Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final.

Commencing July 1, 2026, this bill would, until January 1, 2031, instead require the director, if the director determines during any semiannual period that there has been a change in any prevailing rate of per diem wages in a locality, to make that change available to the awarding body and that decision would have exceptions to its finality, including authorizing a contractor, awarding body, or representative to file a petition to review the directors determination. The bill would provide that the directors determination would apply to any public works contract for which notice to bidders is published, after July 1, 2026, that meets certain requirements.

Existing law requires the Labor Commissioner to investigate allegations that a contractor or subcontractor violated the law regulating public works projects, including the payment of prevailing wages. Existing law requires each contractor and subcontractor on a public works project to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Existing law requires any copy of records made available for inspection as copies and furnished upon request to the public or any public agency to be marked or obliterated to prevent disclosure of an individuals name, address, and social security number but specifies that any copy of records made available to a Taft-Hartley trust fund for the purposes of allocating contributions to participants be marked or obliterated only to prevent disclosure of an individuals full social security number, as specified. Existing law makes any contractor, subcontractor, agent, or representative who neglects to comply with the requirements to keep accurate payroll records guilty of a misdemeanor.

Commencing July 1, 2026, this bill would require jobsites to give reasonable access, as defined, to representatives of a joint labor-management committee in order to monitor compliance with the prevailing wage and apprenticeship requirements. The bill would exempt an awarding body, owner, contractor, or subcontractor from liability for any violations of safety guidelines caused by a committees representative. The bill would authorize the committee to bring an action against an awarding body, contractor, or subcontractor that willfully denies the committees representative reasonable access.

This bill would authorize, if a contractor or subcontractor fails to make payroll records available for inspection by the Labor Commissioner within a specified period, the imposition of certain penalties.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final.

Commencing July 1, 2026, this bill would would, until January 1, 2031, instead require the director, if the director determines during any semiannual period that there has been a change in any prevailing rate of per diem wages in a locality, to make that change available to the awarding body and that decision would have exceptions to its finality, including authorizing a contractor, awarding body, or representative to file a petition to review the directors determination. The bill would provide that the directors determination would apply to any public works contract awarded or for which notice to bidders is published, after July 1, 2025. 2026, that meets certain requirements.

Existing law requires the Labor Commissioner to investigate allegations that a contractor or subcontractor violated the law regulating public works projects, including the payment of prevailing wages. Existing law requires each contractor and subcontractor on a public works project to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Existing law requires any copy of records made available for inspection as copies and furnished upon request to the public or any public agency to be marked or obliterated to prevent disclosure of an individuals name, address, and social security number but specifies that any copy of records made available to a Taft-Hartley trust fund for the purposes of allocating contributions to participants be marked or obliterated only to prevent disclosure of an individuals full social security number, as specified. Existing law makes any contractor, subcontractor, agent, or representative who neglects to comply with the requirements to keep accurate payroll records guilty of a misdemeanor.

Commencing July 1, 2025, 2026, this bill would require jobsites to give reasonable access, as defined, to representatives of a joint labor-management committee in order to monitor compliance with the prevailing wage and apprenticeship requirements. The bill would exempt an awarding body, owner, contractor, or subcontractor from liability for any violations of safety guidelines caused by a committees representative. The bill would authorize the committee to bring an action against an awarding body, contractor, or subcontractor that willfully denies the committees representative reasonable access.

This bill would authorize, if a contractor or subcontractor fails to make payroll records available for inspection by the Labor Commissioner within a specified period, the imposition of certain penalties.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final.

This bill would instead require the director, if the director determines during any semiannual period that there has been a change in any prevailing rate of per diem wages in a locality, to make that change available to the awarding body and that decision would have exceptions to its finality, including authorizing a contractor, awarding body, or representative to file a petition to review the directors determination. The bill would provide that the directors determination would apply to any public works contract awarded or for which notice to bidders is published, after July 1, 2025.

Under existing law, per diem wages include certain employer payments made pursuant to a collective bargaining agreement or for a program or committee established under the federal Labor Management Cooperation Act of 1978, as specified. Existing law provides that these payments are a credit against the obligation to pay the general prevailing rate of per diem wages.

Existing law requires the credit for employer payments to be computed on an annualized basis where the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, except under certain circumstances, including a determination that annualization would not serve the purposes of the provision relating to public works projects.

This bill would remove the exception permitting the director to determine that annualization would not serve the purpose and would instead require, subject to a specified exception, all other fringe benefits not given directly to the worker and regardless of whether contributions are made or benefits are provided for private construction, to be computed on an annualized basis. The bill would require employers to demonstrate that the credit for employer benefits was properly calculated, and would require employers to produce certain records to the Labor Commissioner, upon request. The bill would specify that all related prior exemptions issued by the director are revoked.

Existing law requires the Labor Commissioner to investigate allegations that a contractor or subcontractor violated the law regulating public works projects, including the payment of prevailing wages. Existing law requires each contractor and subcontractor on a public works project to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Existing law requires any copy of records made available for inspection as copies and furnished upon request to the public or any public agency to be marked or obliterated to prevent disclosure of an individuals name, address, and social security number but specifies that any copy of records made available to a Taft-Hartley trust fund for the purposes of allocating contributions to participants be marked or obliterated only to prevent disclosure of an individuals full social security number, as specified. Existing law makes any contractor, subcontractor, agent, or representative who neglects to comply with the requirements to keep accurate payroll records guilty of a misdemeanor.

Commencing July 1, 2025, this bill would require job sites jobsites to give reasonable access, as defined, to representatives of a joint labor-management committee in order to monitor compliance with the prevailing wage and apprenticeship requirements. The bill would exempt an awarding body, owner, contractor, or subcontractor from liability for any violations of safety guidelines caused by a committees representative. The bill would authorize the committee to bring an action against an awarding body, contractor, or subcontractor that willfully denies the committees representative reasonable access.

This bill would authorize, if a contractor or subcontractor fails to make payroll records available for inspection by the Labor Commissioner within a specified period, the imposition of certain penalties.

Existing law authorizes contractors or subcontractors to request review of a civil wage and penalty assessment by submitting a written request to the Labor Commissioner within 60 days after service of the assessment. Existing law requires a hearing to be commenced, before the director, within 90 days of the request.

This bill would authorize the director to dismiss a request for review and issue a decision affirming the assessment if a contractor or subcontractor fails to appear at a hearing or prehearing conference. The bill would also require a petitioner, if seeking review of a decision by the superior court, to post a bond with the Labor Commissioner, as specified.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final.

This bill would instead require the director, if the director determines during any semiannual period that there has been a change in any prevailing rate of per diem wages in a locality, to make that change available to the awarding body and that decision would have exceptions to its finality, including authorizing a contractor, awarding body, or representative to file a petition to review the directors determination. The bill would provide that the directors determination would apply to any public works contract awarded or for which notice to bidders is published, after July 1, 2025.

Under existing law, per diem wages include certain employer payments made pursuant to a collective bargaining agreement or for a program or committee established under the federal Labor Management Cooperation Act of 1978, as specified. Existing law provides that these payments are a credit against the obligation to pay the general prevailing rate of per diem wages.

Existing law requires the credit for employer payments to be computed on an annualized basis where the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, except under certain circumstances, including a determination that annualization would not serve the purposes of the provision relating to public works projects.

This bill would remove the exception permitting the director to determine that annualization would not serve the purpose and would instead require, subject to a specified exception, all other fringe benefits to be computed on an annualized basis. The bill would require employers to demonstrate that the credit for employer benefits was properly calculated, and would require employers to produce certain records to the Labor Commissioner, upon request. The bill would specify that all related prior exemptions issued by the director are revoked.

Existing law requires the Labor Commissioner to investigate allegations that a contractor or subcontractor violated the law regulating public works projects, including the payment of prevailing wages. Existing law requires each contractor and subcontractor on a public works project to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Existing law requires any copy of records made available for inspection as copies and furnished upon request to the public or any public agency to be marked or obliterated to prevent disclosure of an individuals name, address, and social security number but specifies that any copy of records made available to a Taft-Hartley trust fund for the purposes of allocating contributions to participants be marked or obliterated only to prevent disclosure of an individuals full social security number, as specified. Existing law makes any contractor, subcontractor, agent, or representative who neglects to comply with the requirements to keep accurate payroll records guilty of a misdemeanor.

Commencing July 1, 2025, this bill would require job sites to give reasonable access, as defined, to representatives of a joint labor-management committee in order to monitor compliance with the prevailing wage and apprenticeship requirements. The bill would exempt an awarding body, contractor, or subcontractor from liability for any violations of safety guidelines caused by a committees representative. The bill would authorize the committee to bring an action against an awarding body, contractor, or subcontractor that willfully denies the committees representative reasonable access.

This bill would authorize, if a contractor or subcontractor fails to make payroll records available for inspection by the Labor Commissioner within a 10-day specified period, the imposition of certain penalties.

Existing law authorizes contractors or subcontractors to request review of a civil wage and penalty assessment by submitting a written request to the Labor Commissioner within 60 days after service of the assessment. Existing law requires a hearing to be commenced, before the director, within 90 days of the request.

This bill would authorize the director to dismiss a request for review and issue a decision affirming the assessment if a contractor or subcontractor fails to appear at a hearing or prehearing conference. The bill would also require a petitioner, if seeking review of a decision by the superior court, to post a bond with the Labor Commissioner, as specified.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final. Under existing law, that determination does not apply to public works contracts for which the notice to bidders has been published.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law requires the body awarding a contract for a public work to obtain from the director the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed, and the general prevailing rate of per diem wages for holiday and overtime work, for each craft, classification, or type of worker needed to execute the contract. Under existing law, if the director determines during any quarterly period that there has been a change in any prevailing rate of per diem wages in a locality, the director is required to make that change available to the awarding body and their determination is final. Under existing law, that determination does not apply to public works contracts for which the notice to bidders has been published.

This bill would state the intent of the Legislature to enact statutory changes relating to public works.

GOVERNOR'S VETO

GV Bill Id:AB 2182

Author:(Haney)

As Enrolled Ver:September 4, 2024

2/3 vote

SUMMARY

Modifies state public works law by: 1) granting joint labor-management committees (JLMCs) reasonable access to public works jobsites and 2) requiring a change in a prevailing wage rate as determined by the Department of Industrial Relations' (DIR) Director to apply to certain contracts from July 1, 2026, to January 1, 2031.

