AB 3018: State contracts: skilled and trained workforce.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2018-09-28
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires at least 30% of the skilled journeypersons employed to perform work on these contracts or projects, on or after January 1, 2017, to be graduates of an apprenticeship program. Existing law increases that percentage for work performed on or after January 1, 2018, and increases that percentage again for work performed on or after January 1, 2019, but excludes the same set of specified occupations from both of these increased percentage requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would, for work performed on or after January 1, 2018, clarify that the same set of specified occupations continues to be subject to the current requirement that only 30% of skilled journeypersons employed to perform work on those contracts or projects be graduates of an apprenticeship program. The bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would limit the public agency or awarding body to withholding 150% of the value of the monthly billing for a subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires at least 30% of the skilled journeypersons employed to perform work on these contracts or projects, on or after January 1, 2017, to be graduates of an apprenticeship program. Existing law increases that percentage for work performed on or after January 1, 2018, and increases that percentage again for work performed on or after January 1, 2019, but excludes the same set of specified occupations from both of these increased percentage requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would, for work performed on or after January 1, 2018, clarify that the same set of specified occupations continues to be subject to the current requirement that only 30% of skilled journeypersons employed to perform work on those contracts or projects be graduates of an apprenticeship program. The bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would limit the public agency or awarding body to withholding 150% of the value of the monthly billing for a subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires at least 30% of the skilled journeypersons employed to perform work on these contracts or projects, on or after January 1, 2017, to be graduates of an apprenticeship program. Existing law increases that percentage for work performed on or after January 1, 2018, and increases that percentage again for work performed on or after January 1, 2019, but excludes the same set of specified occupations from both of these increased percentage requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would would, for work performed on or after January 1, 2018, clarify that the same set of specified occupations continues to be subject to the current requirement that only 30% of skilled journeypersons employed to perform work on those contracts or projects be graduates of an apprenticeship program. The bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would limit the public agency or awarding body to withholding 150% of the value of the monthly billing for a subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would limit the public agency or awarding body to withholding 150% of the value of the monthly bill billing for a subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment, assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would limit the public agency or awarding body to withholding 150% of the value of the monthly bill for subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. Existing law defines a skilled and trained workforce to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
This bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements. The bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce. The bill would require a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements. The bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor. The bill would make a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified. The bill would require the Labor Commissioner to publish on the commissioners Internet Web site a list of contractors who are ineligible under these provisions. By expanding the crime of perjury, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
The State Contract Act authorizes specified state departments to require from prospective bidders the completion, under penalty of perjury, of a standard form of questionnaire concerning the past safety record of each prospective bidder and additionally authorizes those departments to refuse to prequalify any prospective bidder that fails to submit a completed questionnaire when required, or for the reason that the information contained in the submitted questionnaire or otherwise known to the department indicates a continuing unsatisfactory safety record. Existing law provides that the director of those departments prescribe guidelines listing criteria to be used in determining an unsatisfactory safety record and requires the Director of Industrial Relations to approve the standard form of questionnaire and the guidelines listing criteria used by these departments.This bill would make nonsubstantive changes to these provisions.The State Contract Act authorizes specified state departments to require from prospective bidders the completion, under penalty of perjury, of a standard form of questionnaire concerning the past safety record of each prospective bidder and additionally authorizes those departments to refuse to prequalify any prospective bidder that fails to submit a completed questionnaire when required, or for the reason that the information contained in the submitted questionnaire or otherwise known to the department indicates a continuing unsatisfactory safety record. Existing law provides that the director of those departments prescribe guidelines listing criteria to be used in determining an unsatisfactory safety record and requires the Director of Industrial Relations to approve the standard form of questionnaire and the guidelines listing criteria used by these departments.
This bill would make nonsubstantive changes to these provisions.
For purposes of this chapter:
(a)Apprenticeable occupation means an occupation for which the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations had approved an apprenticeship program pursuant to Section 3075 of the Labor Code before January 1, 2014.
(b)Chief means the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations.
(c)Graduate of an apprenticeship program means either of the following:
(1)An individual that has been issued a certificate of completion under the authority of the California Apprenticeship Council for completing an apprenticeship program approved by the chief pursuant to Section 3075 of the Labor Code.
(2)An individual that has completed an apprenticeship program located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(d)Skilled and trained workforce means a workforce that meets all of the following conditions:
(1)All the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief.
(2)(A)For work performed on or after January 1, 2017, at least 30 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in the occupation of teamster.
(B)For work performed on or after January 1, 2018, at least 40 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(C)For work performed on or after January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(D)For work performed on or after January 1, 2020, at least 60 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(3)For an apprenticeable occupation in which no apprenticeship program had been approved by the chief before January 1, 1995, up to one-half of the graduation percentage requirements of paragraph (2) may be satisfied by skilled journeypersons who commenced working in the apprenticeable occupation before the chiefs approval of an apprenticeship program for that occupation in the county in which the project is located.
(4)The apprenticeship graduation percentage requirements of paragraph (2) are satisfied if, in a particular calendar month, either of the following is true:
(A)At least the required percentage of the skilled journeypersons employed by the contractor or subcontractor to perform work on the contract or project meet the graduation percentage requirement.
(B)For the hours of work performed by skilled journeypersons employed by the contractor or subcontractor on the contract or project, the percentage of hours performed by skilled journeypersons who met the graduation requirement is at least equal to the required graduation percentage.
(5)The contractor or subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if, during the calendar month, the contractor or subcontractor employs skilled journeypersons to perform fewer than 10 hours of work on the contract or project.
(6)A subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if both of the following requirements are met:
(A)The subcontractor was not a listed subcontractor under Section 4104 or a substitute for a listed subcontractor.
(B)The subcontract does not exceed one-half of 1 percent of the price of the prime contract.
(e)Skilled journeyperson means a worker who either:
(1)Graduated from an apprenticeship program for the applicable occupation that was approved by the chief or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(2)Has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the chief.
SEC. 2.Section 2602 of the Public Contract Code is amended to read:2602.(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided. If a monthly report is incomplete due to the failure of a subcontractor to timely submit the required information to the contractor, bidder, or other entity, the public agency or awarding body shall only withhold an amount equal to 150 percent of the value of the monthly billing for the relevant subcontractor. If a public agency or other awarding body withholds amounts pursuant to this subdivision, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor until the subcontractor provides the contractor, bidder, or other entity a complete report, and the public agency or awarding body subsequently pays the contractor, bidder, or other entity the withheld payments. If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to provide a complete report, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall do all of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project. All of the following shall apply to the withholding of payments under this paragraph:
(A)The public agency or awarding body shall withhold an amount equal to 150 percent of the value of the monthly billing for the entity that failed to comply with this chapter, or 150 percent of the value of the monthly billing for the subcontractor that failed to comply with this chapter. If a public agency or other awarding body withholds amounts pursuant to this paragraph, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor that did not demonstrate compliance with this chapter.
(B)If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to demonstrate compliance, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(C)If a contractor, bidder, or other entity submits to the public agency or awarding body a plan to achieve substantial compliance with this chapter, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments unless, within a reasonable time, the public agency or awarding body rejects the plan as insufficient and explains the reasons for the rejection.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(3)Forward to the Labor Commissioner a copy of the plan, if any, submitted by the contractor, bidder, or other entity to achieve substantial compliance with this chapter and the response to that plan, if any, by the public agency or awarding body.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 3.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(5)Whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this chapter.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)For contracts entered into on or after January 1, 2019, the contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall periodically monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
For purposes of this chapter:
(a)Apprenticeable occupation means an occupation for which the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations had approved an apprenticeship program pursuant to Section 3075 of the Labor Code before January 1, 2014.
(b)Chief means the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations.
(c)Graduate of an apprenticeship program means either of the following:
(1)An individual that has been issued a certificate of completion under the authority of the California Apprenticeship Council for completing an apprenticeship program approved by the chief pursuant to Section 3075 of the Labor Code.
(2)An individual that has completed an apprenticeship program located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(d)Skilled and trained workforce means a workforce that meets all of the following conditions:
(1)All the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief.
(2)(A)For work performed on or after January 1, 2017, at least 30 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in the occupation of teamster.
(B)For work performed on or after January 1, 2018, at least 40 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(C)For work performed on or after January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(D)For work performed on or after January 1, 2020, at least 60 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(3)For an apprenticeable occupation in which no apprenticeship program had been approved by the chief before January 1, 1995, up to one-half of the graduation percentage requirements of paragraph (2) may be satisfied by skilled journeypersons who commenced working in the apprenticeable occupation before the chiefs approval of an apprenticeship program for that occupation in the county in which the project is located.
(4)The apprenticeship graduation percentage requirements of paragraph (2) are satisfied if, in a particular calendar month, either of the following is true:
(A)At least the required percentage of the skilled journeypersons employed by the contractor or subcontractor to perform work on the contract or project meet the graduation percentage requirement.
(B)For the hours of work performed by skilled journeypersons employed by the contractor or subcontractor on the contract or project, the percentage of hours performed by skilled journeypersons who met the graduation requirement is at least equal to the required graduation percentage.
(5)The contractor or subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if, during the calendar month, the contractor or subcontractor employs skilled journeypersons to perform fewer than 10 hours of work on the contract or project.
(6)A subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if both of the following requirements are met:
(A)The subcontractor was not a listed subcontractor under Section 4104 or a substitute for a listed subcontractor.
(B)The subcontract does not exceed one-half of 1 percent of the price of the prime contract.
(e)Skilled journeyperson means a worker who either:
(1)Graduated from an apprenticeship program for the applicable occupation that was approved by the chief or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(2)Has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the chief.
SEC. 2.Section 2602 of the Public Contract Code is amended to read:2602.(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided. If a monthly report is incomplete due to the failure of a subcontractor to timely submit the required information to the contractor, bidder, or other entity, the public agency or awarding body shall only withhold an amount equal to 150 percent of the value of the monthly billing for the relevant subcontractor. If a public agency or other awarding body withholds amounts pursuant to this subdivision, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor until the subcontractor provides the contractor, bidder, or other entity a complete report, and the public agency or awarding body subsequently pays the contractor, bidder, or other entity the withheld payments. If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to provide a complete report, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall do all of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project. All of the following shall apply to the withholding of payments under this paragraph:
(A)The public agency or awarding body shall withhold an amount equal to 150 percent of the value of the monthly billing for the entity that failed to comply with this chapter, or 150 percent of the value of the monthly billing for the subcontractor that failed to comply with this chapter. If a public agency or other awarding body withholds amounts pursuant to this paragraph, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor that did not demonstrate compliance with this chapter.
(B)If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to demonstrate compliance, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(C)If a contractor, bidder, or other entity submits to the public agency or awarding body a plan to achieve substantial compliance with this chapter, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments unless, within a reasonable time, the public agency or awarding body rejects the plan as insufficient and explains the reasons for the rejection.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(3)Forward to the Labor Commissioner a copy of the plan, if any, submitted by the contractor, bidder, or other entity to achieve substantial compliance with this chapter and the response to that plan, if any, by the public agency or awarding body.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 3.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(5)Whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this chapter.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)For contracts entered into on or after January 1, 2019, the contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall periodically monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.
SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
For purposes of this chapter:
(a)Apprenticeable occupation means an occupation for which the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations had approved an apprenticeship program pursuant to Section 3075 of the Labor Code before January 1, 2014.
(b)Chief means the Chief of the Division of Apprenticeship Standards of the Department of Industrial Relations.
(c)Graduate of an apprenticeship program means either of the following:
(1)An individual that has been issued a certificate of completion under the authority of the California Apprenticeship Council for completing an apprenticeship program approved by the chief pursuant to Section 3075 of the Labor Code.
(2)An individual that has completed an apprenticeship program located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(d)Skilled and trained workforce means a workforce that meets all of the following conditions:
(1)All the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief.
(2)(A)For work performed on or after January 1, 2017, at least 30 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in the occupation of teamster.
(B)For work performed on or after January 1, 2018, at least 40 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(C)For work performed on or after January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(D)For work performed on or after January 1, 2020, at least 60 percent of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not occupation, except that the requirements of subparagraph (A) shall continue to apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
(3)For an apprenticeable occupation in which no apprenticeship program had been approved by the chief before January 1, 1995, up to one-half of the graduation percentage requirements of paragraph (2) may be satisfied by skilled journeypersons who commenced working in the apprenticeable occupation before the chiefs approval of an apprenticeship program for that occupation in the county in which the project is located.
(4)The apprenticeship graduation percentage requirements of paragraph (2) are satisfied if, in a particular calendar month, either of the following is true:
(A)At least the required percentage of the skilled journeypersons employed by the contractor or subcontractor to perform work on the contract or project meet the graduation percentage requirement.
(B)For the hours of work performed by skilled journeypersons employed by the contractor or subcontractor on the contract or project, the percentage of hours performed by skilled journeypersons who met the graduation requirement is at least equal to the required graduation percentage.
(5)The contractor or subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if, during the calendar month, the contractor or subcontractor employs skilled journeypersons to perform fewer than 10 hours of work on the contract or project.
(6)A subcontractor need not meet the apprenticeship graduation requirements of paragraph (2) if both of the following requirements are met:
(A)The subcontractor was not a listed subcontractor under Section 4104 or a substitute for a listed subcontractor.
(B)The subcontract does not exceed one-half of 1 percent of the price of the prime contract.
(e)Skilled journeyperson means a worker who either:
(1)Graduated from an apprenticeship program for the applicable occupation that was approved by the chief or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor.
(2)Has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by the chief.
SECTION 1.SEC. 2.Section 2602 of the Public Contract Code is amended to read:2602.(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided. If a monthly report is incomplete due to the failure of a subcontractor to timely submit the required information to the contractor, bidder, or other entity, the public agency or awarding body shall only withhold an amount equal to 150 percent of the value of the monthly billing for the relevant subcontractor. If a public agency or other awarding body withholds amounts pursuant to this subdivision, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor until the subcontractor provides the contractor, bidder, or other entity a complete report, and the public agency or awarding body subsequently pays the contractor, bidder, or other entity the withheld payments. If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to provide a complete report, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall do all of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project. All of the following shall apply to the withholding of payments under this paragraph:
(A)The public agency or awarding body shall withhold an amount equal to 150 percent of the value of the monthly billing for the entity that failed to comply with this chapter, or 150 percent of the value of the monthly billing for the subcontractor that failed to comply with this chapter. If a public agency or other awarding body withholds amounts pursuant to this paragraph, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor that did not demonstrate compliance with this chapter.
(B)If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to demonstrate compliance, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(C)If a contractor, bidder, or other entity submits to the public agency or awarding body a plan to achieve substantial compliance with this chapter, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments unless, within a reasonable time, the public agency or awarding body rejects the plan as insufficient and explains the reasons for the rejection.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(3)Forward to the Labor Commissioner a copy of the plan, if any, submitted by the contractor, bidder, or other entity to achieve substantial compliance with this chapter and the response to that plan, if any, by the public agency or awarding body.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 2.SEC. 3.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(5)Whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this chapter.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)The For contracts entered into on or after January 1, 2019, the contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall periodically monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.
SEC. 3.SEC. 4.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided. If a monthly report is incomplete due to the failure of a subcontractor to timely submit the required information to the contractor, bidder, or other entity, the public agency or awarding body shall only withhold an amount equal to 150 percent of the value of the monthly billing for the relevant subcontractor. If a public agency or other awarding body withholds amounts pursuant to this subdivision, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor until the subcontractor provides the contractor, bidder, or other entity a complete report, and the public agency or awarding body subsequently pays the contractor, bidder, or other entity the withheld payments. If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to provide a complete report, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall do all of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project. All of the following shall apply to the withholding of payments under this paragraph:
(A)The public agency or awarding body shall withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply with this chapter. chapter, or 150 percent of the value of the monthly billing for the subcontractor that failed to comply with this chapter. If a public agency or other awarding body withholds amounts pursuant to this paragraph, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor that did not demonstrate compliance with this chapter.
(B)If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to demonstrate compliance, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(C)If a contractor, bidder, or other entity submits to the public agency or awarding body a plan to achieve substantial compliance with this chapter, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments unless, within a reasonable time, the public agency or awarding body rejects the plan as insufficient and explains the reasons for the rejection.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(3)Forward to the Labor Commissioner a copy of the plan, if any, submitted by the contractor, bidder, or other entity to achieve substantial compliance with this chapter and the response to that plan, if any, by the public agency or awarding body.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 2.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(5)Whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this chapter.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall periodically monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided. If a monthly report is incomplete due to the failure of a subcontractor to timely submit the required information to the contractor, bidder, or other entity, the public agency or awarding body shall only withhold an amount equal to 150 percent of the value of the monthly billing for the relevant subcontractor. If a public agency or other awarding body withholds amounts pursuant to this subdivision, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor until the subcontractor provides the contractor, bidder, or other entity a complete report, and the public agency or awarding body subsequently pays the contractor, bidder, or other entity the withheld payments. If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to provide a complete report, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall do both all of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project. All of the following shall apply to the withholding of payments under this paragraph:
(A)The public agency or awarding body shall withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply with this chapter. If a public agency or other awarding body withholds amounts pursuant to this paragraph, the contractor, bidder, or other entity shall be entitled to withhold the same amount from the subcontractor that did not demonstrate compliance with this chapter.
(B)If the contractor, bidder, or other entity substitutes a subcontractor pursuant to Chapter 4 (commencing with Section 4100) for failure to demonstrate compliance, and the contractor, bidder, or other entity replaces the subcontractor with one that provides an enforceable commitment that a skilled and trained workforce will be used to complete the contract or project, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments.
(C)If a contractor, bidder, or other entity submits to the public agency or awarding body a plan to achieve substantial compliance with this chapter, the public agency or awarding body shall immediately resume making payments to the contractor, bidder, or other entity, including all previously withheld payments unless, within a reasonable time, the public agency or awarding body rejects the plan as insufficient and explains the reasons for the rejection.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(3)Forward to the Labor Commissioner a copy of the plan, if any, submitted by the contractor, bidder, or other entity to achieve substantial compliance with this chapter and the response to that plan, if any, by the public agency or awarding body.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 2.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced or waived by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(5)Whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this chapter.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall continually periodically monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining funds 150 percent of the amount due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate knowing willful violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of Section 66201 of the Government Code.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)When a contractor, bidder, or other entity is required to provide an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project, the commitment shall be made in an enforceable agreement with the public entity or other awarding body that provides both of the following:
(1)The contractor, bidder, or other entity, and its contractors and subcontractors at every tier, will comply with this chapter.
(2)The contractor, bidder, or other entity will provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with this chapter.
(b)If the contractor, bidder, or other entity fails to provide the monthly report required by this section, or provides a report that is incomplete, the public agency or other awarding body shall withhold further payments until a complete report is provided.
(c)If a monthly report does not demonstrate compliance with this chapter, the public agency or other awarding body shall withhold do both of the following:
(1)Withhold further payments until the contractor, bidder, or other entity provides a plan to achieve substantial compliance with this chapter, with respect to the relevant apprenticeable occupation, prior to completion of the contract or project.
(2)Forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with Section 2603.
(d)A monthly report provided to the public agency or other awarding body shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection.
SEC. 2.Section 2603 is added to the Public Contract Code, to read:2603.(a)If the Labor Commissioner or his or her designee determines after an investigation that a contractor or subcontractor failed to use a skilled and trained workforce in accordance with this chapter, the contractor or subcontractor responsible for the violation shall forfeit, as a civil penalty to the state, not more than five thousand dollars ($5,000) per month of work performed in violation of this chapter. A contractor or subcontractor that commits a second or subsequent violation within a three-year period shall forfeit as a civil penalty to the state the sum of not more than ten thousand dollars ($10,000) per month of work performed in violation of this chapter.
(b)For the purposes of this section:
(1)Any interest shall have the same meaning as in subdivision (h) of Section 1777.1 of the Labor Code.
(2)Contractor or subcontractor shall have the same meaning as in subdivision (g) of Section 1777.1 of the Labor Code.
(3)Entity shall have the same meaning as in subdivision (i) of Section 1777.1 of the Labor Code.
(c)The amount of any monetary penalty may be reduced by the Labor Commissioner if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider, in setting the amount of a monetary penalty, all of the following circumstances:
(1)Whether the violation was intentional.
(2)Whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code.
(3)Whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation.
(4)The extent or severity of the violation.
(d)The Labor Commissioner or his or her designee shall issue a civil wage and penalty assessment, in accordance with the provisions of Section 1741 of the Labor Code, upon determination of penalties assessed under subdivision (a). Review of a civil wage and penalty assessment issued under this subdivision may be requested in accordance with the provisions of Section 1742 of the Labor Code. The regulations of the Director of Industrial Relations, which govern proceedings for review of civil wage and penalty assessments and the withholding of contract payments under Article 1 (commencing with Section 1720) and Article 2 (commencing with Section 1770) of Chapter 1 of Part 7 of Division 2 of the Labor Code, shall apply.
(e)The determination of the Labor Commissioner as to the amount of the penalty imposed under subdivision (a) shall be reviewable by the Director of Industrial Relations only for an abuse of discretion.
(f)If a subcontractor is found to have violated this chapter, the prime contractor of the project is not liable for any penalties under subdivision (a) unless the prime contractor had knowledge of the subcontractors failure to comply with this chapter or unless the prime contractor fails to comply with any of the following requirements:
(1)The contract executed between the contractor and the subcontractor for the performance of work on the project shall include a copy of this chapter.
(2)The contractor shall continually monitor the subcontractors use of a skilled and trained workforce.
