, the fee alone is not enough to tackle the issue for repeat offenders. AB 1425 raises the stakes on these contractors that violate their requirements by denying bids on future public works projects if they are in violation over four times in a three-year period.

AB 1425 protects an existing gateway for those entering steady careers through apprenticeships and provides adequate deterrence against those contractors from skirting the law. Because every public works project utilizes taxpayer money, it is important that these projects provide a benefit to the state’s emerging workforce.”

Apprenticeship Programs

Apprenticeship is a system of learning while earning, and learning by doing. It combines training on the job with related and supplemental instruction at school. Today, it is utilized chiefly in the skilled crafts. Each program operates under apprenticeship training standards agreed to by labor and management in accordance with state and federal laws, under which a person works with a skilled worker and gains on the job skills and knowledge and in turn becomes an important part of the occupation and industry. In those crafts in which management and labor organizations exist, each selects an equal number of members to serve on the joint apprenticeship committee. The joint apprenticeship committee determines the standards for training of its occupation and supervises the training of apprentices. In many cases the local apprenticeship committees have guidelines in the form of national and/or statewide standards recommended by the advisory organizations. But these are minimums and the local groups usually have complete autonomy in developing and administering their own programs.

Training is spelled out in apprenticeship standards developed by the local apprenticeship committees, with the assistance of consultants of the Division of Apprenticeship Standards, and registered with the State. The processes of the trade and the number of hours to be spent learning each process are defined. The period of training is from 1 to 6 years, depending upon the trade; most programs are for 4 years.

Apprentices start at a percentage of the skilled worker's wage and receive increases at regular intervals. Starting rates are usually 35% to 50%, and increases are given every six months in most trades. Upon successful completion of training, they are issued a certificate of completion by the State of California. Industry coordinators and apprenticeship consultants of the Division of Apprenticeship Standards visit establishments to determine on-the-job progress of apprentices, seek new apprenticeship openings, and discuss problems with apprentices, supervisors and employers. The enforcement of apprenticeship requirements is the responsibility of the Division of Labor Standards Enforcement.

Arguments in Support

The California State Association of Electrical Workers is the sponsor of this measure and writes in support, “AB 1425 adds to the Labor Code the requirement that a contractor shall provide award information to the apprenticeship committee for each applicable craft or trade in the area of the site of the public works project that has approved the contractor to train apprentices. This mandate is currently found at 8 California Code of Regulations 230, but the bill goes further and enhances the penalties for failure to comply with the statute. If a contractor or subcontractor knowingly commits four or more violations within a three-year period, they shall be ineligible to bid on or to be awarded to perform work on a public works contract for one year.

It is critical to a successful apprenticeship program to dispatch these men and women to actual job sites. The purpose behind notifying apprenticeship committees is to ensure that they have time to ensure that apprentices will be available.”

Arguments in Opposition

The Western Electrical Contractors Association (WECA), Plumbing-Heating-Cooling Contractors Association of California (CAPHCC), American Fire Sprinkler Association (AFSA), Independent Roofing Contractors of California, Inc. and Associated Builders and Contractors write in opposition that, “While my clients are sponsors of apprenticeship programs and believe that contractors should be held to a high standard of compliance with apprenticeship requirements, they believe elements in AB 1425 are duplicative of existing regulations, confusing and the penalties are too severe and could constitute a “death penalty” for a contractor who makes even unintentional mistakes in their paperwork associated with apprenticeship utilization. First, the proposed language in (q) is completely duplicative of an existing regulation, 8 CCR 230. We do not believe it is necessary to adopt a statute when there is already an existing regulation in place.

Second, the proposed requirements in (q) (2) (A) (VI), (vii), (viii) [that the notice of contract award contain information re: estimated journeyman hours, number of apprentices to be employed and the approximate dates apprentices will be employed] already exist in subsection (e) of the very same statute [1777.5(e)]. We do not believe the same statute needs to contain the same requirements twice. Third, running penalties through the filing of the Notice of Completion (NOC) is contrary to DLSE’s stated practice in its Public Works Manual, which is to run penalties through the last date the contractor has apprentices in any trade employed on the project. [See Division of Labor Standards Enforcement Public Works Manual, page 29]. Fourth, under AB 1425 a “contractor’s failure to provide contract award information that is known by the contractor” is “a continuing violation for the duration of the contract, ending when a Notice of Completion is filed by the awarding body, for the purpose of determining the accrual of penalties under Section 1777.7 of the Labor Code.” For a multi-year project, a contractor could be liable for hundreds of thousands of dollars in penalties even if they have completed their work because the penalties do not end until the NOC is filed by the public agency. And what if the public agency never files a NOC? Finally, AB 1425 amends LC§1777.7 to debar a contractor who “knowingly commits four or more violations within a three-year period.” As I am sure you know, California Courts have concluded that “knowing” does not mean the contractor actually “knows” his or her conduct is illegal – only that the conduct was intentional. We believe that AB 1425 is duplicative of existing law and thus adds confusion, furthermore, the new penalties in AB 1425 are excessive.”

REGISTERED SUPPORT / OPPOSITION:

Support

California State Association of Electrical Workers (sponsor)

California State Pipe Trades Council

Western States Council of Sheet Metal Workers

International Union of Elevator Constructors

Opposition

Associated Builders and Contractors

American Fire Sprinkler Association

Independent Roofing Contractors of California, Inc.

Plumbing-Heating-Cooling Contractors Association of California

Western Electrical Contractors Association

Analysis Prepared by: Taylor Jackson / L. & E. / 916-319-2091