Senate Amendments

1. Strike provisions relating to the dismissal of a request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor's or subcontractor's failure to appear for a prehearing conference or hearing after receiving notice.
2. Strike provisions related to the annualization of employer payments.
3. Make technical and clarifying changes.
4. Add to the provision granting JLMC representatives' reasonable access to public works jobsites that an awarding body, owner, contractor, or subcontractor shall not be liable for safety standard violations by these representatives. If a representative is injured on the jobsite while monitoring compliance, the committee's workers' compensation or liability insurance policy, or both, are the exclusive remedy.
5. Make the JLMC provision described in 4) above inapplicable to public works jobsites where school employees are subject to criminal background checks.
6. Change the effective date of the JLMC provision from July 1, 2025, to July 1, 2026.
7. Move the review period for the DIR Director to determine a change in any prevailing rate of per diem wages in any locality to a semiannual basis and make it inoperable on July 1, 2026. Maintain that the determination by the Director shall not be effective as to any contract for which a notice to bidders has been published.
8. Provide that a new prevailing wage rate determination shall apply on its effective date to any contract for which notice to bidders is published after July 1, 2026 that meets all of the following requirements:
   1. The contract is not for the development of housing.
   2. The contract is subject to the provision described in 7) above.
   3. The awarded value of the prime contract is thirty-five million dollars or greater.
   4. The contract is not awarded by the state, as defined, by a state agency, nor in furtherance of a project undertaken by the state.
9. Provide that 8) above is operative on July 1, 2026, until January 1, 2031.
10. Revert to the language in 7) above beginning January 1, 2031.
11. Clarify that liability attaches to a contractor or subcontractor that fails to comply with a payroll records request from the Labor Commissioner (LC) within the 10-day period or any additional time period granted by the LC at the request of the contractor or subcontractor.

Governor's Veto Message

This bill would require that any change in prevailing wage rates apply to existing contracts on certain public works projects. The bill also grants joint labor- management committees (JLMCs) reasonable access to public works jobsites and allows JLMCs to file actions in court to enforce this requirement.

While I am a steadfast supporter of prevailing wage law, the adjustments proposed by this measure would likely lead to uncertainty in the cost of public works projects, potentially creating significant cost pressures on the state budget.

In partnership with the Legislature this year, my Administration has enacted a balanced budget that avoids deep program cuts to vital services and protected investments in education, health care, climate, public safety, housing, and social service programs that millions of Californians rely on. It is important to remain disciplined when considering bills with significant fiscal implications that are not included in the budget, such as this measure.

COMMENTS

None.

According to the Author

"Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State's public works law and will provide transparency on public works projects."

Arguments in Support

The State Building and Construction Trades Council of California, sponsor of the bill, states, "Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based. This occurs if there is a single asterisk determination or if the determination has a double asterisk, but the work goes on for longer than the predetermined changes.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.

This bill would also grant representatives from joint labor-management committees reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly."

Arguments in Opposition

The Construction Employers' Association is opposed and states, "The measure provides that if DIR makes a determination concerning a new prevailing wage rate, the new rates shall take effect immediately, even for projects that are already underway. Bids are submitted to public agencies based on wage rates known at the time of bid and included in the applicable wage determinations. DIR typically issues wage determinations twice a year in February and in August. The applicable wage determinations for each project are determined by the bid advertisement date and in accordance with Labor Code section 1773.2, the awarding body must specify the wage rates in the call for bids, in the bid specifications and the contract. The rationale for not adjusting wage rates mid-stream is simple; contractors and subcontractors have no way to recoup the difference from public agencies because they are under contract. To the extent that the author would like to raise wages during the course of construction, the measure must provide that public agencies shall be responsible for paying any change order related to the new wage rates. Absent that, contractors and subcontractors will be working at a loss."

FISCAL COMMENTS

According to the Senate Appropriations Committee:

1. DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter (Labor Enforcement and Compliance Fund).
2. By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
3. To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

VOTES

ASM LABOR AND EMPLOYMENT: 7-0-0

YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur

ASM APPROPRIATIONS: 11-2-2

YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

NO: Sanchez, Jim Patterson

ABS, ABST OR NV: Dixon, Ta

ASSEMBLY FLOOR: 65-5-10

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO: Dixon, Essayli, Vince Fong, Gallagher, Sanchez

ABS, ABST OR NV: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Hoover, Mathis, Jim Patterson, Luz Rivas, Ta

SENATE FLOOR: 30-8-2

YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Dodd, Glazer

ASSEMBLY FLOOR: 70-0-9

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Flora, Mike Fong, Friedman, Gabriel, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Pacheco, Papan, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

ABS, ABST OR NV: Cervantes, Dixon, Essayli, Gallagher, Mathis, Ortega, Jim Patterson, Joe Patterson, Sanchez

UPDATED

VERSION: September 4, 2024

CONSULTANT: Megan Lane / L. & E. /(916) 319-2091 FN: 0005156

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2182

Author:(Haney)

As Amended Ver:August 23, 2024

Majority vote

SUMMARY

Modifies state public works law by: 1) granting joint labor-management committees (JLMCs) reasonable access to public works jobsites and 2) requiring a change in a prevailing wage rate as determined by the Department of Industrial Relations' (DIR) Director to apply to certain contracts from July 1, 2026, to January 1, 2031.

Senate Amendments

1. Strike provisions relating to the dismissal of a request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor's or subcontractor's failure to appear for a prehearing conference or hearing after receiving notice.
2. Strike provisions related to the annualization of employer payments.
3. Make technical and clarifying changes.
4. Add to the provision granting JLMC representatives' reasonable access to public works jobsites that an awarding body, owner, contractor, or subcontractor shall not be liable for safety standard violations by these representatives. If a representative is injured on the jobsite while monitoring compliance, the committee's workers' compensation or liability insurance policy, or both, are the exclusive remedy.
5. Make the JLMC provision described in 4) above inapplicable to public works jobsites where school employees are subject to criminal background checks.
6. Change the effective date of the JLMC provision from July 1, 2025, to July 1, 2026.
7. Move the review period for the DIR Director to determine a change in any prevailing rate of per diem wages in any locality to a semiannual basis and make it inoperable on July 1, 2026. Maintain that the determination by the Director shall not be effective as to any contract for which a notice to bidders has been published.
8. Provide that a new prevailing wage rate determination shall apply on its effective date to any contract for which notice to bidders is published after July 1, 2026 that meets all of the following requirements:
   1. The contract is not for the development of housing.
   2. The contract is subject to the provision described in 7) above.
   3. The awarded value of the prime contract is thirty-five million dollars or greater.
   4. The contract is not awarded by the state, as defined, by a state agency, nor in furtherance of a project undertaken by the state.
9. Provide that 8) above is operative on July 1, 2026, until January 1, 2031.
10. Revert to the language in 7) above beginning January 1, 2031.
11. Clarify that liability attaches to a contractor or subcontractor that fails to comply with a payroll records request from the Labor Commissioner (LC) within the 10-day period or any additional time period granted by the LC at the request of the contractor or subcontractor.

COMMENTS

None

According to the Author

"Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State's public works law and will provide transparency on public works projects."

Arguments in Support

The State Building and Construction Trades Council of California, sponsor of the bill, states, "Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based. This occurs if there is a single asterisk determination or if the determination has a double asterisk, but the work goes on for longer than the predetermined changes.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.

This bill would also grant representatives from joint labor-management committees reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly."

Arguments in Opposition

The Construction Employers' Association is opposed and states, "The measure provides that if DIR makes a determination concerning a new prevailing wage rate, the new rates shall take effect immediately, even for projects that are already underway. Bids are submitted to public agencies based on wage rates known at the time of bid and included in the applicable wage determinations. DIR typically issues wage determinations twice a year in February and in August. The applicable wage determinations for each project are determined by the bid advertisement date and in accordance with Labor Code section 1773.2, the awarding body must specify the wage rates in the call for bids, in the bid specifications and the contract. The rationale for not adjusting wage rates mid-stream is simple; contractors and subcontractors have no way to recoup the difference from public agencies because they are under contract. To the extent that the author would like to raise wages during the course of construction, the measure must provide that public agencies shall be responsible for paying any change order related to the new wage rates. Absent that, contractors and subcontractors will be working at a loss."

FISCAL COMMENTS

According to the Senate Appropriations Committee:

1. DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter (Labor Enforcement and Compliance Fund).
2. By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
3. To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

VOTES:

ASM LABOR AND EMPLOYMENT: 7-0-0

YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur

ASM APPROPRIATIONS: 11-2-2

YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

NO: Sanchez, Jim Patterson

ABS, ABST OR NV: Dixon, Ta

ASSEMBLY FLOOR: 65-5-10

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO: Dixon, Essayli, Vince Fong, Gallagher, Sanchez

ABS, ABST OR NV: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Hoover, Mathis, Jim Patterson, Luz Rivas, Ta

SENATE FLOOR: 30-8-2

YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Durazo, Eggman, Gonzalez, Hurtado, Laird, Limón, McGuire, Menjivar, Min, Newman, Padilla, Portantino, Roth, Rubio, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

NO: Alvarado-Gil, Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Dodd, Glazer

UPDATED

VERSION: August 23, 2024

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0004669

 THIRD READING  

Bill No: AB 2182

Author: Haney (D)

Amended: 8/23/24 in Senate

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-0, 6/12/24

AYES: Cortese, Durazo, Gonzalez, Laird

NO VOTE RECORDED: Wilk

SENATE JUDICIARY COMMITTEE: 9-1, 6/25/24

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Roth, Stern, Wahab

NOES: Niello

NO VOTE RECORDED: Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/15/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

ASSEMBLY FLOOR: 65-5, 5/21/24 - See last page for vote

SUBJECT: Public works

SOURCE: State Building and Construction Trades Council of California

DIGEST:

This bill makes several changes to state public works law. This bill (1) provides representatives of a joint labor-management committee (JLMC) access to active public works jobsites, as specified; (2) requires a change in the prevailing wage rate, as determined by the Director (Director) of the Department of Industrial Relations to take effect 10 days after its issuance for any contract for which notice to bidders is published after July 1, 2026 and that meets specified conditions; and (3) requires contractors, upon receipt of a written request, to furnish payroll records to the Labor Commissioner (LC) within 10 days.

Senate Floor Amendments of 8/23/24 (1) delete provisions of the bill related to the Director of DIR reviewing and dismissing civil wage and penalty assessments for public works violations and annualization requirements; (2) delay implementation of the JLMC provisions from July 1, 2025 to July 1, 2026; (3) revise provisions related to semiannual changes in the prevailing wage rate; (4) require any change in the prevailing wage rate, as determined by the Director, to take effect 10 days after its issuance for any contract for which notice to bidders is published after July 1, 2026 and that meets specified conditions, including that the contract is not for the development of housing and the awarded value of the prime contract is $35,000,000 or greater; and (5) delay implementation of the prevailing wage provisions until July 1, 2026 and repeal them January 1, 2031.