(3)Upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, the contractor shall take corrective action, including, but not limited to, retaining funds due to the subcontractor for work performed on the project until the failure is corrected.
(4)Prior to making the final payment to the subcontractor for work performed on the project, the contractor shall obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the requirements of this chapter.
(g)The Labor Commissioner shall notify the prime contractor within 15 days of the receipt by the Labor Commissioner of a complaint that a subcontractor violated this chapter.
(h)Whenever a contractor or subcontractor is found by the Labor Commissioner to be in violation of this chapter with intent to defraud, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of not less than one year or more than three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(i)Whenever a contractor or subcontractor is found by the Labor Commissioner to have committed two or more separate knowing violations of this chapter within a three-year period, the contractor or subcontractor or a firm, corporation, partnership, or association in which the contractor or subcontractor has any interest is ineligible for a period of up to three years to do either of the following:
(1)Bid on or be awarded a contract for a public works project.
(2)Perform work as a subcontractor on a public works project.
(j)The debarment procedures adopted by the Labor Commissioner pursuant to Section 1777.1 of the Labor Code shall apply to any finding made under subdivisions (h) or (i) of this section.
(k)The Labor Commissioner shall publish on the commissioners Internet Web site a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project pursuant to this section. The list shall contain the name of the contractor, the Contractors State License Board license number of the contractor, and the effective period of debarment of the contractor. Contractors shall be added to the list upon issuance of a debarment order and the commissioner shall also notify the Contractors State License Board when the list is updated. At least annually, the commissioner shall notify awarding bodies of the availability of the list of debarred contractors.
(l)(1)If a public entity or awarding body that is required to obtain an enforceable commitment that a skilled and trained workforce will be used to complete a contract or project receives a monthly report which does not demonstrate compliance with the skilled and trained workforce requirements of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of 66201 of the Government Code, the public entity or awarding body shall forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment in accordance with this section.
(2)The penalty and debarment procedures of this section shall apply to violations of subdivision (c) of Section 10506.6, Section 10506.8, Section 10506.9, or subdivision (c) of Section 20928.2 of this code, Article 9 (commencing with Section 388) of Chapter 2.3 of Part 1 of Division 1 of the Public Utilities Code, or subparagraph (B) of paragraph (8) of subdivision (a) of Section 65913.4 or subparagraph (B) of paragraph (4) of subdivision (f) of 66201 of the Government Code.
SEC. 3.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
SECTION 1.Section 10161 of the Public Contract Code is amended to read:10161.(a)The department may also require from prospective bidders the completion, under penalty of perjury, of a standard form of questionnaire concerning the past safety record of each prospective bidder, any officer of that bidder, and any managing employee of that bidder. The department may refuse to prequalify any prospective bidder who fails to submit a completed questionnaire when required or for the reason that the information contained in the submitted questionnaire or otherwise known to the department indicates a continuing unsatisfactory safety record.(b)The director of the department shall prescribe guidelines listing criteria to be utilized administratively in determining an unsatisfactory safety record. A refusal by the department to prequalify a prospective bidder shall be issued only after the department has granted such bidder a hearing.(c)This section shall in no way abridge or restrict the right of the department to later determine whether the low bidder on a particular project is the lowest responsible bidder for purposes of award of the contract, including the holding of hearings thereon.(d)The Director of Industrial Relations shall approve the standard form of questionnaire and the guidelines listing criteria to be utilized administratively by the department in determining an unsatisfactory safety record prior to their use by the department.(a)The department may also require from prospective bidders the completion, under penalty of perjury, of a standard form of questionnaire concerning the past safety record of each prospective bidder, any officer of such that bidder, and any managing employee of such that bidder. The department may refuse to prequalify any prospective bidder who fails to submit a completed questionnaire when required, required or for the reason that the information contained in the submitted questionnaire or otherwise known to the department indicates a continuing unsatisfactory safety record.
The(b)The director of the department shall prescribe guidelines listing criteria which will to be utilized administratively in determining an unsatisfactory safety record. A refusal by the department to prequalify a prospective bidder shall be issued only after the department has granted such bidder a hearing.
This(c)This section shall in no way abridge or restrict the right of the department to later determine whether the low bidder on a particular project is the lowest responsible bidder for purposes of award of the contract, including the holding of hearings thereon.
The(d)The Director of Industrial Relations shall approve the standard form of questionnaire and the guidelines listing criteria which will to be utilized administratively by the department in determining an unsatisfactory safety record prior to their use by the department.
|
Date
|
Status
|
|---|---|
| Sep 28, 2018 | Chaptered by Secretary of State - Chapter 882, Statutes of 2018. |
| Sep 28, 2018 | Approved by the Governor. |
| Sep 11, 2018 | Enrolled and presented to the Governor at 4:30 p.m. |
| Aug 30, 2018 | Senate amendments concurred in. To Engrossing and Enrolling. |
| Aug 29, 2018 | In Assembly. Concurrence in Senate amendments pending. |
| Aug 29, 2018 | Read third time. Passed. Ordered to the Assembly. |
| Aug 27, 2018 | Read second time. Ordered to third reading. |
| Aug 24, 2018 | Read third time and amended. Ordered to second reading. |
| Aug 20, 2018 | Read second time. Ordered to third reading. |
| Aug 17, 2018 | From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 16). |
| Aug 6, 2018 | In committee: Referred to APPR. suspense file. |
| Jun 20, 2018 | 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. |
| Jun 28, 2018 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 4. Noes 1.) (June 27). Re-referred to Com. on APPR. |
| Jun 20, 2018 | From committee: Do pass and re-refer to Com. on L. & I.R. (Ayes 5. Noes 2.) (June 19). Re-referred to Com. on L. & I.R. |
| Jun 13, 2018 | Referred to Coms. on JUD. and L. & I.R. |
| May 31, 2018 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 30, 2018 | Read third time. Passed. Ordered to the Senate. |
| May 25, 2018 | From committee: Do pass. (Ayes 12. Noes 4.) (May 25). |
| May 9, 2018 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 26, 2018 | From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 1.) (April 25). Re-referred to Com. on APPR. |
| Apr 11, 2018 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Apr 2, 2018 | Re-referred to Com. on L. & E. |
| Mar 22, 2018 | Referred to Com. on L. & E. |
| Feb 17, 2018 | From printer. May be heard in committee March 19. |
| Feb 16, 2018 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 30, 2018 | AB 3018 LOW Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 29, 2018 | Assembly 3rd Reading AB3018 Low By Lara | Senate Floor |
Passed |
|
| Aug 16, 2018 | Do pass as amended | Senate Standing Committee on Appropriations |
Passed |
|
| Aug 6, 2018 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jun 27, 2018 | Do pass, but first be re-referred to the Committee on [Appropriations] | Senate Standing Committee on Labor and Industrial Relations |
Passed |
|
| Jun 19, 2018 | Do pass, but first be re-referred to the Committee on [Labor and Industrial Relations] | Senate Standing Committee on Judiciary |
Passed |
|
| May 30, 2018 | AB 3018 LOW Assembly Third Reading | Assembly Floor |
Passed |
|
| May 25, 2018 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 25, 2018 | Do pass and be re-referred to the Committee on [Appropriations] | 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
|
|---|---|---|
| ABC Northern California Chapter | ** Against | Aug 27, 2018 |
| Air Conditioning Sheet Metal Association | ** Support | Aug 27, 2018 |
| Air-Conditioning & Refrigeration Contractors Association | ** Support | Aug 27, 2018 |
| California Labor Federation | * Support | Jun 27, 2018 |
| California Legislative Conference for Plumbing, Heating and Piping Industry | * Support | Jun 19, 2018 |
| California State Association Of Electrical Workers | ** Support | Aug 27, 2018 |
| California State Pipe Trades Council | ** Support | Aug 27, 2018 |
| Central California Chapter Of Associated Builders And Contractors | ** Against | Aug 27, 2018 |
| Construction Employers' Association | * For If Amend | Jun 19, 2018 |
| International Union Of Elevator Contractors | ** Support | Aug 27, 2018 |
| National Electrical Contractors Association | ** Support | Aug 27, 2018 |
| Northern California Allied Trades | ** Support | Aug 27, 2018 |
| Plumbing-Heating-Cooling Contractors Association | ** Against | Aug 27, 2018 |
| Plumbing-Heating-Cooling Contractors Association of California | ** Against | Apr 23, 2018 |
| San Diego Chapter Of Associated Builders And Contractors | ** Against | Aug 27, 2018 |
| Southern California Chapter Of Associated Builders And Contractors | ** Against | Aug 27, 2018 |
| Southern California Contractors Association | ** Against | Aug 27, 2018 |
| State Building and Construction Trades Council, AFL-CIO | ** Support | Aug 27, 2018 |
| Unless Amended | ** Against | Apr 23, 2018 |
| Wall and Ceiling Alliance | ** Support | Aug 27, 2018 |
| Western Electrical Contractors Association | ** Against | Aug 27, 2018 |
| Western States Council Of Sheet Metal Workers | ** Support | Aug 27, 2018 |
| Western Wall & Ceiling Contractors Association | ** Support | Aug 27, 2018 |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 3018
Author:(Low)
As Amended Ver:August 24, 2018
Majority vote
ASSEMBLY: | 54-22 | (May 30, 2018) | SENATE: | 26-12 | (August 29, 2018) |
Original Committee Reference: L. & E.
SUMMARY: Enhances compliance with skilled and trained workforce rules by strengthening public agency reporting requirements, creating penalties for noncompliance, and providing the Labor Commissioner (LC) with the authority to issue a civil wage and penalty assessment against a contractor or subcontractor found in violation of state law. Specifically, this bill:
- Clarifies, for work performed on or after January 1, 2018, that the same set of specified occupations continues to be subject to the current requirement that only 30% of skilled journeypersons employed to perform work on those contracts or projects be graduates of an apprenticeship program.
- Requires the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner (LC) for issuance of a civil wage and penalty assessment and a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements.
- Limits the public agency or awarding body to withholding 150% of the value of the monthly billing for a subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor.
- Requires a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the LC or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce.
- Requires a contractor or subcontractor that commits a second or subsequent violation within a 3-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements.
- Requires a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor.
- Makes a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified.
- Requires the LC to publish on the commissioner's Internet Web site a list of contractors who are ineligible under these provisions..
The Senate amendments:
- Require a public agency or other awarding body to include in the monthly report to the LC a copy of the plan, if any, to achieve substantial compliance with skilled and trained workforce requirements and the response to that plan, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements.
- Limit the public agency or awarding body to withholding 150% of the value of the monthly billing for subcontractor that failed to timely submit the required information or did not demonstrate compliance, and would allow the contractor, bidder, or other entity to withhold the same amount from the subcontractor
- Clarify, for work performed on or after January 1, 2018, that a set of occupations currently exempted from the percentage increase timeline must continue to meet the requirement that 30% of skilled journeypersons employed on those contracts be graduates of apprenticeship program;
- Specify that the requirement to provide a copy of specified information found in Public Contracts Code with a contract apply to contracts that are executed on or after January 1, 2019;
- Make technical, non-substantive changes to address necessary wording, title and punctuation changes.