ANALYSIS: Existing federal law permits, pursuant to the Labor Management Cooperation Act of 1978, the establishment of plant, area, and industrywide labor management committees, which have been organized jointly by employers and labor organizations representing employees in that plant, area, or industry, as specified. (29 U.S.C. §175a)

Existing state law:

1. Establishes within the Department of Industrial Relations (DIR) the Division of Labor Standards Enforcement (DLSE) under the direction of the Labor Commissioner (LC), and empowers the LC to ensure a just day’s pay in every work place and to promote justice through the robust enforcement of labor laws. (Labor Code §79-107)
2. Requires the LC to, with reasonable promptness, issue a civil wage and penalty assessment to the contractor or subcontractor, or both, if the LC or their designee determines after an investigation that there has been a violation of public works laws. (Labor Code §1741(a))
3. Authorizes an awarding body to elect to initiate and be approved by DIR to enforce a labor compliance program in exchange for higher prevailing wage exemptions. (Labor Code §1771.5)
4. Requires the body awarding the contract for public work to take cognizance of violations of public works law committed in the course of the execution of the contract, and promptly report any suspected violations to the LC. An awarding body may withhold contract payments following an investigation, as specified. (Labor Code §1726)
5. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an employer that fails to pay the prevailing wage to its employees or that fails to provide required payroll records. (Labor Code §1771.2)
6. Requires the Director to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
7. Provides that if during any quarterly period the Director determines that there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published. (Labor Code §1773.6)
8. Provides that if the Director determines that the general prevailing rate of per diem wages is the rate established by a collective bargaining agreement, and that the collective bargaining agreement contains definite and predetermined changes during its term that will affect the rate adopted, the Director must incorporate those changes into the determination. Predetermined changes that are rescinded prior to their effective date shall not be enforced. (Labor Code §1773.9(c))
9. Requires each contractor and subcontractor to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. (Labor Code §1776(a))
10. Requires the payroll records to be certified and available for inspection at all reasonable hours at the principal office of the contractor, as specified. (Labor Code §1776(b))

This bill:

1. Provides that, effective July 1, 2026, representatives of a JLMC must be permitted reasonable access to active public works jobsites to monitor compliance with prevailing wage and apprenticeship requirements.
2. Specifies that, for purposes of this section, “reasonable access” means access that is consistent with jobsite safety and security requirements, including the use of personal protective equipment that does not disrupt performance of work. Reasonable access includes access to workers during nonwork time.
3. Provides that an awarding body, owner, contractor, or subcontractor is not liable for any violations of safety standards caused by a representative of a JLMC. If a representative is injured on a jobsite while performing duties pursuant to these provisions, the JLMC’s workers’ compensation or liability insurance policy, or both are the exclusive remedy of the representative, and the awarding body, owner, contractor, or subcontractor shall not have any liability.
4. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an awarding body, contractor, or subcontractor that willfully denies the committee’s representative reasonable access in violation of these provisions. Requires the action be brought within six months after the denial of access.
5. Requires a court in an action described in 4) above to award a prevailing JLMC the following:
   1. A civil penalty of one thousand dollars ($1,000) for each occasion that reasonable access was denied.
   2. Its reasonable attorney’s fees and costs incurred in maintaining the action, including expert witness fees.
6. Exempts public works jobsites for entities that are required to comply with Sections 45122.1, 45125, and 45125.1 of the Education Code from the requirements described in 1) though 6) above.
7. Requires, effective July 1, 2026, if during any semiannual period the Director determines that there has been a change in any prevailing wage rate in any locality, they make such change available to the awarding body and the determination is final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published, except as specified.
8. Provides that a change in the prevailing wage rate determined pursuant to 7), above, shall apply on its effective date to any contract for which notice to bidders is published after July 1, 2026 and that meets all of the following requirements:
   1. The contract is not for the development of housing.
   2. The contract is subject to this chapter (Division 2, Part 7, Chapter 1 of the Labor Code).
   3. The awarded value of the prime contract is thirty-five million dollars ($35,000,000) or greater.
   4. The contract is not awarded by the state or a state agency, nor is the contract awarded in furtherance of a project undertaken by the state.
      1. As used in this section, the term “state” is inclusive of the Legislature, the Judicial Council, the California State University, and the University of California.
9. Permits any contractor, awarding body, or representative of any craft, classification, or type of work affected by a change in rates on a particular contract to, within 20 days after publication of the new determination, file with the Director a verified petition to review the determination of that rate on the ground that it has not been determined in accordance with Labor Code §1773. Within two days after the filing of the petition, a copy of that petition shall be filed with the awarding body.
10. Requires the Director, or the Director’s authorized representative, to, upon notice to the petitioner, the awarding body, and other persons the Director deems proper, including the recognized collective bargaining representatives for the particular crafts, classifications, or types of work involved, initiate an investigation or hold a hearing. Within 20 days after the filing of that petition, or within a longer period as agreed upon by the Director, awarding body, and all interested parties, the Director shall make a final determination, as specified.
11. States that a determination issued by the Director is effective 10 days after its issuance. The Director must include an issue date on the determination. The determination shall remain in effect until it is modified, rescinded, or superseded by the Director.
12. Provides that 7) through 11), above, remain in effect only until January 1, 2031 and as of that date are repealed.
13. Requires a contractor or subcontractor to make available for inspection by the LC, within 10 days following receipt of a written notice, any requested payroll records. In the event the contractor or subcontractor fails to comply with the 10-day period or any additional time period granted by the LC, the contractor or subcontractor shall be liable for specified penalties.
14. Defines for purposes of 13) above, the term “payroll records” as all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

Background

Prevailing Wage Calculations. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area. The Director issues wage determinations semiannually, on February 22 and August 22. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements (CBAs) and the rates that may have been predetermined for federal public works.

Existing law states that if the Director determines that there has been a change in the prevailing wage, such changes shall be made available to an awarding body. This notification is for informational purposes and does not require an awarding body to update wages on existing and ongoing projects.

When bidding on a contract, union contractors must account for increases in labor costs arising out of wage rate increases determined within their CBA. If a CBA provides for a wage increase mid project, then union contractors have to abide by that. Non-union contractors do not have to adjust wages mid project.

Earlier prevailing wage provisions in this bill were similar to the language in AB 1140 (Daly, 2013), which was vetoed by Governor Jerry Brown. In his veto message, he stated the following:

“This measure requires contractors on public works projects to increase workers' pay any time the state updates its prevailing wage rates. This is intended to address the circumstance where a non-union contractor is not required to adjust wages mid-project but a union contractor is subject to such adjustments pursuant to a collective bargaining agreement.

In most cases, projects are bid, awarded and completed in a relatively short period of time and this measure would have little, if any impact. Larger, long term projects are the more likely setting for the union/non-union wage differential this bill seeks to address. Unfortunately, introducing such wage adjustments as proposed by this measure is likely to lead to uncertainty in the cost of public works projects and increase costs ultimately borne by the taxpayers.

Finally, many collective bargaining agreements already address this limited circumstance by allowing wage rates to remain at the level determined by the state at the time of the bid, award or start of the contract. Given this, I do not find a statutory change warranted to address the issue raised by this measure.”

Amendments taken on August 23, 2024, address some of the concerns raised in AB 1140’s veto message. The prevailing wage provisions now only apply to any contract for which notice to bidders is published after July 1, 2026 and that meets all of the following conditions:

1. The contract is not for the development of housing.
2. The contract is subject to this chapter (Division 2, Part 7, Chapter 1 of the Labor Code).
3. The awarded value of the prime contract is thirty-five million dollars ($35,000,000) or greater.
4. The contract is not awarded by the state or a state agency, nor is the contract awarded in furtherance of a project undertaken by the state.
   1. As used in this section, the term “state” is inclusive of the Legislature, the Judicial Council, the California State University, and the University of California.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter (Labor Enforcement and Compliance Fund).
• By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
• To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

*The above fiscal analysis is for an outdated version of the bill.

SUPPORT: (Verified 8/26/24)

State Building and Construction Trades Council of California (source)

Air Conditioning Sheet Metal Association
California Democratic Party
California Labor Federation
California Legislative Conference of Plumbing, Heating & Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
California State Treasurer
Finishing Contractors Association of Southern California
International Union of Operating Engineers, Cal-Nevada Conference
National Electrical Contractors Association
Northern California Allied Trades
Northern California Floor Covering Association
Southern California Glass Management Association
United Contractors
Wall and Ceiling Alliance
Western Painting and Coating Contractors Association
Western States Council Sheet Metal, Air, Rail and Transportation
Western Wall and Ceiling Contractors Association

OPPOSITION: (Verified 8/26/24)

American Council of Engineering Companies of California
Associated General Contractors of California
Associated General Contractors-San Diego Chapter

California Building Industry Association

California Special Districts Association

Calleguas Municipal Water District
Plumbing-heating-cooling Contractors Association of California
Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: The State Building and Construction Trades Council of California, state, in regards to the measure’s prevailing wage provisions:

“Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.”

ARGUMENTS IN OPPOSITION: The Associated General Contractors are opposed to the measure, arguing in regards to the prevailing wage provisions:

“There are numerous issues with AB 2182. First, changing the prevailing wage rate during a project would increase contractor costs. When a contractor enters into a contract with a public agency, the wage rates are defined as part of that contract and are reflected in a contractor’s bid price. Under AB 2182, it is not clearly identified that the awarding public entity would have to pay for the wage rate changes, making the contractors potentially responsible for paying the prevailing wage rate changes. This could make contractors less inclined to bid on public works projects as there is no certainty of what the future wage rates may be, thereby impacting the contractor’s cost on a project.”

*The above opposition statement is for a previous version of the bill. The prevailing wage provisions have been narrowed.

ASSEMBLY FLOOR: 65-5, 5/21/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Dixon, Essayli, Vince Fong, Gallagher, Sanchez

NO VOTE RECORDED: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Hoover, Mathis, Jim Patterson, Luz Rivas, Ta

Prepared by: Emma Bruce / L., P.E. & R. / (916) 651-1556

8/26/24 17:11:57

**** END ****

 THIRD READING  

Bill No: AB 2182

Author: Haney (D)

Amended: 8/15/24 in Senate

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-0, 6/12/24

AYES: Cortese, Durazo, Gonzalez, Laird

NO VOTE RECORDED: Wilk

SENATE JUDICIARY COMMITTEE: 9-1, 6/25/24

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Roth, Stern, Wahab

NOES: Niello

NO VOTE RECORDED: Wilk

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/15/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

ASSEMBLY FLOOR: 65-5, 5/21/24 - See last page for vote

SUBJECT: Public works

SOURCE: State Building and Construction Trades Council of California

DIGEST:

This bill makes several changes to state public works law. This bill 1) authorizes the Director (Director) of the Department of Industrial Relations (DIR) to dismiss a contractor’s request to review a civil wage and penalty assessment, as specified; 2) provides representatives of a joint labor-management committee (JLMC) access to active public works jobsites, as specified; 3) updates California’s annualization laws to conform to federal regulations; 4) requires any change in a prevailing wage rate, as determined by the Director, to take effect 10 days after its issuance for any contract that is awarded or for which notice to bidders is published after July 1, 2025, as specified; and 5) requires contractors, upon receipt of a written request, to furnish payroll records to the Labor Commissioner (LC) within 10 days.