FISCAL EFFECT: According to the Senate Appropriations Committee, "The Department of Industrial Relations (DIR) indicates that it would incur a first-year cost of $821,000, and $775,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). The amount of penalty revenue resulting from the bill is unknown, and would depend on the number of violations."
COMMENTS: The author argues, "Existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill seeks to provide a procedure to determine how much money should be withheld and what to do with the amount that is withheld. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation."
Arguments in Support
The sponsor, The State Building and Construction Trades Council of California, writes in support, "Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs and California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes." The sponsor continues, "With a better compliance process, contractors who choose not to play by the rules at the expense of taxpayers and construction workers will be deterred from public works."
Arguments in Opposition
The Associated Building Contractors write in opposition, "All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into Project Labor Agreements without an enforceable commitment that a skilled and trained workforce is being used. No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California."
Analysis Prepared by: Jennifer Richard / L. & E. / (916) 319-2091 FN: 0005014
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB |
THIRD READING
Bill No: AB 3018
Amended: 8/24/18 in Senate
SENATE JUDICIARY COMMITTEE: 5-2, 6/19/18
AYES: Jackson, Hertzberg, Monning, Stern, Wieckowski
NOES: Moorlach, Anderson
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/27/18
AYES: Lara, Jackson, Mitchell, Wieckowski
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/16/18
AYES: Portantino, Beall, Bradford, Hill, Wiener
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 54-22, 5/30/18 - See last page for vote
SOURCE: State Building and Construction Trades Council, AFL-CIO
DIGEST:
This bill imposes a fine on a contractor or subcontractor that fails to use a skilled and trained workforce, as defined, for a contract that is required to utilize a skilled and trained workforce and prevents an entity that is found to be non-compliant with skilled and trained workforce requirements from bidding or participating on public works projects for 1 to 3 years.
Senate Floor Amendments of 8/24/18 (1) make changes to a code section not currently in the bill which would, for work performed on or after January 1, 2018, clarify that a set of occupations currently exempted from the percentage increase timeline (described below) must continue to meet the requirement that 30% of skilled journeypersons employed on those contracts be graduates of apprenticeship program; (2) specify that the requirement to provide a copy of specified information found in Public Contracts Code with a contract would apply to contracts that are executed on or after January 1, 2019; and (3) make technical, non-substantive changes to address necessary wording, title and punctuation changes.
Existing law:
- Authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. (Public Contract Code §2600, 2602)
- Defines “Skilled and trained workforce” to mean a workforce where all the workers performing work in an apprenticeable occupation, as defined, in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief of the Division of Apprenticeship Standards. (Public Contract Code §2601)
- Requires that at least 30% of the skilled journeypersons employed to perform work on these contracts or projects, on or after January 1, 2017, to be graduates of an apprenticeship program. (Public Contract Code §2601)
- Increases that percentage to 40 % for work performed on or after January 1, 2018, increases that percentage again to 50% for work performed on or after January 1, 2019, and again to 60% for work performed on or after January 1, 2020 but excludes the same set of specified occupations from both of these increased percentage requirements. (Public Contract Code §2601)
- Requires a public entity to withhold further payments from a contractor who fails to submit complete monthly reports regarding compliance with an agreement to use a skilled and trained workforce on the project, until complete reports are provided. (Public Contract Code §2602)
- Specifies that when a contractor’s complete monthly report does not demonstrate compliance with the agreement to use a skilled and trained workforce, then the public entity must withhold further payment on the project until the contractor submits a plan to achieve substantial compliance with the agreement prior to the completion of the project. (Public Contract Code §2602)
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more of the above provisions from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years. (Labor Code §1777.1)
- Stipulates that a contractor or subcontractor performing a public works project that fails to provide a timely response to a request to provide certified payroll records by the Division of Labor Standards Enforcement, the Division of Apprenticeship Standards, or another awarding body, be subject to debarment in addition to any other penalties provided by law if the records are not produced within 30 days after receipt of written notice. (Labor Code §1777.1)
This bill:
- Imposes a $5000 civil penalty per month of work performed in violation on a contractor or subcontractor if the Labor Commissioner or their designee determines after an investigation that that entity failed to use a skilled and trained workforce in accordance with this bill. A contractor or subcontractor that commits a second or subsequent violation within a three-year period is subject to a $10,000 fine per month of work performed in violation of this chapter.
- Adds changes to a code section which, for work performed on or after January 1, 2018, clarify that the set of specified occupations continues to be subject to the current requirement that only 30% of skilled journeypersons employed to perform work on those contracts or projects be graduates of an apprenticeship program.
- States that if a subcontractor is found to have violated this bill, the prime contractor of the project is not liable for any penalties under the provisions of this bill unless the prime contractor had knowledge of the subcontractor’s failure to comply, failed to include a copy of the provisions of this bill in the contract executed between the contractor and the subcontractor, failed to periodically monitor the subcontractor’s use of a skilled and trained workforce, failed to take corrective action upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, or failed to obtain a declaration from the subcontractor that the subcontractor has met the requirements of this chapter prior to making the final payment to the subcontractor.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more provisions of this bill with the intent to defraud from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have committed two or more separate willful violations of this bill within a three-year period from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for a period of up to three years.
- Requires the Labor Commissioner publish a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project on the commissioner’s Internet Web site pursuant to this section. The list shall contain the name of the contractor, the Contractors’ State License Board license number of the contractor, and the effective period of debarment of the contractor.
- Requires that a public agency or awarding body that receives a required monthly report from a contractor or subcontractor that does not comply with reporting regulations withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply. The primary contractor is entitled to withhold this same amount from a subcontractor that did not demonstrate compliance. This withholding continues until the entity submits to the public agency or awarding body a plan to achieve substantial compliance and forwards that plan and the corresponding noncompliant monthly report to the Labor Commissioner, at which point payments must resume immediately.
- Specifies that the requirement to provide a copy of this chapter of Public Contracts Code with a contract would apply to contracts that are executed on or after January 1, 2019.
Comments
Need for this bill? According to the author:
“Existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill seeks to provide a procedure to determine how much money should be withheld and what to do with the amount that is withheld. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation.”
Related/Prior Legislation
SB 418 (Hernandez, Chapter 393, Statutes of 2017) revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
SB 693 (Hueso, Chapter 774, Statutes of 2016) among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
AB 1358 (Dababneh, Chapter 752, Statutes of 2015) aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
AB 566 (O’Donnell, Chapter 214, Statutes of 2015) required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
According to the Senate Appropriations Committee:
“The Department of Industrial Relations (DIR) indicates that it would incur a first-year cost of $821,000, and $775,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). The amount of penalty revenue resulting from the bill is unknown, and would depend on the number of violations.”
State Building and Construction Trades Council, AFL-CIO (source)
Air Conditioning Sheet metal Association
Air-conditioning & Refrigeration Contractors Association
California Legislative Conference of the Plumbing, Heating and Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Contractors
National Electrical Contractors Association
Northern California Allied Trades
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
Western Wall & Ceiling Contractors Association
OPPOSITION: (Verified 8/16/18)
ABC Northern California Chapter
Central California Chapter of Associated Builders and Contractors
Plumbing-Heating-Cooling Contractors Association
San Diego Chapter of Associated Builders and Contractors
Southern California Chapter of Associated Builders and Contractors
Southern California Contractors Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT: The sponsor, The State Building and Construction Trades Council of California, writes in support:
“Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs and California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes. […] With a better compliance process, contractors who choose not to play by the rules at the expense of taxpayers and construction workers will be deterred from public works.”
ARGUMENTS IN OPPOSITION: The Associated Building Contractors write in opposition:
“All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into Project Labor Agreements without an enforceable commitment that a skilled and trained workforce is being used. No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California.”
The Southern California Contractors Association writes in opposition:
“The relationship between general contractors and subcontractors is, at times, tenuous at best. SCCA fears that provisions of this bill will have yet another chilling effect on the general contractor and subcontractor relationship. […] There are a variety of challenges that subcontractors face in order for them to be paid in a timely fashion, especially on public works projects. Paragraph (f) in Section 2 creates another strain on that relationship that may give cause for general contractors to withhold payments for suspect cause. SCCA prefers that the state treat the contractor and the subcontractor equally, as employers, as it seeks to enforce the ‘skilled and trained’ workforce requirements.”
ASSEMBLY FLOOR: 54-22, 5/30/18
AYES: Arambula, Berman, Bloom, Bonta, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Eggman, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon
NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chávez, Chen, Choi, Dahle, Fong, Gallagher, Harper, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Voepel, Waldron
NO VOTE RECORDED: Aguiar-Curry, Flora
8/27/18 18:39:44
**** END ****
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 3018 |
THIRD READING
Bill No: AB 3018
Amended: 8/17/18 in Senate
SENATE JUDICIARY COMMITTEE: 5-2, 6/19/18
AYES: Jackson, Hertzberg, Monning, Stern, Wieckowski
NOES: Moorlach, Anderson
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/27/18
AYES: Lara, Jackson, Mitchell, Wieckowski
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/16/18
AYES: Portantino, Beall, Bradford, Hill, Wiener
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 54-22, 5/30/18 - See last page for vote
SUBJECT: State contracts: skilled and trained workforce
SOURCE: State Building and Construction Trades Council, AFL-CIO
DIGEST:
This bill imposes a fine on a contractor or subcontractor that fails to use a skilled and trained workforce, as defined, for a contract that is required to utilize a skilled and trained workforce and prevents an entity that is found to be non-compliant with skilled and trained workforce requirements from bidding or participating on public works projects for 1 to 3 years.
Existing law:
- Defines “Skilled and trained workforce” to mean a workforce where all the workers performing work in an apprenticeable occupation, as defined, in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief of the Division of Apprenticeship Standards. (Public Contract Code §2601)
- Requires that by January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on a contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in specified exempted positions. Further requires that by January 1, 2020 the threshold for compliance increases to 60 percent.
(Public Contract Code §2601)
- Requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements. (Public Contract Code §2602)
- Requires a public entity to withhold further payments from a contractor who fails to submit complete monthly reports regarding compliance with an agreement to use a skilled and trained workforce on the project, until complete reports are provided. (Public Contract Code §2602)
- Specifies that when a contractor’s complete monthly report does not demonstrate compliance with the agreement to use a skilled and trained workforce, then the public entity must withhold further payment on the project until the contractor submits a plan to achieve substantial compliance with the agreement prior to the completion of the project. (Public Contract Code §2602)
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more of the above provisions from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years. (Labor Code §1777.1)
- Stipulates that a contractor or subcontractor performing a public works project that fails to provide a timely response to a request to provide certified payroll records by the Division of Labor Standards Enforcement, the Division of Apprenticeship Standards, or another awarding body, be subject to debarment in addition to any other penalties provided by law if the records are not produced within 30 days after receipt of written notice. (Labor Code §1777.1)
This bill:
- Imposes a $5000 civil penalty per month of work performed in violation on a contractor or subcontractor if the Labor Commissioner or their designee determines after an investigation that that entity failed to use a skilled and trained workforce in accordance with this bill. A contractor or subcontractor that commits a second or subsequent violation within a three-year period is subject to a $10,000 fine per month of work performed in violation of this chapter.