ANALYSIS:

Existing federal law:

1. Permits, pursuant to the Labor Management Cooperation Act of 1978, the establishment of plant, area, and industrywide labor management committees, which have been organized jointly by employers and labor organizations representing employees in that plant, area, or industry, as specified. (29 U.S.C. §175a)
2. Specifies, under the Davis-Bacon Act (DBA), the terms “wages,” “scale of wages,” “wage rates,” and “prevailing wages” include:
   1. The basic hourly rate of pay,
   2. Any contribution irrevocably made by a contractor to a trustee or third party pursuant to a bona fide fringe benefit fund, plan or program, and
   3. The rate of costs to the contractor which may be reasonably anticipated in providing bona fide fringe benefits pursuant to an enforceable commitment to carry out a financially responsible plan or program, which was communicated to the workers in writing. (29 U.S.C. §3141(2))
3. Provides that, among others, life insurance, health insurance, and pensions, are fringe benefits under the DBA. (40 U.S.C. §3141(2)(B))
4. Requires contractors, except under limited circumstances, to annualize their fringe benefit contributions or costs to determine the hourly credit that may be claimed towards their prevailing wage obligation. (29 C.F.R. 5.25(c))

Existing state law:

1. Establishes within the Department of Industrial Relations (DIR) the Division of Labor Standards Enforcement (DLSE) under the direction of the LC, and empowers the LC to ensure a just day’s pay in every work place and to promote justice through the robust enforcement of labor laws. (Labor Code §79-107)
2. Requires the LC to, with reasonable promptness, issue a civil wage and penalty assessment to the contractor or subcontractor, or both, if the LC or their designee determines after an investigation that there has been a violation of public works laws. (Labor Code §1741(a))
3. Authorizes an affected contractor or subcontractor to obtain review of a civil wage and penalty assessment by transmitting a written request to the office of the LC that appears on the assessment within 60 days after service of the assessment. (Labor Code §1742(a))
4. Requires, upon receipt of a timely request, a hearing to be commenced within 90 days before the Director, who shall appoint an impartial hearing officer. (Labor Code §1742(b))
5. Requires, within 45 days of the conclusion of the hearing, the Director to issue a written decision affirming, modifying, or dismissing the assessment. (Labor Code §1742(b))
6. Authorizes an affected contractor or subcontractor to obtain review of the decision of the Director by filing a petition for a writ of mandate to the appropriate superior court within 45 days after service of the decision. (Labor Code §1742(c))
7. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an employer that fails to pay the prevailing wage to its employees or that fails to provide required payroll records. (Labor Code §1771.2)
8. Specifies that the term “per diem wages”, as it relates to public works, includes employer payments for, among other things, health and welfare, pensions, and apprenticeship or other training programs, as specified. (Labor Code §1773.1(a))
9. Provides that employer payments are a credit against the obligation to pay the general prevailing rate of per diem wages. (Labor Code §1773.1(c))
10. Requires the credit for employer payments to be computed on an annualized basis when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, unless certain circumstances exist. (Labor Code §1773.1(e))
11. Requires the Director to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
12. Provides that if during any quarterly period the director determines that there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published. (Labor Code §1773.6)
13. Requires each contractor and subcontractor to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. (Labor Code §1776(a))
14. Requires the payroll records to be certified and to be available for inspection at all reasonable hours at the principal office of the contractor, as specified. (Labor Code §1776(b))

This bill:

1. Authorizes the Director to dismiss a contractor or subcontractor’s request to review a civil wage and penalty assessment issued by the LC and instead issue a decision affirming the assessment if the contractor or subcontractor fails to appear for a prehearing conference or hearing, as specified.
2. Provides that within 15 days of the issuance of the decision, the Director may, upon a showing of good cause for the failure to appear, reconsider the dismissal of the request for review.
3. Requires that as a condition for filing a petition for a writ of mandate, to obtain review of the decision of the Director, the petitioner seeking the writ shall first post a bond with the LC equal to the total amount found to be due and owing as determined pursuant to the decision. Specifies the bond shall be issued by a surety duly authorized to do business in the state and shall be issued in favor of the LC.
4. Provides that, effective July 1, 2025, representatives of a JLMC shall be permitted reasonable access to active public works jobsites to monitor compliance with the prevailing wage and apprenticeship requirements.
5. Specifies that, for purposes of this section, “reasonable access” means access that is consistent with jobsite safety and security requirements, including the use of personal protective equipment that does not disrupt performance of work. Reasonable access includes access to workers during nonwork time.
6. Provides that an awarding body, owner, contractor, or subcontractor is not liable for any violations of safety standards caused by a representative of a JLMC. If a representative is injured on a jobsite while performing duties pursuant to these provisions, the JLMC’s workers’ compensation or liability insurance policy, or both are the exclusive remedy of the representative, and the awarding body, owner, contractor, or subcontractor shall not have any liability.
7. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an awarding body, contractor, or subcontractor that willfully denies the committee’s representative reasonable access in violation of these provisions. Requires the action be brought within six months after the denial of access.
8. Requires a court in an action described in 6) above to award a prevailing JLMC the following:
9. A civil penalty of one thousand dollars ($1,000) for each occasion that reasonable access was denied.
10. Its reasonable attorney’s fees and costs incurred in maintaining the action, including expert witness fees.
11. Exempts public works jobsites for entities that are required to comply with Sections 45122.1, 45125, and 45125.1 of the Education Code from the requirements described in 4) though 8) above.
12. Removes an exemption that allows the Director to determine that annualization does not serve the purposes of the law from a general rule requiring annualization when an employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer.
13. Provides that annualization, as specified, applies to all employer payments not made directly to the worker, regardless of whether any contributions are made or benefits are provided with respect to private construction, with the exception of contributions, except for contributions to defined contribution pension plans that provide for both immediate participation and immediate vesting. An employer may take full credit for the hourly amounts contributed to such defined contribution pension plans for public works projects even if the employer contributes at a lower rate or does not make contributions for private construction.
14. States that the employer shall have the burden of demonstrating that the credit for employer payments was properly calculated, as specified.
15. Requires the employer to, upon request of the LC, produce records of employee hours and employer payments on private construction sufficient for the LC to verify that the credit for employer payments was properly calculated on an annualized basis.
16. Revokes any exemptions to the annualization requirements of these provisions issued by the Director prior to January 1, 2025.
17. Requires prevailing wage fringe benefit credit issues not addressed by California statutes or regulations shall be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.
18. Makes inoperative on July 1, 2025 and repeals, on January 1, 2026, the provision that states if during any quarterly period the Director determines there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published.
19. Requires, if during any semiannual period the Director determines that there has been a change in any prevailing wage rate in any locality, the Director to make such change available to the awarding body and the Director’s determination to be final, except as specified.
20. Provides that the determination of a change in any prevailing wage by the Director shall apply on its effective date to any contract that is awarded or for which notice to the bidders is published after July 1, 2025.
21. Permits any contractor, awarding body, or representative of any craft, classification, or type of work affected by a change in rates on a particular contract to, within 20 days after publication of the new determination, file with the Director a verified petition to review the determination of that rate on the ground that it has not been determined in accordance with Labor Code §1773. Within two days after the filing of the petition, a copy of that petition shall be filed with the awarding body.
22. Requires the Director, or the Director’s authorized representative, to, upon notice to the petitioner, the awarding body, and other persons the Director deems proper, including the recognized collective bargaining representatives for the particular crafts, classifications, or types of work involved, initiate an investigation or hold a hearing. Within 20 days after the filing of that petition, or within a longer period as agreed upon by the Director, awarding body, and all interested parties, the Director shall make a final determination, as specified.
23. States that a determination issued by the Director is effective 10 days after its issuance. The Director shall include an issue date on the determination. The determination shall remain in effect until it is modified, rescinded, or superseded by the Director.
24. Provides that 15) through 19) above are operative on July 1, 2025.
25. Requires, upon request of the LC, a contractor or subcontractor to make available for inspection by the LC any payroll records requested, or portion thereof, by the LC to verify the accuracy or completeness of certified payroll records required to be produced, as specified.
26. Provides that the contractor or subcontractor has 10 days in which to comply following receipt of a written notice from the LC requesting records. In the event the contractor or subcontractor fails to comply with the 10-day period or any additional time period granted by the LC, the contractor or subcontractor shall be liable for specified penalties.
27. For purposes of 21) above, the term “payroll records” means all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

Background

Prevailing Wage Calculations. The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area. The Director issues wage determinations semiannually, on February 22 and August 22. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements (CBAs) and the rates that may have been predetermined for federal public works.

Existing law states that if the Director determines that there has been a change in the prevailing wage, such change shall be made available to an awarding body. This notification is for informational purposes and does not require an awarding body to update wages on existing and ongoing projects.

When bidding on a contract, union contractors must account for increases in labor costs arising out of wage rate increases determined within their CBA. If a CBA provides for a wage increase mid project, then union contractors have to abide by that. This is true regardless of existing law, which specifies updated wage rates, determined by the Director, do not apply to ongoing projects. Non-union contractors do not have to adjust wages mid project.

The prevailing wage provisions in this bill are substantially similar to the language in AB 1140 (Daly, 2013), which was vetoed by Governor Jerry Brown. In his veto message, he stated the following:

“This measure requires contractors on public works projects to increase workers' pay any time the state updates its prevailing wage rates. This is intended to address the circumstance where a non-union contractor is not required to adjust wages mid-project but a union contractor is subject to such adjustments pursuant to a collective bargaining agreement.

In most cases, projects are bid, awarded and completed in a relatively short period of time and this measure would have little, if any impact. Larger, long term projects are the more likely setting for the union/non-union wage differential this bill seeks to address. Unfortunately, introducing such wage adjustments as proposed by this measure is likely to lead to uncertainty in the cost of public works projects and increase costs ultimately borne by the taxpayers.

Finally, many collective bargaining agreements already address this limited circumstance by allowing wage rates to remain at the level determined by the state at the time of the bid, award or start of the contract. Given this, I do not find a statutory change warranted to address the issue raised by this measure.”

The questions raised in the veto message remain relevant today. Who will bear the costs related to increases in wage rates mid project? What effect will this have on future bids for public works projects? However, the committee also asks, is it fair to pay non-union workers employed on lengthy public works projects an outdated prevailing wage rate? Would applying mid-project wage rate increases maintain a level playing field? For more information on other provisions of this bill, please see the Senate Labor, Public Employment, and Retirement bill analysis.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee,

• DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter (Labor Enforcement and Compliance Fund).
• By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
• To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

SUPPORT: (Verified 8/15/24)

State Building and Construction Trades Council of California (Source)

Air Conditioning Sheet Metal Association
California Democratic Party
California Labor Federation
California Legislative Conference of Plumbing, Heating & Piping Industry
California State Association of Electrical Workers
California State Pipe Trades Council
California State Treasurer
Finishing Contractors Association of Southern California
International Union of Operating Engineers, Cal-Nevada Conference
National Electrical Contractors Association
Northern California Allied Trades
Northern California Floor Covering Association
Southern California Glass Management Association
United Contractors
Wall and Ceiling Alliance
Western Painting and Coating Contractors Association
Western States Council Sheet Metal, Air, Rail and Transportation
Western Wall and Ceiling Contractors Association

OPPOSITION: (Verified 8/15/24)

American Council of Engineering Companies of California
Associated General Contractors of California
Associated General Contractors-San Diego Chapter

California Building Industry Association

California Special Districts Association

Calleguas Municipal Water District
Plumbing-heating-cooling Contractors Association of California
Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: The sponsors of the measure, the State Building and Construction Trades Council of California, state, in regards to the measure’s prevailing wage provisions:

“Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.”