- Allows the Labor Commissioner to reduce or waive the penalty if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider whether the violation was intentional, whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code, whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation, the extent or severity of the violation and whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this bill.
- States that if a subcontractor is found to have violated this bill, the prime contractor of the project is not liable for any penalties under the provisions of this bill unless the prime contractor had knowledge of the subcontractor’s failure to comply, failed to include a copy of the provisions of this bill in the contract executed between the contractor and the subcontractor, failed to periodically monitor the subcontractor’s use of a skilled and trained workforce, failed to take corrective action upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, or failed to obtain a declaration from the subcontractor that the subcontractor has met the requirements of this chapter prior to making the final payment to the subcontractor.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more provisions of this bill with the intent to defraud from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have committed two or more separate willful violations of this bill within a three-year period from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for a period of up to three years.
- Requires the Labor Commissioner publish a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project on the commissioner’s Internet Web site pursuant to this section. The list shall contain the name of the contractor, the Contractors’ State License Board license number of the contractor, and the effective period of debarment of the contractor.
- Requires that a public agency or awarding body that receives a required monthly report from a contractor or subcontractor that does not comply with reporting regulations withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply. The primary contractor is entitled to withhold this same amount from a subcontractor that did not demonstrate compliance. This withholding continues until the entity submits to the public agency or awarding body a plan to achieve substantial compliance and forwards that plan and the corresponding noncompliant monthly report to the Labor Commissioner, at which point payments must resume immediately.
Comments
- Need for this bill? According to the author:
“Existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill seeks to provide a procedure to determine how much money should be withheld and what to do with the amount that is withheld. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation.”
Related/Prior Legislation
SB 418 (Hernandez, Chapter 393, Statutes of 2017) revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
SB 693 (Hueso, Chapter 774, Statutes of 2016) among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
AB 1358 (Dababneh, Chapter 752, Statutes of 2015) aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
AB 566 (O’Donnell, Chapter 214, Statutes of 2015) required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Appropriations Committee:
“The Department of Industrial Relations (DIR) indicates that it would incur a first-year cost of $821,000, and $775,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). The amount of penalty revenue resulting from the bill is unknown, and would depend on the number of violations.”
State Building and Construction Trades Council, AFL-CIO (source)
Air Conditioning Sheet metal Association
Air-conditioning & Refrigeration Contractors Association
California Legislative Conference of the Plumbing, Heating and Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Contractors
National Electrical Contractors Association
Northern California Allied Trades
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
Western Wall & Ceiling Contractors Association
OPPOSITION: (Verified 8/16/18)
ABC Northern California Chapter
Central California Chapter of Associated Builders and Contractors
Plumbing-Heating-Cooling Contractors Association
San Diego Chapter of Associated Builders and Contractors
Southern California Chapter of Associated Builders and Contractors
Southern California Contractors Association
Western Electrical Contractors Association
ARGUMENTS IN SUPPORT: The sponsor, The State Building and Construction Trades Council of California, writes in support:
“Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs and California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes. […] With a better compliance process, contractors who choose not to play by the rules at the expense of taxpayers and construction workers will be deterred from public works.”
ARGUMENTS IN OPPOSITION: The Associated Building Contractors write in opposition:
“All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into Project Labor Agreements without an enforceable commitment that a skilled and trained workforce is being used. No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California.”
The Southern California Contractors Association writes in opposition:
“The relationship between general contractors and subcontractors is, at times, tenuous at best. SCCA fears that provisions of this bill will have yet another chilling effect on the general contractor and subcontractor relationship. […] There are a variety of challenges that subcontractors face in order for them to be paid in a timely fashion, especially on public works projects. Paragraph (f) in Section 2 creates another strain on that relationship that may give cause for general contractors to withhold payments for suspect cause. SCCA prefers that the state treat the contractor and the subcontractor equally, as employers, as it seeks to enforce the ‘skilled and trained’ workforce requirements.”
ASSEMBLY FLOOR: 54-22, 5/30/18
AYES: Arambula, Berman, Bloom, Bonta, Burke, Caballero, Calderon, Carrillo, Cervantes, Chau, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Eggman, Frazier, Friedman, Cristina Garcia, Eduardo Garcia, Gipson, Gloria, Gonzalez Fletcher, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Quirk, Quirk-Silva, Reyes, Rodriguez, Rubio, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Wood, Rendon
NOES: Acosta, Travis Allen, Baker, Bigelow, Brough, Chávez, Chen, Choi, Dahle, Fong, Gallagher, Harper, Kiley, Lackey, Mathis, Mayes, Melendez, Obernolte, Patterson, Steinorth, Voepel, Waldron
NO VOTE RECORDED: Aguiar-Curry, Flora
Prepared by: Jake Ferrera / L. & I.R. / (916) 651-1556
8/19/18 13:40:20
**** END ****
SENATE COMMITTEE ON
Senator Anthony Portantino, Chair
2017 - 2018 Regular Session
AB 3018 (Low) - State contracts: skilled and trained workforce
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
AB 3018 would (1) impose a fine on a contractor or subcontractor that fails to use a skilled and trained workforce, as defined, for a contract that is required to utilize such labor, and (2) prevent an entity that is found to be non-compliant with skilled and trained workforce requirements from bidding or participating on public works projects for one to three years.
*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********
The following information is revised to reflect amendments
adopted by the committee on August 16, 2018
Fiscal Impact:
The Department of Industrial Relations (DIR) indicates that it would incur a first-year cost of $821,000, and $775,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). The amount of penalty revenue resulting from the bill is unknown, and would depend on the number of violations.
Author Amendments:
Limit the public agency or awarding body to withholding 150 percent of the value of the monthly billing for a subcontractor that failed to timely submit the required information. .
-- END --
SENATE COMMITTEE ON APPROPRIATIONS
Senator Anthony Portantino, Chair
2017 - 2018 Regular Session
AB 3018 (Low) - State contracts: skilled and trained workforce
Version: June 20, 2018 | Policy Vote: JUD. 5 - 2, L. & I.R. 4 - 1 |
Urgency: No | Mandate: Yes |
Hearing Date: August 6, 2018 | Consultant: Robert Ingenito |
This bill meets the criteria for referral to the Suspense File.
Bill Summary:
AB 3018 would (1) impose a fine on a contractor or subcontractor that fails to use a skilled and trained workforce, as defined, for a contract that is required to utilize such labor, and (2) prevent an entity that is found to be non-compliant with skilled and trained workforce requirements from bidding or participating on public works projects for one to three years.
Fiscal Impact:
The Department of Industrial Relations (DIR) indicates that it would incur a first-year cost of $821,000, and $775,000 annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund). The amount of penalty revenue resulting from the bill is unknown, and would depend on the number of violations.
Background:
Under current law, public entities can require contractors on their public works projects to commit to using a skilled and trained workforce to complete the project. The phrase “skilled and trained workforce” is defined to mean a workforce where all the workers performing work in an apprenticeable occupation, as defined, in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief of the Division of Apprenticeship Standards. When a contractor has agreed to use a skilled and trained workforce for a public works project, the contractor must submit publicly available monthly reports to the public entity demonstrating compliance. If the contractor fails to do so, or the report is incomplete, the public agency is supposed to withhold further payments pending submission of a completed report. If the contractor submits the report but the report does not show compliance with the skilled and trained workforce commitment, then the public entity is supposed to withhold further payments until the contractor provides a plan for coming into compliance prior to the completion of the project.
Proposed Law:
This bill would, among other things, do the following:
- Impose a $5,000 civil penalty per month of work performed in violation on a contractor or subcontractor if the Labor Commissioner or their designee determines after an investigation that that entity failed to use a skilled and trained workforce in accordance with this bill. A contractor or subcontractor that commits a second or subsequent violation within a three-year period would be subject to a $10,000 fine per month.
- Allow the Labor Commissioner to reduce or waive the penalty if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider whether the violation was intentional, whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code, whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation, the extent or severity of the violation and whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this bill.
- State that if a subcontractor is found to have violated this bill, the prime contractor of the project is not liable for any penalties under the provisions of this bill unless the prime contractor had knowledge of the subcontractor’s failure to comply, failed to include a copy of the provisions of this bill in the contract executed between the contractor and the subcontractor, failed to periodically monitor the subcontractor’s use of a skilled and trained workforce, failed to take corrective action upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, or failed to obtain a declaration from the subcontractor that the subcontractor has met the requirements of this chapter prior to making the final payment to the subcontractor.
- Prohibit a contractor or subcontractor found by the Labor Commissioner to have violated one or more provisions of this bill with the intent to defraud from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years.
- Prohibit a contractor or subcontractor found by the Labor Commissioner to have committed two or more separate willful violations of this bill within a three-year period from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for a period of up to three years.
- Require the Labor Commissioner publish a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project on the commissioner’s Internet Web site pursuant to this section. The list shall contain the name of the contractor, the Contractors’ State License Board license number of the contractor, and the effective period of debarment of the contractor.
- Require that a public agency or awarding body that receives a required monthly report from a contractor or subcontractor that does not comply with reporting regulations withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply. The primary contractor is entitled to withhold this same amount from a subcontractor that did not demonstrate compliance. This withholding continues until the entity submits to the public agency or awarding body a plan to achieve substantial compliance and forwards that plan and the corresponding noncompliant monthly report to the Labor Commissioner, at which point payments must resume immediately.
Related Legislation:
- SB 418 (Hernandez, Ch. 393, Stats. 2017) revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
- SB 693 (Hueso, Ch. 774, Stats. 2016) among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
- AB 1358 (Dababneh, Ch. 752, Stats. 2015) aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
- AB 566 (O’Donnell, Ch. 214, Stats. 2015) required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
Staff Comments:
This bill would greatly expand the consequences for a contractor who commits to using a “skilled or trained” workforce but then fails to deliver on that commitment. As noted above, this bill would provide that, if a contractor’s monthly report shows that the contractor is not using a “skilled or trained” workforce as promised, then in addition to the existing withholding of further payments pending submission of a plan to correct the situation, the following consequences will also ensue. First, the public entity would forward a copy of the monthly report to the California Labor Commissioner for the assessment of civil penalties. Those penalties shall be at most $5,000 for a first violation, and $10,000 for subsequent violations within the same three year period, though the Labor Commissioner would have discretion to reduce those penalties for more minor violations. Second, if the Labor Commissioner finds that a contractor violated the commitment to use a “skilled and trained” workforce with intent to defraud, or that repeated violations have happened, then the contractor’s name and license number would be placed on a publicly available list and the contractor would be ineligible to obtain or perform work on a public works project for up to three years.
DIR notes that it is difficult to quantify (1) the number of public works projects that are also subject to skilled and trained workforce requirements, and (2) the portion of those projects that are noncompliant. DIR performs roughly 2,000 public works inspections annually, and anticipates that the bill would likely generate additional enforcement workload. Specifically, DIR estimates needing resources in the amount of $821,000 for the first year, and $775,000 annually thereafter, to implement and enforce the provisions of the bill.
-- END --
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Ricardo Lara, Chair
2017 - 2018 Regular
Bill No: AB 3018 Hearing Date: June 27, 2018
Author: | Low | ||
Version: | June 20, 2018 | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Jake Ferrera | ||
Subject: State contracts: skilled and trained workforce.
KEY ISSUE
Should the Legislature impose a fine on a contractor or subcontractor that fails to use a skilled and trained workforce, as defined, for a contract that is required to utilize a skilled and trained workforce?
Should the Legislature prevent an entity that is found to be non-compliant with skilled and trained workforce requirements from bidding or participating on public works projects for 1 to 3 years?
ANALYSIS
Existing law:
- Defines “Skilled and trained workforce” to mean a workforce where all the workers performing work in an apprenticeable occupation, as defined, in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief of the Division of Apprenticeship Standards.
(Public Contract Code §2601)
- Requires that by January 1, 2019, at least 50 percent of the skilled journeypersons employed to perform work on a contract or project by every contractor and each of its subcontractors at every tier are graduates of an apprenticeship program for the applicable occupation. This requirement shall not apply to work performed in specified exempted positions. Further requires that by January 1, 2020 the threshold for compliance increases to 60 percent.
(Public Contract Code §2601)
- Requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
(Public Contract Code §2602)
- Requires a public entity to withhold further payments from a contractor who fails to submit complete monthly reports regarding compliance with an agreement to use a skilled and trained workforce on the project, until complete reports are provided.
(Public Contract Code §2602)
- Specifies that when a contractor’s complete monthly report does not demonstrate compliance with the agreement to use a skilled and trained workforce, then the public entity must withhold further payment on the project until the contractor submits a plan to achieve substantial compliance with the agreement prior to the completion of the project.
(Public Contract Code §2602)
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more of the above provisions from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years. (Labor Code §1777.1)
- Stipulates that a contractor or subcontractor performing a public works project that fails to provide a timely response to a request to provide certified payroll records by the Division of Labor Standards Enforcement, the Division of Apprenticeship Standards, or another awarding body, be subject to debarment in addition to any other penalties provided by law if the records are not produced within 30 days after receipt of written notice.
(Labor Code §1777.1)
This bill:
- Imposes a $5000 civil penalty per month of work performed in violation on a contractor or subcontractor if the Labor Commissioner or their designee determines after an investigation that that entity failed to use a skilled and trained workforce in accordance with this bill. A contractor or subcontractor that commits a second or subsequent violation within a three-year period is subject to a $10,000 fine per month of work performed in violation of this chapter.
- Allows the Labor Commissioner to reduce or waive the penalty if the amount of the penalty would be disproportionate to the severity of the violation. The Labor Commissioner shall consider whether the violation was intentional, whether the contractor or subcontractor has committed other violations of this chapter or of the Labor Code, whether, upon notice of the violation, the contractor or subcontractor took steps to voluntarily remedy the violation, the extent or severity of the violation and whether a contractor or subcontractor submitted and followed a plan to achieve substantial compliance with this bill.
- States that if a subcontractor is found to have violated this bill, the prime contractor of the project is not liable for any penalties under the provisions of this bill unless the prime contractor had knowledge of the subcontractor’s failure to comply, failed to include a copy of the provisions of this bill in the contract executed between the contractor and the subcontractor, failed to periodically monitor the subcontractor’s use of a skilled and trained workforce, failed to take corrective action upon becoming aware of a failure of the subcontractor to use a skilled and trained workforce, or failed to obtain a declaration from the subcontractor that the subcontractor has met the requirements of this chapter prior to making the final payment to the subcontractor.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have violated one or more provisions of this bill with the intent to defraud from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for at least 1 year, but not longer than 3 years. If the contractor or subcontractor commits a second willful violation of the provisions of this bill within a 3 year period, that entity will be prohibited from doing any of the actions listed above for a period of up to 3 years.
- Prohibits a contractor or subcontractor found by the Labor Commissioner to have committed two or more separate willful violations of this bill within a three-year period from bidding on or being awarded a contract for a public works project or performing work as a subcontractor on a public works project for a period of up to three years.
- Requires the Labor Commissioner publish a list of contractors who are ineligible to bid on or be awarded a public works contract, or to perform work as a subcontractor on a public works project on the commissioner’s Internet Web site pursuant to this section. The list shall contain the name of the contractor, the Contractors’ State License Board license number of the contractor, and the effective period of debarment of the contractor.
- Requires that a public agency or awarding body that receives a required monthly report from a contractor or subcontractor that does not comply with reporting regulations withhold an amount equal to 150 percent of the value of the monthly billing for the entity or subcontractor that failed to comply. The primary contractor is entitled to withhold this same amount from a subcontractor that did not demonstrate compliance. This withholding continues until the entity submits to the public agency or awarding body a plan to achieve substantial compliance and forwards that plan and the corresponding noncompliant monthly report to the Labor Commissioner, at which point payments must resume immediately.
COMMENTS
1. Need for this bill?
According to the Author:
“Existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill seeks to provide a procedure to determine how much money should be withheld and what to do with the amount that is withheld. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation.”
2. Proponent Arguments:
The sponsor, The State Building and Construction Trades Council of California, writes in support:
“Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs and California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes. […] With a better compliance process, contractors who choose not to play by the rules at the expense of taxpayers and construction workers will be deterred from public works.”
3. Opponent Arguments:
The Associated Building Contractors write in opposition:
“All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into Project Labor Agreements without an enforceable commitment that a skilled and trained workforce is being used. No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California.”
The Southern California Contractors Association writes in opposition:
“The relationship between general contractors and subcontractors is, at times, tenuous at best. SCCA fears that provisions of this bill will have yet another chilling effect on the general contractor and subcontractor relationship. […] There are a variety of challenges that subcontractors face in order for them to be paid in a timely fashion, especially on public works projects. Paragraph (f) in Section 2 creates another strain on that relationship that may give cause for general contractors to withhold payments for suspect cause. SCCA prefers that the state treat the contractor and the subcontractor equally, as employers, as it seeks to enforce the “skilled and trained” workforce requirements.”
4. Double Referral
This bill has been double referred and was previously heard and passed by the Senate Judiciary Committee.
4. Prior Legislation:
SB 418 (Hernandez, Ch. 393, Stats. 2017) revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
SB 693 (Hueso, Ch. 774, Stats. 2016) among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
AB 1358 (Dababneh, Ch. 752, Stats. 2015) aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
AB 566 (O’Donnell, Ch. 214, Stats. 2015) required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
SUPPORT
State Building and Construction Trades Council, AFL-CIO (Sponsor)
Air Conditioning Sheet metal Association
Air-conditioning & Refrigeration Contractors Association
California Legislative Conference of the Plumbing, Heating and Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
International Union of Elevator Contractors
National Electrical Contractors Association
Northern California Allied Trades
Wall and Ceiling Alliance
Western States Council of Sheet Metal Workers
Western Wall & Ceiling Contractors Association
OPPOSITION
ABC Northern California Chapter
Central California Chapter of Associated Builders and Contractors
Plumbing-Heating-Cooling Contractors Association
San Diego Chapter of Associated Builders and Contractors
Southern California Chapter of Associated Builders and Contractors
Southern California Contractors Association
Western Electrical Contractors Association
-- END --
Senator Hannah-Beth Jackson, Chair
2017-2018 Regular Session
Bill No: AB 3018 (Author:Low)
Version: March 22, 2018
Hearing Date: June 19, 2018
Fiscal: Yes
Urgency: No
Consultant: TSG
SUBJECT
State contracts: skilled and trained workforce
DESCRIPTION
This bill would promote greater compliance with agreements to use skilled and trained labor on public works projects. When such an agreement exists, existing law requires the contractor on the project to submit monthly reports demonstrating compliance. This bill would set forth a series of consequences that would ensue if the contractor’s report does not show that the contractor complied with the agreement to use skilled and trained labor.
BACKGROUND
To help ensure quality construction and to help graduates of California apprenticeship programs obtain jobs, public entities can and sometimes must require contractors on their public works projects to commit to using a “skilled and trained” workforce to complete the project. (Pub. Contract Code Sec. 2600.) By law, such a workforce consists entirely of workers who are skilled journeypersons or apprentices, among whom a certain percentage are graduates of an apprenticeship program for the applicable occupation. (Pub. Contract Code 2601(d); see Comment 4, below, for specifics about what constitutes a “skilled and trained workforce.”).
Under existing law, when a contractor has agreed to use a “skilled and trained” workforce for a public works project, the contractor must submit publicly available monthly reports to the public entity demonstrating compliance. (Pub. Contract Code Sec. 2602(a)(2).) If the contractor fails to provide this monthly report, or the report is incomplete, then the public agency is supposed to withhold further payments pending submission of a completed report. If the contractor submits the report but the report does not show compliance with the “skilled and trained” workforce commitment, then the public entity is supposed to withhold further payments until the contractor provides a plan for coming into compliance prior to the completion of the project.
According to the author and sponsor of the bill, the existing mechanisms for holding a contractor accountable for using a “skilled and trained” workforce have proven too weak. This bill would greatly expand the consequences for a contractor who promises to use a “skilled or trained” workforce but then fails to deliver on that commitment.
Specifically, this bill would provide that, if a contractor’s monthly report shows that the contractor is not using a “skilled or trained” workforce as promised, then in addition to the existing withholding of further payments pending submission of a plan to correct the situation, the following consequences will also ensue. First, the public entity would forward a copy of the monthly report to the California Labor Commissioner for the assessment of civil penalties. Those penalties shall be at most $5,000 for a first violation, and $10,000 for subsequent violations within the same three year period, though the Labor Commissioner would have discretion to reduce those penalties for more minor violations. Second, if the Labor Commissioner finds that a contractor violated the commitment to use a “skilled and trained” workforce with intent to defraud, or that repeated violations have happened, then the contractor’s name and license number would be placed on a publicly available list and the contractor would be ineligible to obtain or perform work on a public works project for up to three years.
This bill is double-referred. If approved by this Committee, it will proceed to the Senate Committee on Labor and Industrial Relations for review and consideration there.
CHANGES TO EXISTING LAW
Existing law authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project. (Pub. Contract Code Sec. 2600.)
Existing law requires that a commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements. (Pub. Contract Code Sec. 2602(a).)
Existing law defines a “skilled and trained workforce” to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements. (Pub. Contract Code Sec. 2601(d).)
Existing law requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements. (Pub. Contract Code Sec. 2602(a)(2).)