ARGUMENTS IN OPPOSITION: The Associated General Contractors are opposed to the measure, arguing in regards to the prevailing wage provisions, “There are numerous issues with AB 2182. First, changing the prevailing wage rate during a project would increase contractor costs. When a contractor enters into a contract with a public agency, the wage rates are defined as part of that contract and are reflected in a contractor’s bid price. Under AB 2182, it is not clearly identified that the awarding public entity would have to pay for the wage rate changes, making the contractors potentially responsible for paying the prevailing wage rate changes. This could make contractors less inclined to bid on public works projects as there is no certainty of what the future wage rates may be, thereby impacting the contractor’s cost on a project.”

ASSEMBLY FLOOR: 65-5, 5/21/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Flora, Mike Fong, Garcia, Gipson, Grayson, Haney, Hart, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Santiago, Schiavo, Soria, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NOES: Dixon, Essayli, Vince Fong, Gallagher, Sanchez

NO VOTE RECORDED: Cervantes, Megan Dahle, Friedman, Gabriel, Holden, Hoover, Mathis, Jim Patterson, Luz Rivas, Ta

Prepared by: Emma Bruce / L., P.E. & R. / (916) 651-1556

8/19/24 10:47:20

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2182 (Haney) - Public works

Bill Summary:

AB 2182 would (1) require that a joint labor-management committee (JLMC) be granted reasonable access, as defined, to a public works worksite to monitor compliance with prevailing wages law, (2) revise provisions for the appeal of the Labor Commissioner’s civil wage and penalty assessments, (3) provide that an employer has the burden of demonstrating that credit for employer payments is calculated correctly, (4) require an employer to provide payroll records to the Labor Commissioner upon request, and (5) require the Department of Industrial Relations (DIR) to update the prevailing wage semi-annually, to take effect on current public works projects.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 15, 2024

Fiscal Impact:

• DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter (Labor Enforcement and Compliance Fund).
• By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
• To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

Author Amendments:

Clarify that annualization would apply both when the employer makes lower payments for employee benefits when workers are on private work and when the employer makes zero contributions on private work, and make other clarifying changes.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2182 (Haney) - Public works

Bill Summary:

AB 2182 would (1) require that a joint labor-management committee (JLMC) be granted reasonable access, as defined, to a public works worksite to monitor compliance with prevailing wages law, (2) revise provisions for the appeal of the Labor Commissioner’s civil wage and penalty assessments, (3) provide that an employer has the burden of demonstrating that credit for employer payments is calculated correctly, (4) require an employer to provide payroll records to the Labor Commissioner upon request, and (5) require the Department of Industrial Relations (DIR) to update the prevailing wage semi-annually, to take effect on current public works projects.

Fiscal Impact:

• DIR indicates that it would incur first-year costs of $3.2 million, and $2.9 million annually thereafter, to implement the provisions of the bill (Labor Enforcement and Compliance Fund).
• By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill could result in an increased number of civil actions. Consequently, the bill could result in potentially significant cost pressures to the courts; the magnitude is unknown (Trial Court Trust Fund (TCTF)). The specific number of new actions that could be filed under the bill also is unknown; however, it generally costs about $1,000 to operate a courtroom for one hour. Courts are not funded on the basis of workload, and increased pressure on TCTF may create a need for increased funding for courts from the General Fund. The enacted 2024-25 budget includes $37 million in ongoing support from the General Fund to continue to backfill TCTF for revenue declines.
• To the extent updating the prevailing wage rate paid on a project increases project costs, the bill could result in costs to state agencies executing public works projects. The magnitude is unknown, but potentially significant (General Fund and special funds).

Background: When a state or local agency completes any construction, demolition, installation, alteration, or repair work, or work on any irrigation, utility, or street, sewer, public transportation, or other infrastructure project through the use of public funds, it is considered a “public works” project. Under state law, when a public agency contracts for a public works project, all workers employed on the public works project must be paid a prevailing wage for the locality, as determined by DIR. The prevailing wage rate generally based on the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft or classification within a locality. Requiring an across-the-board rate ensures bidders are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Existing law requires payment of prevailing wage to all workers employed on a public works project valued over $1,000, such as publicly funded construction, alteration, demolition, installation, maintenance, or repair work done under contract.

However, ensuring compliance with the prevailing wage law requires a variety of mechanisms as well as enforcement from the Labor Commissioner. An awarding agency is supposed to “take cognizance” of a violation of the prevailing wage and public works laws and promptly report any suspected violations to the Commissioner. The awarding agency is empowered to withhold contract payments until the violations are resolved when the contractor has not paid a prevailing wage. The Commissioner will investigate and determine whether there has been a violation of the prevailing wage laws, whether by notification of a suspected violation from the awarding agency or from a worker. If the Commissioner’s investigation determines that a violation has occurred, the Commissioner must with reasonable promptness issue an assessment of the wages and civil penalty stating the wages, penalties, and forfeitures due. Current law provides the Commissioner 18 months (with specified exceptions) from the completion of the public works project (when a notice of completion for the project is recorded, or upon acceptance by the awarding agency of the public work) to serve the assessment on the project’s contractor or subcontractor. If the public awarding agency has not disbursed all of the funds under the public works contract when the Commissioner issues an assessment, the agency must withhold from any disbursements the amounts needed to satisfy the Commissioner’s civil wage and penalty assessment, which the agency can disburse when the Commissioner’s assessment order is final.

A contractor may request review of the withholding and any assessment of penalties within 60 days after receiving the assessment notice, and such review would then be conducted within 90 days at a hearing before an impartial hearing officer. The Director must issue their written decision on the case within 45 days of the hearing, which becomes final if the contractor or subcontractor does not appeal the decision within 45 days to an appropriate court through a writ of mandate. Upon receiving a copy of the final order, the awarding agency that has withheld funds from the contractor must transmit the funds to the Commissioner. A wage and penalty assessment also becomes final if the contractor does not request a hearing on the assessment within 60 days, and the agency in such scenario also transmits any withheld funds to the Commissioner for disbursal to the aggrieved workers.

A JLMC is an organization jointly organized by management and labor organizations representing employees in the area for the purpose of improving labor-management relationships, job security, organizational effectiveness, and economic opportunity. A JLMC also may (1) enforce the prevailing wage requirements for public projects by bringing a civil action against the contractor that failed to pay the required prevailing wage, and (2) request certified payroll records.

Proposed Law:

This bill would, among other things, do the following:

• Provide that, if a contractor or subcontractor requests a review of the Commissioner’s civil wage and penalty assessment and fails to appear for a prehearing conference or hearing after receiving notice, as specified, the Director may dismiss the request for review and issue a decision affirming the assessment. Specify that, within 15 days of the issuance of the decision, a Director may reconsider the dismissal upon a showing of good cause for the failure to appear.
• Specify that, as a condition to file a petition for a writ of mandate with the appropriate superior court, the petitioner seeking the writ must first post a bond with the Commissioner equal to the amount found to be due as determined pursuant to the decision. Specify that the bond shall be issued by a surety duly authorized to do business in the state and shall be issued in favor of the Commissioner.
• Specify that, beginning July 1, 2025, representatives of a JLMC established pursuant to federal law must be permitted reasonable access (as defined) to active public works job sites to monitor compliance with the prevailing wage and apprenticeship requirements.
  • Specify that an awarding body, contractor, or subcontractor must not be liable for any violations of safety standards caused by a representative of a JLMC.
  • Specify that, if a representative of a JLMC is injured on a jobsite while monitoring compliance, the committee’s workers’ compensation or liability insurance policy, or both, shall be the exclusive remedy of the representative, and the awarding body, contractor, or subcontractor are not liable.
• Provide that a JLMC may bring an action in a court of competent jurisdiction against the awarding agency, contractor, or subcontractor that willfully denies the committee’s representative reasonable access to the public works job site. Specify that this suit must be brought within six months of the denial of access, and that a court shall award a prevailing committee a civil penalty of $1,000 for each occasion in which reasonable access was denied, as well as reasonable attorney’s fees and costs, including expert witness fees.
• Specify that annualized computations of credit for employer payments applies to all employer payments, except for contributions to defined contribution pension plans that provide for both immediate participation and immediate vesting. Specifies that an employer may take full credit for the hourly amounts contributed to such plans for public works projects even if the employer contributes at a lower rate or does not make contributions for private construction.
  • Specify that an employer has the burden of demonstrating that the credit for employer payments was properly calculated, and that the employer shall, upon request of the Commissioner, produce records of employee hours and employer payments on private construction projects sufficient for the Commissioner to verify that the credit was properly calculated on an annualized basis. Provides that the Commissioner may deny the employer credit if such records are not produced.
  • Specify that any exemptions to the annualization requirements issued by the director prior to January 1, 2025 are revoked.
• Specify that any prevailing wage fringe benefit credit issues not addressed by California law or regulations shall be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.
• Provide that, if during any semi-annual period the Director determines that there has been a change in any prevailing rate of per diem wages in any locality, the Director must make the change available to the awarding agency, and that the Director’s determination is final, except as specified. Specifies that the Director’s determination of a change in the prevailing wage shall apply on its effective date to any contract that is awarded or for which notice to bidders is published after July 1, 2025.
  • Provide that any contractor, awarding agency, or representative of any craft, classification, or type of work affected by a change of the prevailing wage rates on a particular contract may file, within 20 days after publication of the change of rate, with the Director a verified petition to review for not being determined in accordance with Labor Code Section 1773. Specifies that such a petition must be filed with the awarding agency within two days of being filed, and must set forth the facts upon which it is based.
  • Specify that the Director or their representative must initiate an investigation or hold a hearing, upon notice to the petitioner, awarding agency, or other persons. Specifies that the Director shall make a determination and transmit the determination in writing to the awarding agency and to the interested parties within 20 days after the filing of the petition. Specifies that this determination is final.
  • Specify that a determination issued by the Director is effective 10 days after issuance, and shall remain in effect until it is modified, rescinded, or superseded by the Director.
• Specify that, upon request of the Commissioner, a contractor or subcontractor must make available for the inspection by the Commissioner any payroll records, or portions of such records, requested by the Commissioner to verify the accuracy or completeness of certified payroll records required to be produced pursuant to Labor Code Section 1776. Specifies that the contractor or subcontractor has 10 days from receipt of written notice requesting the records to comply, unless additional time is granted by the Commissioner at the request of the contractor or subcontractor, and that the contractor or subcontractor is liable for penalties, as specified, for failing to comply with the order.