Existing law requires a public entity to withhold further payments from a contractor who fails to submit complete monthly reports regarding compliance with an agreement to use a skilled and trained workforce on the project, until complete reports are provided. (Pub. Contract Code Sec. 2602(b).)
Existing law specifies that when a contractor’s complete monthly report does not demonstrate compliance with the agreement to use a skilled and trained workforce, then the public entity must withhold further payment on the project until the contractor submits a plan to achieve substantial compliance with the agreement prior to the completion of the project. (Pub. Contract Code Sec. 2602(c).)
Existing law provides that all of the contractor’s monthly reports relating to compliance with the agreement to use a skilled and trained workforce are public records and open to public inspection. (Pub. Contract Code Sec. 2602(d).)
This bill would require the public agency or other awarding body to forward a copy of the monthly report to the Labor Commissioner for issuance of a civil wage and penalty assessment, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements.
This bill would require a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the Labor Commissioner determines that the contractor or subcontractor failed to use a skilled and trained workforce.
This bill would require a contractor or subcontractor that commits a second or subsequent violation within a three-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements.
This bill would require a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that the subcontractor has met the skilled and trained workforce requirements before making the final payment to the subcontractor.
This bill would make a contractor or subcontractor who violates the agreement to use a skilled and trained workforce repeatedly or with the intent to defraud ineligible to bid on, be awarded, or perform work on a contract for a public works project for a period of up to three years.
This bill would instruct the Labor Commissioner to publish on the Commissioner’s Internet Web site a list of contractors who are ineligible under these provisions.
COMMENT
1. Stated need for the bill
According to the author:
[E]xisting law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. […]
This bill increases compliance with the skilled and trained construction workforce statutes by improving public agency reporting requirements and providing the Labor Commissioner, after an investigation, with the authority to issue a civil penalty against a contractor or subcontractor found in violation of state law.
As sponsor of the bill, the State Building and Construction Trades Council, AFL-CIO writes:
Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs/California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes. […] With a better compliance process, contractors who choose not to play by the rules at the expense of taxpayers and construction workers will be deterred from public works.
2. Concerns expressed about the bill
In opposition to the bill, the Associated Builders and Contractors, Northern California Chapter writes:
All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into [Project Labor Agreements] PLAs without an enforceable commitment that a skilled and trained workforce is being used. […] No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California.
3. Making jobs available to graduates of California apprenticeship programs
In addition to the more obvious purpose of ensuring the public works projects are well constructed, agreements requiring the use of “skilled and trained” workforces help to ensure that jobs are available to graduates of California’s apprenticeship programs. In this regard, the sponsors of this bill write:
Building Trades Union workers, through their wages, invest over $100 million annually into their apprenticeship programs which graduate 92% of the state’s total apprentices. As local agencies, cities, and counties continue to seek innovative methods to deliver public works projects, it is important to give those entities options while also creating employment opportunities for the highly skilled and trained young men and women graduating from California’s apprenticeship system.
4. Detailed legal definition of what constitutes a skilled and trained workforce
The purpose behind this bill is to add “teeth” to enforcement of public works contracts that include an agreement to use skilled and trained workforces. Public Contracts Code Section 2601(d) provides a detailed definition of what is meant by a “skilled and trained workforce.” To understand that definition, however, it is necessary to know, first, what a “skilled journeyperson” is. A “skilled journeyperson” is a worker who either graduated from an apprenticeship program for the applicable occupation that was approved by DAS or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor, or has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by DAS.
With that in mind, a “skilled and trained workforce” is a workforce that meets the following conditions, as simplified for the sake of brevity:
- all the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the chief of the Division of Apprenticeships.
- of the skilled journeypersons employed to perform work on the contract or project by every contractor and each of its subcontractors at every tier, at least the following percentages are graduates of an apprenticeship program for the applicable occupation:
- on or after January 1, 2017, at least 30 percent;
- on or after January 1, 2018, at least 40 percent;
- on or after January 1, 2019, at least 50 percent; and
- on or after January 1, 2020, at least 60 percent.
There are exceptions for certain trades as well as for subcontractors with a very small role in the overall project. There are also detailed rules on how to calculate the percentages.
5. What the monthly reports show
The monthly reports should show whether or not each worker on the project is either a skilled journeyperson or a registered apprentice of an approved apprenticeship program. The monthly reports should also indicate how many of the skilled journeypersons are graduates of an apprenticeship program. From that, the public entity should be able to determine whether or not the contractor is meeting the required percentages to meet the definition of using a skilled and trained workforce. If not, the consequences set forth in this bill would ensue.
6. Due process considerations
Whenever a bill proposes to impose civil penalties for a violation of the law, as this one would do, due process requires that there be a process in place by which the target of the penalty receives notice and has some reasonable mechanism for challenging the penalty. No particular procedure is required necessarily; the U.S. Supreme Court has not given any hard and fast meaning to “due process of law.” According to the Court: “due process, unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place, and circumstances. Due process is flexible and calls for such procedural protections as the particular situation demands.” (Mathews v. Eldridge (1976) 424 U.S. 319, 334. Internal quotations and citations omitted.) At a minimum, however, due process of law always entails “certain basic safeguards such as notice of the charges or issue, the opportunity for a meaningful hearing, and an impartial decision maker.”[1]
In the case of this bill, any assessment of civil penalties would be imposed in accordance with the procedures set forth in Labor Code Section 1741. That statute provides for both notice of the proposed penalty and the procedure for challenging the penalty. That procedure is laid out in Labor Code Section 1742. It gives the contractor against whom the penalty is being assessed the opportunity to request a review hearing. If the contractor is dissatisfied with the outcome of that hearing, the contractor may seek relief through a petition for a writ of mandamus with the courts. In short, while proposing to enact stiff consequences for contractors who are not abiding by their commitment to use a skilled and trained workforce, the bill also provides for robust procedural safeguards against the imposition of these consequences through error or abuse.
7. Proposed Amendments
The author has offered to incorporate amendments into the bill that would:
- replace gendered pronouns with non-binary alternatives.
The specific amendment is as follows:
Amendment 1
On page 4, in line 27, strike out “his or her” and insert:
the Labor Commissioner’s
Given the short timeline that this bill has to reach the Senate Labor and Industrial Relations Committee, this proposed amendment will be taken in that committee rather than here in this Committee.
The author’s office has also indicated that additional amendments are planned for the bill, also to be taken in the Senate Labor and Industrial Relations Committee. Those amendments will evidently address ways to apportion the withholding of payments when a subcontractor, not the general contractor, is the cause of the violation. This should also be responsive to the point raised by two parties, the Association of California Construction Managers and the Coalition for Adequate School Housing, that wrote the Committee to express a desire for greater clarify regarding the bill’s requirement that general contractors “continually monitor” the subcontractor’s use of a skilled and trained workforce.
Given the short timeline involved, these amendments were not ready in time to be analyzed in this Committee. Should this bill pass out of this Committee in its current form, the Committee would retain authority to call it back for further review in the event that there are concerns about those amendments that relate to this Committee’s jurisdiction.
Support: Air Conditioning Sheet Metal Association; Air-conditioning & Refrigeration Contractors Association; California Legislative Conference of the Plumbing, Heating and Piping Industry; California State Association of Electrical Workers; California State Pipe Trades Council; International Union of Elevator Contractors; National Electric Contractors Association; Northern California Allied Trades; Wall and Ceiling Alliance; Western States Council of Sheet Metal Workers; Western Wall & Ceiling Contractors Association
Opposition: Associated Builders and Contractors, Northern California Chapter; Western Electrical Contractors Association; Plumbing-Heating-Cooling Contractors Association of California; San Diego, Southern California and Central California Chapters of Associated Builders and Contractors; Western Electrical Contractors Association
HISTORY
Source: State Building and Construction Trades Council
Related Pending Legislation: None known
Prior Legislation:
SB 418 (Hernandez, Ch. 393, Stats. 2017) revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
SB 693 (Hueso, Ch. 774, Stats. 2016) among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
AB 1358 (Dababneh, Ch. 752, Stats. 2015) aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
AB 566 (O’Donnell, Ch. 214, Stats. 2015) required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
Prior Vote:
Assembly Floor (Ayes 54, Noes 22)
Assembly Appropriations Committee (Ayes 12, Noes 4)
Assembly Labor and Employment Committee (Ayes 5, Noes 1)
**************
Chemerinsky, Constitutional Law Policies and Principles, Fifth Edition (2015), p. 606. ↑
ASSEMBLY THIRD READING
ATR Bill Id:AB 3018
Author:(Low)
As Amended Ver:March 22, 2018
Majority vote
Committee | Votes | Ayes | Noes |
Labor | 5-1 | Thurmond, Gonzalez Fletcher, Jones-Sawyer, Kalra, McCarty | Melendez |
Appropriations | 12-4 | Gonzalez Fletcher, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Friedman, Eduardo Garcia, Nazarian, Quirk, Reyes | Bigelow, Fong, Gallagher, Obernolte |
SUMMARY: Enhances compliance with skilled and trained workforce rules by strengthening public agency reporting requirements, creating penalties for noncompliance, and providing the Labor Commissioner (LC) with the authority to issue a civil wage and penalty assessment against a contractor or subcontractor found in violation of state law. Specifically, this bill:
- Requires a public agency to send DLSE a copy of the monthly report from a contractor, bidder, or other entity if that monthly report does not demonstrate compliance with the skilled-and-trained workforce requirements.
- Requires a contractor or subcontractor to pay a civil penalty of up to $5,000 per month of work performed in violation of the skilled-and-trained workforce requirements.
- Makes a contractor or subcontractors who violates specified requirements ineligible to be awarded or perform work on a public works project and requires DLSE to publish on the internet a list of ineligible contractors.
FISCAL EFFECT: According to the Assembly Appropriations Committee, one-time special fund costs of $410,000 and ongoing special fund costs of $350,000 as a result of an increased enforcement workload. These cost estimates assume additional investigations as a result of the new reporting requirement. Civil penalty revenue from these cases would depend on the number of, and nature of, violations.
COMMENTS: California law requires public projects using certain project delivery methods to employ a "skilled-and-trained workforce," meaning all workers performing work in apprenticeable occupations on that project are either skilled journeypersons or apprentices registered in an apprenticeship program. Under these skilled-and-trained workforce requirements, a certain share of skilled journeypersons must be graduates of an approved apprenticeship program. That share is 40% in 2018 and will increase to 60% by 2020.
According to the author, "existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation. This bill may also be used to establish a procedure to determine how much money should be withheld and what to do with the amount that is withheld."
The author continues, "This bill increases compliance with the skilled and trained construction workforce statutes by improving public agency reporting requirements and providing the LC, after an investigation, with the authority to issue a civil penalty against a contractor or subcontractor found in violation of state law."
Arguments in Support
This measure is sponsored by the State Building and Construction Trades Council, AFL-CIO. The State Building and Construction Trades Council writes in support, "Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs/California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes."