Related Legislation:

• AB 2705 (Ortega, 2024) provides that the Labor Commissioner must file any action on a payment bond for a violation of the prevailing wages law within the timeline required for the Labor Commissioner to serve a civil wage and penalty assessment, as specified. The bill is currently pending in this Committee.
• AB 2135 (Schiavo, 2024) increases the timeline for when the LC must serve a civil wage and penalty assessment upon a contractor or subcontractor of a prevailing wage violation from 18 months to 24 months after the later of the filing of a valid notice of completion or after the acceptance of the public work. Provides that this time period may be extended by 18 months for good cause. The bill is currently pending in this Committee.
• AB 1336 (Frazier, Chapter 792, Statutes of 2013) increased timeline for when the LC must serve a civil wage and penalty assessment upon a contractor or subcontractor of a prevailing wage violation from 180 days to 18 months after the later of the filing of a valid notice of completion or after the acceptance of the public work.
• AB 1140 (Daly, 2013) would have provided that if the Director determines, within a semiannual period, that there is a change in any prevailing rate of per diem wages in a locality, that determination applies to any public works contract that is awarded or for which notice to bidders is published on or after January 1, 2014. This bill was vetoed by the Governor.
• AB 1646 (Committee on Labor and Employment, Chapter 954, Statutes of 2000) established the authority of the LC to assess a civil wage and penalty against a contractor or subcontractor who fails to pay the prevailing wage.

Staff Comments:

The $37 million in General Fund support for TCTF in 2024-25 is down sharply (over 50 percent) from previous years. The comparative figure was $74 million in 2023-24, $72 million in 2022-23, and $84 million in 2021-22.

The increased costs to DIR under the bill reflect additional workload related to reviewing prevailing wage petitions and making determinations. However, the bill could additionally result in potential cost savings and assessment revenue gain of an unknown, but potentially significant amount, since it would (1) permit DIR to dismiss a request for review of a civil wage and penalty assessment, and (2) require a petitioner to post a bond with the LC before seeking a writ of mandate.

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SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: AB 2182 (Author:Haney)

Version: June 13, 2024

Hearing Date: June 25, 2024

Fiscal: Yes

Urgency: No

Consultant: ID

SUBJECT

Public works

DIGEST

This bill requires that a joint labor-management committee be granted reasonable access, as defined, to a public works worksite to monitor compliance with prevailing wages law, revises provisions for the appeal of the Labor Commissioner’s civil wage and penalty assessments, provides that an employer has the burden of demonstrating that credit for employer payments is calculated correctly, requires an employer to provide payroll records to the Labor Commissioner upon request, and requires the Director of the Department of Industrial Relations to update the prevailing wage semi-annually, to take effect on current public works projects.

EXECUTIVE SUMMARY

When a state or local agency completes any construction or similar work through the use of public funds, it is considered a “public works” project. Under state law, when a public agency contracts for a public works project, all workers employed by a contractor or subcontractor on the public works project must be paid a prevailing wage for the locality. The Labor Commissioner (Commissioner) may investigate a claim that a contractor or subcontractor failed to pay an employee the prevailing wage, and if the Commissioner determines there was a violation, the Commissioner must issue an assessment for the wages and penalties within a specified period of time. However, the prevailing wage for a particular project does not change once set in the notice of bidding, and the Labor Commissioner’s and a Joint Labor-Management Committee’s ability to enforce the prevailing wage law is limited in a variety of ways. AB 2182 proposes to address what the author and sponsors assert are inadequacies through a variety of changes to the public works laws, as described below. AB 2182 is sponsored by the State Building and Construction Trades Council of California and is supported by various trade and worker associations and unions, and is opposed by the Associated General Contractors, and a variety of other associations. The bill passed out of the Senate Public Employment and Retirement Committee by a vote of 4 to 0.

PROPOSED CHANGES TO THE LAW

Existing law:

1. Establishes the Labor Commissioner (Commissioner) within the Department of Industrial Relations (DIR), to enforce, among other things, wage and hour law, anti-retaliation provisions, and employer notice requirements. (Labor Code § 79 et seq.)
2. Defines a “public work” as construction, alteration, demolition, installation, or repair work done under contract and paid in part or in whole out of public funds, except for work done directly by a public utility company pursuant to Public Utilities Commission or other public authority. Includes work done for irrigation, utility, reclamation, improvement districts and other similar districts, street, sewer, or other improvement work, laying of carpet in specified circumstances, tree removal work, and public transportation demonstration projects. (Labor Code § 1720.)
3. Requires that, when a public agency contracts for a public works project, except for public works projects of $1,000 or less, all workers on the public works project must be paid at least a prevailing rate of per diem wages for work of a similar character in the locality in which the public project is performed, including the prevailing rate for any holiday or overtime work. (Labor Code § 1771.)
4. Requires the Director of DIR (Director) to determine the general prevailing rate of per diem wages, as specified, and specifies that the Director’s determination shall be final, except as specified. (Labor Code § 1770.)
5. Requires an awarding agency of a public works project to “take cognizance” of violations of the prevailing wage laws, and permits the awarding agency to withhold contract payments for such violations. (Labor Code § 1726.)
6. Specifies that, before an awarding agency makes payments to a contractor of the money due under a public works contract, the agency withhold and retain all amounts required to satisfy any civil wage and penalty assessment issued by the Commissioner for a prevailing wage violation. (Labor Code § 1727.)
7. Requires the Commissioner to, with reasonable promptness, issue a civil wage and penalty assessment to the contractor or subcontractor, or both, if the Commissioner or their designee determines after an investigation that there has been a violation public works laws. Specifies that interest shall accrue for any due and unpaid wages from the time the wages were due and payable. (Labor Code § 1741 (a).)
8. States that the Commissioner’s assessment must be served not later than 18 months after the filing of a valid notice of completion in the office of the county recorder in each county in which the public work or some part thereof was performed, or not later than 18 months after the acceptance of the public work, whichever occurs last. Specifies that the Commissioner must, to the extent practicable, ascertain the identity of any bonding company that issued a bond to secure the payment of wages covered by the assessment and any surety on a bond, and that the Commissioner shall serve a copy of the assessment on the bonding company or surety at the same time that notice is made on the contractor or subcontractor. (Labor Code § 1741 (a).)
9. Requires the period of service of assessments to be tolled for the period of time required by the Director to determine whether a project is a public work, as specified. Requires the body awarding the contract for a public work to furnish, within 10 days after receipt of a written request from the Commissioner, a copy of the valid notice of completion for the public work, as described. (Labor Code §§ 1741.1 (a) and (b)(1).)
10. An affected contractor or subcontractor may request a review of a civil wage and penalty assessment and withholding to the Commissioner, if requested within 60 days after they are served with the notice of the assessment. Upon the contractor’s request, a hearing before an impartial hearing officer within 90 days shall occur, at which the contractor will have the burden of proving that the basis for the civil wage and penalty assessment was incorrect. Within 45 days of the conclusion of the hearing, the Director must issue a written decision regarding the assessment. An affected contractor or subcontractor may obtain review of this decision by filing a petition for a writ of mandate to the appropriate superior court. (Labor Code § 1742.)
11. Provides that a joint labor-management committee, as established under federal law, may bring an action against an employer for a failure to pay a prevailing wage to its employees within 18 months after the filing of a valid notice of completion, or within 18 months after the acceptance of the public work, whichever occurs last. A court must award restitution to an employee for unpaid wages, plus interest, and liquidated damages equal to the amount of unpaid wages owed, and may impose civil penalties, injunctive relief, or any other appropriate form of equitable relief. (Labor Code § 1771.2.)
12. Provides that employer payments, as defined, are a credit against the obligation to pay the general prevailing rate of per diem wages. Specifies that employer payments include the rate of contribution irrevocably made pursuant to a plan, fund, or program, the rate of actual costs to the employer reasonably anticipated in providing benefits to workers, and payments to the California Apprenticeship Council. (Labor Code §1773.1(c).)
13. Requires the credit for employer payments to be computed on an annualized basis when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, unless certain circumstances exist. (Labor Code §1773.1(e).)
14. Provides that if during any quarterly period the director shall determine that there has been a change in any prevailing rate of per diem wages in any locality, they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published. (Labor Code §1773.6.)
15. Requires each contractor and subcontractor to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. (Labor Code §1776(a).)
16. Requires the payroll records to be certified and to be available for inspection at all reasonable hours at the principal office of the contractor on the following basis:
    1. a certified copy of an employee’s payroll record shall be made available for inspection or furnished to the employee or the employee’s authorized representative on request;
    2. a certified copy of all payroll records shall be made available for inspection or furnished upon request to a representative of the body awarding the contract and the Division of Labor Standards Enforcement; and
    3. a certified copy of all payroll records shall be made available upon request by the public for inspection or for copies thereof. (Labor Code §1776(a).)

This bill:

1. Provides that, if a contractor or subcontractor requests a review of the Commissioner’s civil wage and penalty assessment and fails to appear for a prehearing conference or hearing after receiving notice, as specified, the Director may dismiss the request for review and issue a decision affirming the assessment. Specifies that, within 15 days of the issuance of the decision, a Director may reconsider the dismissal upon a showing of good cause for the failure to appear.
2. Specifies that, as a condition to file a petition for a writ of mandate with the appropriate superior court, the petitioner seeking the writ must first post a bond with the Commissioner equal to the amount found to be due as determined pursuant to the decision. Specifies that the bond shall be issued by a surety duly authorized to do business in the state and shall be issued in favor of the Commissioner.
3. Specifies that, beginning July 1, 2025, representatives of a joint labor-management committee established pursuant to federal law must be permitted reasonable access to active public works job sites to monitor compliance with the prevailing wage and apprenticeship requirements.
   1. Defines “reasonable access” to mean access that is consistent with job site safety and security requirements, including the use of personal protective equipment, and that does not disrupt performance of work, and to include access to workers during non-work time.
   2. Specifies that an awarding body, contractor, or subcontractor must not be liable for any violations of safety standards caused by a representative of a joint labor-management committee.
   3. Specifies that, if a representative of a joint labor-management committee is injured on a jobsite while monitoring compliance, the committee’s workers’ compensation or liability insurance policy, or both, shall be the exclusive remedy of the representative, and the awarding body, contractor, or subcontractor are not liable.
4. Provides that a joint labor-management committee may bring an action in a court of competent jurisdiction against the awarding agency, contractor, or subcontractor that willfully denies the committee’s representative reasonable access to the public works job site. Specifies that this suit must be brought within six months of the denial of access, and that a court shall award a prevailing committee a civil penalty of $1,000 for each occasion in which reasonable access was denied, as well as reasonable attorney’s fees and costs, including expert witness fees.
5. Specifies that annualized computations of credit for employer payments applies to all employer payments, except for contributions to defined contribution pension plans that provide for both immediate participation and immediate vesting. Specifies that an employer may take full credit for the hourly amounts contributed to such plans for public works projects even if the employer contributes at a lower rate or does not make contributions for private construction.
   1. Specifies that an employer has the burden of demonstrating that the credit for employer payments was properly calculated, and that the employer shall, upon request of the Commissioner, produce records of employee hours and employer payments on private construction projects sufficient for the Commissioner to verify that the credit was properly calculated on an annualized basis. Provides that the Commissioner may deny the employer credit if such records are not produced.
   2. Specifies that any exemptions to the annualization requirements issued by the director prior to January 1, 2025 are revoked.
6. Specifies that any prevailing wage fringe benefit credit issues not addressed by California law or regulations shall be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.
7. Provides that, if during any semi-annual period the Director determines that there has been a change in any prevailing rate of per diem wages in any locality, the Director must make the change available to the awarding agency, and that the Director’s determination is final, except as specified. Specifies that the Director’s determination of a change in the prevailing wage shall apply on its effective date to any contract that is awarded or for which notice to bidders is published after July 1, 2025.
   1. Provides that any contractor, awarding agency, or representative of any craft, classification, or type of work affected by a change of the prevailing wage rates on a particular contract may file, within 20 days after publication of the change of rate, with the Director a verified petition to review for not being determined in accordance with Labor Code Section 1773. Specifies that such a petition must be filed with the awarding agency within two days of being filed, and must set forth the facts upon which it is based.
   2. Specifies that the Director or their representative must initiate an investigation or hold a hearing, upon notice to the petitioner, awarding agency, or other persons. Specifies that the Director shall make a determination and transmit the determination in writing to the awarding agency and to the interested parties within 20 days after the filing of the petition. Specifies that this determination is final.
   3. Specifies that a determination issued by the Director is effective 10 days after issuance, and shall remain in effect until it is modified, rescinded, or superseded by the Director.
8. Specifies that, upon request of the Commissioner, a contractor or subcontractor must make available for the inspection by the Commissioner any payroll records, or portions of such records, requested by the Commissioner to verify the accuracy or completeness of certified payroll records required to be produced pursuant to Labor Code Section 1776. Specifies that the contractor or subcontractor has 10 days from receipt of written notice requesting the records to comply, unless additional time is granted by the Commissioner at the request of the contractor or subcontractor, and that the contractor or subcontractor is liable for penalties, as specified, for failing to comply with the order.

COMMENTS

1. Author’s statement

According to the author:

Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State’s public works law and will provide transparency on public works projects.

1. California’s protections for workers’ wages and equity in public works projects

Many of California’s labor laws aim to protect the state’s workers and ensure they are paid fairly and adequately for their work. These laws are of significant importance, as they ensure that workers can meet their basic needs and protect their right to just compensation for their labor. However, wage theft, in which an employer does not pay a worker the amount the worker is due, or does not pay the worker for all of their working hours, is the largest form of theft in the nation.^[1] Reports state that workers lost at least 338 million dollars to wage theft in 2021, and one of the top industries for wage theft was construction.^[2] The Commissioner, who is charged with investigating complaints of violations of prevailing wage and apprenticeship laws that protect the wages of workers on public works projects, opened 1,964 cases of prevailing wage violation and assessed over $10.6 million prevailing wages and another $12.6 million in penalties against employers for violations.^[3]

When a state or local agency completes any construction, demolition, installation, alteration, or repair work, or work on any irrigation, utility, or street, sewer, public transportation, or other infrastructure project through the use of public funds, it is considered a “public works” project. (Labor Code § 1720.) When a California state or local agency initiates a public works project, the agency often lacks the staff and expertise to carry out the project itself. Instead, it turns to contractors to which it awards funds and a contract to complete the project for the agency. Under state law, when a public agency contracts for a public works project, all workers employed on the public works project must be paid a prevailing wage for the locality, as determined by the Director of DIR. (Labor Code § 1771.) Furthermore, in any call for bids for a public works contract, as well as in the final contract for the contracted-for work, the agency must specify the prevailing wage rate for each type of worker needed for the project, or otherwise make the rate available upon request. (Labor Code § 1773.2.) The prevailing wage is based on the standard wages for a particular work or position, and is often based on the rate in local collective bargaining agreements. The function of prevailing wage laws is to ensure that a contractor’s ability to obtain a public works contract is not based on paying lower wage rates than competing bidders. Thus, all bidders on a public works project are required to use the same wage rates when bidding for a public works project, and contractors cannot squeeze their employees or rely on non-unionized workers in order to outbid another contractor for the project.

However, for such a public works project, ensuring compliance with the prevailing wages law requires a variety of mechanisms as well as enforcement from the Commissioner. An awarding agency is supposed to “take cognizance” of a violation of the prevailing wage and public works laws and promptly report any suspected violations to the Commissioner. (Labor Code § 1726.) The awarding agency is empowered to withhold contract payments until the violations are resolved when the contractor has not paid a prevailing wage. (Labor Code §§b 1726, 1771.6.) The Commissioner will investigate and determine whether there has been a violation of the prevailing wage laws, whether by notification of a suspected violation from the awarding agency or from a worker. If the Commissioner’s investigation determines there has been a violation, the Commissioner must with reasonable promptness issue an assessment of the wages and civil penalty stating the wages, penalties, and forfeitures due. (Labor Code § 1741.) The law provides the Commissioner 18 months from the completion of the public works project (when a notice of completion for the project is recorded, or upon acceptance by the awarding agency of the public work) to serve the assessment on the project’s contractor or subcontractor. (Labor Code § 1741.) This timeline may additionally be tolled if DIR must investigate whether the project is in fact a public works project. (Labor Code § 1741.1.) If the public awarding agency has not disbursed all of the funds under the public works contract when the Commissioner issues an assessment, the agency must withhold from any disbursements the amounts needed to satisfy the Commissioner’s civil wage and penalty assessment, which the agency can disburse when the Commissioner’s assessment order is final. (Labor Code § 1727.)

A contractor may request review of the withholding and any assessment of penalties within 60 days after receiving the assessment notice, and such review would then be conducted within 90 days at a hearing before an impartial hearing officer. (Labor Code § 1742.) The Director must issue their written decision on the case within 45 days of the hearing, which becomes final if the contractor or subcontractor does not appeal the decision within 45 days to an appropriate court through a writ of mandate. Upon receiving a copy of the final order, the awarding agency that has withheld funds from the contractor must transmit the funds to the Commissioner. A wage and penalty assessment also becomes final if the contractor does not request a hearing on the assessment within 60 days, and the agency in such scenario also transmits any withheld funds to the Commissioner for disbursal to the aggrieved workers.

A joint labor-management committee (JLMC) is an organization jointly organized by management and labor organizations representing employees in the area for the purpose of improving labor-management relationships, job security, organizational effectiveness, and economic opportunity pursuant to Title 29 of the United States Code, Section 175a. A JLMC also may enforce the prevailing wage requirements for public projects by bringing a civil action against the contractor that failed to pay the required prevailing wage. (Labor Code § 1771.2.) A JLMC also may request certified payroll records. (Labor Code § 1776.)

Contractors and subcontractors on public works projects are also required to pay prevailing rate of per diem wages, which generally are employer payments toward a worker’s healthcare, pension, vacation, travel, subsistence, and other payments for training or assistance programs and fees. (Labor Code § 1773.1.) Any employer payments into benefit contribution plans can be credited against this obligation. However, because an employee’s work may not be solely on the public works project, the amount of payments toward benefits that can be credited is calculated on an annualized basis.

1. AB 2182 proposes to make various changes to the public works law to ensure workers are paid an up-to-date prevailing wage
   
   1. AB 2182 provides more clarity for the enforcement of civil wage and penalty assessments

AB 2182 provides additional guidelines for the Commissioner’s civil wage and penalty assessments to ensure that such assessments can be enforced without significant delay. It specifies that, if a contractor or subcontractor requests review of the assessment by the Director, and the contractor or subcontractor does not appear for a prehearing conference or the hearing, the Director may dismiss the request for review. Currently, the statute provides no process for a request to review to be dismissed, or to be dismissed when a contractor or subcontractor fails to appear for proceedings on the request. Thus, AB 2182 creates a mechanism to allow the Director to dismiss a request to review when the contractor or subcontractor does not appear to argue their request. AB 2182 includes protections for if there was a valid reason that the contractor or subcontractor missed the prehearing conference or hearing, as it allows the Director to reconsider the request within 15 days of their dismissal upon a showing of good cause. This process provides a contractor or subcontractor with an opportunity to still make their case if there is a good reason that they missed the prehearing conference or hearing. The author argues that this process is needed because review proceedings of the Commissioner’s assessment can take years to conclude, and that contractors and subcontractors failing to appear at a proceeding further delays the review and delays workers receiving their lost wages.

AB 2182 also aims to prevent an appeal of a final order upholding the Commissioner’s assessment from further delaying the payment of the unpaid wages to the aggrieved employees. It specifies that, if a contractor or subcontract files a writ of mandate to appeal to the court a final order on the assessment, they must post a bond with the Commissioner equal to the total amount found to be due. Thus, the aggrieved worker will be paid their lost wages while the petition challenging the Commissioner’s final order is reviewed on appeal.

• 1. AB 2182 amends the annualization process for credit on prevailing rates of per diem wages

AB 2182 makes two changes to the annualization process for credit for employer payments on benefits. It first specifies that employer contributions to defined contribution pension plans that provide for both immediate participation and immediate vesting are exempted from the annualization process and can instead be claimed in full as credit. Second, it specifies that the employer has the burden of demonstrating that the credit for employer payments was properly calculated. For determining whether the calculations were correct, AB 2182 provides that an employer must produce records of employee hours and employer payments on private construction project upon the request of the Commissioner, and that the Commissioner may deny the employer credit for employer payments if the employer does not produce such records.

• 1. AB 2182 provides JLMCs a right to reasonable access to a public works worksite for the purposes of ensuring compliance with prevailing wage law

AB 2182 aims to provide JLMCs greater ability to investigate and enforce the prevailing wage law. It does so by requiring that JLMCs are provided reasonable access to active public works worksites in order to monitor compliance with the prevailing wage and apprenticeship requirements. It limits such access by requiring it be consistent with job site safety and security requirements and that it not disrupt the ongoing work. It also specifies that reasonable access includes access to workers during non-work time. If the JLMC is denied reasonable access, the JLMC may bring a civil action against the entity, be it the awarding agency, the contractor, or a subcontractor, that willfully denied the JLMC reasonable access. Such a suit may only be brought within six months of the denial of access, but a prevailing JLMC is entitled to reasonable attorney’s fees and a civil penalty of $1,000 for each occasion access was denied.