The sponsors continue, "Building Trades Union workers, through their wages, invest over $100 million annually into their apprenticeship programs which graduate 92% of the state's total apprentices. As local agencies, cities, and counties continue to seek innovative methods to deliver public works projects, it is important to give those entities options while also creating employment opportunities for the highly skilled and trained young men and women graduating from California's apprenticeship system. Sadly, there are still some underground economy contractors who choose to not play by the rules so that they can maximize profit at the expense of taxpayers and construction workers."
Arguments in Opposition
Associated Builders and Contractors, Northern California Chapter writes that they must oppose the measure "unless it is amended to remove disparate treatment for contractors under Project Labor Agreements (PLAs) and other contractors not working under PLAs." They continue, "All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about "significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into PLAs without an enforceable commitment that a skilled and trained workforce is being used." Associated Builders and Contractors, Northern California Chapter asserts, "No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California."
Analysis Prepared by: Jennifer Richard / L. & E. / (916) 319-2091 FN: 0003134
Date of Hearing: May 9, 2018
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez Fletcher, Chair
ABPCA Bill Id:AB 3018
Author:(Low) – As Amended Ver:March 22, 2018
Policy Committee: | Labor and Employment | Vote: | 5 - 1 |
|
| ||
|
|
Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill modifies the Division on Labor Standards and Enforcement’s (DLSE’s) enforcement authority as it relates to skilled-and-trained workforce requirements. Specifically, this bill:
- Requires a public agency to send DLSE a copy of the monthly report from a contractor, bidder, or other entity if that monthly report does not demonstrate compliance with the skilled-and-trained workforce requirements.
- Requires a contractor or subcontractor to pay a civil penalty of up to $5,000 per month of work performed in violation of the skilled-and-trained workforce requirements.
- Makes a contractor or subcontractors who violates specified requirements ineligible to be awarded or perform work on a public works project and requires DLSE to publish on the internet a list of ineligible contractors.
FISCAL EFFECT:
One-time special fund costs of $410,000 and ongoing special fund costs of $350,000 as a result of an increased enforcement workload. These cost estimates assume additional investigations as a result of the new reporting requirement. Civil penalty revenue from these cases would depend on the number of, and nature of, violations.
COMMENTS:
- Background. California law requires public projects using certain project delivery methods (see Comment #3) to employ a “skilled-and-trained workforce,” which means all workers performing work in apprenticeable occupations are either skilled journeypersons or apprentices registered in an apprenticeship program. Moreover, a certain share of skilled journeypersons must be graduates of an approved apprenticeship program. That share is 40% in 2018 and will increase to 60% by 2020.
- Purpose. According to the author, AB 3018 will increase compliance with the skilled-and-trained workforce statutes by improving public agency reporting requirements and providing the LC the authority to issue a civil penalty against a contractor or subcontractor.
- Alternative project delivery methods. The design-build, lease-leaseback, and “best value” procurement methods require the use of a skilled-and-trained workforce for certain public works projects. These methods differ from the traditional “design-bid-build” procurement method, and these methods are designed to better involve builders into the design phase. Various statutes have promoted these methods and put in place a skilled workforce requirement for projects utilizing them. Recent bills include SB 693 (Hueso), Chapter 774, Statutes of 2016, which consolidated skilled-and-trained workforce requirements for these types of projects, and SB 785 (Wolk), Chapter 785, Statutes of 2014, which provided for a general authorization for the design-build method to be utilized by the Department of General Services, Department of Corrections, cities, counties, special districts, and transit districts.
Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081
Date of Hearing: April 25, 2018
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Tony Thurmond, Chair
ABPCA Bill Id:AB 3018 (
Author:Low) – As Amended Ver:March 22, 2018
SUBJECT: State contracts: skilled and trained workforce
SUMMARY: Enhances compliance with skilled and trained workforce rules by strengthening public agency reporting requirements, creating penalties for noncompliance, and providing the Labor Commissioner (LC) with the authority to issue a civil wage and penalty assessment against a contractor or subcontractor found in violation of state law. Specifically, this bill:
- Requires the public agency or other awarding body to forward a copy of the monthly report to the LC for issuance of a civil wage and penalty assessment, as prescribed, if the monthly report does not demonstrate compliance with skilled and trained workforce requirements.
- Requires a contractor or subcontractor to pay a civil penalty to the state of not more than $5,000 per month of work performed in violation of the skilled and trained workforce requirements if the LC or his or her designee determines that the contractor or subcontractor failed to use a skilled and trained workforce.
- Requires a contractor or subcontractor that commits a second or subsequent violation within a three-year period to pay a civil penalty to the state of not more than $10,000 per month of work performed in violation of the skilled and trained workforce requirements.
- Requires a contractor to obtain a declaration signed under penalty of perjury from the subcontractor that he or she has met the skilled and trained workforce requirements before making the final payment to the subcontractor.
- Makes a contractor or subcontractor who, with the intent to defraud, violates the above-described requirements ineligible to bid on, be awarded, or perform work on a contract for a public works project, as specified.
- Requires the LC publish on the Commissioner’s Internet Web site a list of contractors who are ineligible under these provisions.
EXISTING LAW:
- Authorizes a public entity to require a bidder, contractor, or other entity to use a skilled and trained workforce to complete a contract or project, and requires that the commitment to use a skilled and trained workforce be made in an enforceable agreement that meets specified requirements.
- Defines a “skilled and trained workforce” to mean a workforce that meets certain conditions, including specified apprenticeship graduation requirements.
- Requires a contractor, bidder, or other entity to provide to the public entity or other awarding body, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with skilled and trained workforce requirements.
FISCAL EFFECT: Unknown
COMMENTS: According to the author, “existing law provides that an awarding body shall withhold payment from a contractor or subcontractor if the skilled and trained workforce requirements are not met. However, that doesn't take into account the magnitude of the violation. This bill provides calibrated penalties for the nature of the violation rather than indiscriminately holding all remaining payments which may be disproportionately large or small compared to the violation. This bill may also be used to establish a procedure to determine how much money should be withheld and what to do with the amount that is withheld.”
The author continues, “This bill increases compliance with the skilled and trained construction workforce statutes by improving public agency reporting requirements and providing the LC, after an investigation, with the authority to issue a civil penalty against a contractor or subcontractor found in violation of state law.”
Background on Skilled and Trained Workforce
California has adopted laws requiring a skilled and trained workforce on public projects using the design-build, lease/leaseback, job-order contracting for counties, construction manager at-risk and best-value construction (alternatives) delivery methods. These laws require contractors and sub-contractors at every tier to employ a skilled and trained workforce. They require the percentages of a skilled and trained workforce to be: 30% in 2017, 40% in 2018, 50% in 2019 and 60% in 2020.
Under the Public Contract Code, a “skilled and trained workforce” is defined as a workforce where all the workers performing work in an apprenticeable occupation in the building and construction trades are either skilled journeypersons or apprentices registered in an apprenticeship program approved by the Chief of the Division of Apprenticeship Standards (DAS). A skilled journeyperson is defined as a worker who either graduated from an apprenticeship program for the applicable occupation that was approved by DAS or located outside California and approved for federal purposes pursuant to the apprenticeship regulations adopted by the federal Secretary of Labor, or has at least as many hours of on-the-job experience in the applicable occupation as would be required to graduate from an apprenticeship program for the applicable occupation that is approved by DAS.
Arguments in Support
This measure is sponsored by the State Building and Construction Trades Council, AFL-CIO. The State Building and Construction Trades Council writes in support, “Since 2012, the Legislature has passed and the Governor signed various bills requiring the use of a skilled and trained workforce on design-build, lease/leaseback, construction manager-at-risk, and best-value construction projects. These requirements ensure that a high level of competency will be required of the workers who actually build these public projects, which in turn results in the public agencies and taxpayers receiving the highest quality of construction. It also helps ensure that graduates from regional apprenticeship programs/California residents will be employed on these projects instead of out of state workers. Unfortunately, since enactment of these laws there have been concerns with the level of compliance with these statutes.”
The sponsors continue, "Building Trades Union workers, through their wages, invest over $100 million annually into their apprenticeship programs which graduate 92% of the state's total apprentices. As local agencies, cities, and counties continue to seek innovative methods to deliver public works projects, it is important to give those entities options while also creating employment opportunities for the highly skilled and trained young men and women graduating from California's apprenticeship system. Sadly, there are still some underground economy contractors who choose to not play by the rules so that they can maximize profit at the expense of taxpayers and construction workers."
Arguments in Opposition
Associated Builders and Contractors, Northern California Chapter writes that they must oppose the measure “unless it is amended to remove disparate treatment for contractors under Project Labor Agreements (PLAs) and other contractors not working under PLAs.” They continue, “All contractors, union and non-union, must be treated the same as to skilled workforce mandates. If the state truly cares about “significantly raising the standards for contractors, increasing the quality of construction and protecting taxpayers and workers on construction projects, then a skilled and trained workforce mandate needs to be a uniform standard across the industry on all projects, without exceptions for entities that enter into PLAs without an enforceable commitment that a skilled and trained workforce is being used.” Associated Builders and Contractors, Northern California Chapter asserts, “No contractor should get a free pass on demonstrating their commitment to a skilled and trained workforce in California.”
Prior and Related Legislation
SB 418 (Hernández) Chapter 393, Statutes of 2017. Revised the existing definition of “skilled and trained workforce” to specify that on or after January 1, 2018, the 40, 50 and 60 percentage graduation rate of skilled journeypersons required for work in specified contracts shall not apply to work performed in the following occupations: acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher, or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher.
SB 693 (Hueso) Chapter 774, Statutes of 2016. Among other provisions, consolidated the skilled and trained workforce requirements of various provisions of existing law, related to alternative construction delivery methods, and defined the terms of these requirements.
AB 1358 (Dababneh) Chapter 752, Statutes of 2015. Aligned the process for school districts awarding contracts through the design-build method with the design-build process established for state and local agencies.
AB 566 (O'Donnell) Chapter 214, Statutes of 2015. Required school districts entering into specified school building lease contracts to use a skilled and trained workforce.
REGISTERED SUPPORT / OPPOSITION:
Support
California State Association of Electrical Workers
California State Pipe Trades council
International Union of Elevator Contractors
State Building and Construction Trades Council (sponsor)
Western States Council of Sheet Metal Workers
Oppose Unless Amended
Associated Builders and Contractors, Northern CA Chapter
Western Electrical Contractors Association
Plumbing-Heating-Cooling Contractors Association of California
San Diego, Southern CA and Central CA Chapters of Associated Builders and Contractors
Concerns
Association of California Construction Managers
Analysis Prepared by: Jennifer Richard / L. & E. /
Discussed in Hearing
48SEC
Assembly Floor
2MIN
Senate Floor
1H
Senate Standing Committee on Appropriations
13MIN
Senate Standing Committee on Labor and Industrial Relations
11MIN
Senate Standing Committee on Judiciary
55SEC
Assembly Floor
8MIN
Assembly Standing Committee on Labor and Employment
Bill Author
Bill Co-Author(s):