The author asserts that this provision is necessary because JLMCs ability to monitor and enforce prevailing wage and apprenticeship law is hampered by not having access to the worksite. Indeed, enforcement requires having the ability to monitor, and while JLMCs may obtain payroll records from contractors and subcontractors, such payroll records may not tell the whole story. Talking with workers to determine how much they are paid and what their hours are would be a valuable tool in enforcing the law. In response to opposition’s concerns that requiring access to the worksite would expose the property owner to liability if an accident or injury occurs while the JLMC representative is on the property, the author recently amended the bill in specify that an awarding agency, contractor, or subcontractor may not be liable for any violations of safety standards caused by a JLMC representative. The amendments further specify that, if a representative of the JLMC is injured on the jobsite while monitoring compliance, the JLMC’s workers’ compensation or liability insurance policy are the exclusive remedy of the representative.

Opposition also argues that requiring that a property owner provide a JLMC access to the worksite is unconstitutional under recent Supreme Court precedent in Cedar Point Nursery v. Hassid. In that case, a nursery asserted that a California regulation that granted union organizers access to the nursery’s property for three hours a day for four months a year for organizing activities constituted a taking per se under the Fifth and Fourteenth Amendments. (Cedar Point Nursery v. Hassid, (2021) 141 S. Ct. 2063.) The Supreme Court agreed with the nursery on the reasoning that the regulation was not a regulatory taking restraining the grower’s use of their property, but rather a per se taking because it amounted to a right to invade and appropriated the grower’s right to exclude. (Id. at 2072.) However, the provisions of AB 2182 can be distinguished from those at issue in Cedar Point Nursery. AB 2182 does not grant a complete right of access, like in Cedar Point Nursery, but rather a limited access subject to reasonableness. It also does not mandate access for a certain number of hours or days per year, as did the regulation at issue in Cedar Point Nursery. Thus, a property owner under AB 2182 still has a right to exclude based on reasonableness, and the bill does not mandate any specific amount of access other than that to which the JLMC is entitled.

• 1. AB 2182 applies any semiannual change in the prevailing wage to pending public works projects

AB 2182 seeks to allow adjustments to the prevailing wage so that workers are not stuck with an old prevailing wage years after it was set for the project. It requires that, if the Director determines that there has been a change in the prevailing wage upon a semi-annual review, the Director must make the change available to the awarding agency of any public works project to which it applies. Additionally, this determination of a new prevailing wage applies to any public works contract on a project that was advertised for bidding after July 1, 2025. Thus, AB 2182 permits DIR to adjust the prevailing wage when it completes its semi-annual review of the prevailing wage, and mandates this new prevailing wage on all applicable public works projects. The author asserts that this is necessary because many workers take a wage lower than the current prevailing wage because they must accept the rate set during the bidding process. The prevailing wage in such a case would stay the same throughout the bidding and completion of the public works project, even if the project takes years and the prevailing wage changes. Because the entire purpose of the prevailing wage is meant to ensure that workers on public works projects are not being paid less than local workers, including unionized workers, in the area, this adjustment makes sense.

AB 2182 includes provisions that allow for the Director’s new, adjusted prevailing wage determination to be challenged, much like current law allows the Director’s prevailing wage to be challenged. Those provisions allow the Director to initiate an investigation and hold a hearing on the request, and requires the Director to make a final determination within 20 days of the filing of the petition for review, except upon agreement of all parties.

• 1. AB 2182 provides the Commissioner an enforcement mechanism to obtain contractor certified payroll records

Lastly, AB 2182 provides a mechanism by which the Commissioner can require a contractor provide the certified payroll records that the Commissioner is already empowered to review as part of their power to investigate prevailing wage violations. However, while the Commissioner currently can request and review certified payroll records for this purpose, the Commissioner does not have an enforcement mechanism to require the contractor to provide the records. AB 2182 requires a contractor or subcontractor to make available to the Commissioner any payroll records requested by the Commissioner, and it requires that the contractor or subcontractor provide the records within 10 days of the request. If the contractor or subcontractor fails to comply in the 10-day period, the contractor or subcontractor is liable for penalties. AB 2182 aligns the definition of payroll records with the definition in the regulations on such records at California Code of Regulations Section 16000.

1. Arguments in support

According to the State Building and Construction Trades Council of California, which is the sponsor of AB 2182:

Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based. This occurs if there is a single asterisk determination or if the determination has a double asterisk, but the work goes on for longer than the predetermined changes.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.

This bill would also grant representatives from joint labor-management committee’s reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly.

AB 2182 also fixes an issue with annualization. Annualization is a principle adopted by the federal Department of Labor (DOL) in enforcing federal prevailing wage law, the Davis-Bacon Act, for crediting contributions made to fringe benefit plans based on the effective rate of contributions for all hours worked during a year by an employee on both public and private projects. Contractors may meet their prevailing wage obligations by paying workers a combination of cash wages and fringe benefits. Under a state law passed in 2000, contractors must use the annualization rule to calculate the hourly value of their fringes. However, the Department of Industrial Relations (DIR) has yet to issue conforming regulations on annualization. Instead, the DIR has issued public guidelines, private rulings, and enforcement decisions; actions that have sometimes contradicted each other and have at times also conflicted with federal prevailing wage rules. Lacking clarity, enforcement suffers; a particular problem as underpayment schemes via excessive fringe benefit credits have become more widespread. AB 2182 would conform annualization to the US DOL Davis-Bacon regulations for purposes of clarity and to help prevent wage theft.

Under current law, the Labor Commissioner issues a civil wage and penalty assessment (CWAPA) to a contractor that violates the prevailing wage law. Contractors often request administrative review, which just requires a letter and delays enforcement of the assessment, and then the contractor fails to appear at the hearing. This wastes the time of the Labor Commissioner’s office, which must prepare for the hearing, and wastes the time of the Director’s hearing officers. If the contractor does not appear, the hearing officer conducts the hearing anyway and requires the deputy Labor Commissioner to present evidence. This bill allows the Director to dismiss the request for review and issue a decision affirming the civil wage and penalty assessment if the contractor who has been served with notice, does not show up for the pre-hearing conference or hearing. The Labor Code requires that parties seeking judicial review of Labor Commissioner decisions to post a bond to secure payment of back wages. The same is true for parties seeking writ review of Labor Commissioner decisions after citations by the Bureau of Field Enforcement. However, there is no similar requirement to post a bond after a decision by the director to affirm a CWAPA. This bill requires a contractor who wishes to file a petition for a writ of mandate challenging the director’s decision to post a bond.

Finally, this bill would require contractors to produce the backup payroll records requested by the Labor Commissioner and authorize the Labor Commissioner to issue a civil wage and penalty assessment if the contractor fails to do so. Under current law, contractors on public works projects are required by Labor Code 1776 to produce certified payroll records so it is possible to verify that construction workers are being paid prevailing wages. The issue AB 2182 is fixing is that the definition of “payroll records” is broader than the definition in Labor Code 1776, and some contractors have used this as a reason to refuse to provide the Labor Commissioner with these backup payroll records.

1. Arguments in opposition

According to the Associated General Contractors, which opposes AB 2182:

There are numerous issues with AB 2182. First, changing the prevailing wage rate during a project would increase contractor costs. When a contractor enters into a contract with a public agency, the wage rates are defined as part of that contract and are reflected in a contractor’s bid price. Under AB 2182, it is not clearly identified that the awarding public entity would have to pay for the wage rate changes, making the contractors potentially responsible for paying the prevailing wage rate changes. This could make contractors less inclined to bid on public works projects as there is no certainty of what the future wage rates may be, thereby impacting the contractor’s cost on a project. Further, if the definition of “public works” is expanded while a project is underway, a contractor would not have prepared its bid document with any knowledge of a potential future substantial contract change.

Granting “reasonable access” to job sites by joint labor-management committees raises concerns. While the most recent amendments help alleviate some of the liability concerns of being on a worksite, there are additional concerns about the amount of non-project personnel that may be on-site at any time. Many contractors hold master labor agreements (MLA) with specific unions irrespective of the projects. As such, measures like AB 2182 would look to disturb the existing labor agreements held by those MLA-affiliated contractors by allowing any joint labor management committee access to the worksite. The undercurrent of allowing these committees to access active worksites reflects the current tension of unions fighting to ensure their workers hold jobs on a worksite. This creates possible disruptions at worksites merely because a joint labor-management committee union affiliation may not be the union working on the project. Only joint labor-management committees that have members on a worksite should be granted reasonable access.

Lastly, by requiring a contractor to secure a surety bond if they are filing a writ of mandate to dispute the Department of Industrial Relations Director’s decision unfairly discriminates against minority-owned and women-owned subcontractors. Unless a subcontractor is required to have performance and payment bonds (which is rare) for the job, securing a surety bond where the subcontractor is not required to have surety bonds makes it difficult to secure one as a standalone bond which would be viewed by the sureties as a “financial guarantee bond”. Aside from tying up needed capital, obtaining a bond of this type would require a subcontractor to produce the necessary guarantees, which can be a time-consuming process. Creating an additional barrier to legitimate legal rights negatively affects a subcontractor’s right to due process. In the case of the general contractor on a public works project, they are required to provide performance and payment bonds and the surety is liable for any unpaid wage claims and penalties. In addition, as it relates to the subcontractor wage claims, the general contractor is responsible for labor violations of its subcontractors which calls into question the necessity of this provision. The general contractor is the ultimate guarantor along with the insurer of performance and payment bonds.

SUPPORT

State Building and Construction Trades Council of California, AFL-CIO (sponsor)

Air Conditioning Sheet Metal Association

Associated General Contractors – San Diego Chapter

California Democratic Party

California Labor Federation, AFL-CIO

California State Association of Electrical Workers

California State Pipe Trades Council

California State Treasurer

International Union of Operating Engineers, Cal-Nevada Conference

Western States Council of Sheet Metal Workers

OPPOSITION

Associated General Contractors

California Special Districts Association

Calleguas Municipal Water Districts

Western Electrical Contractors Association

RELATED LEGISLATION

Pending Legislation:

AB 2705 (Ortega, 2024) provides that the Labor Commissioner must file any action on a payment bond for a violation of the prevailing wages law within the timeline required for the Labor Commissioner to serve a civil wage and penalty assessment, as specified. AB 2705 is currently in the Senate Judiciary Committee.

AB 2135 (Schiavo, 2024) increases the timeline for when the LC must serve a civil wage and penalty assessment upon a contractor or subcontractor of a prevailing wage violation from 18 months to 24 months after the later of the filing of a valid notice of completion or after the acceptance of the public work. Provides that this time period may be extended by 18 months for good cause. AB 2135 is currently in the Senate Judiciary Committee.

Prior Legislation:

AB 1336 (Frazier, Ch. 792, Stats. 2013) increased timeline for when the LC must serve a civil wage and penalty assessment upon a contractor or subcontractor of a prevailing wage violation from 180 days to 18 months after the later of the filing of a valid notice of completion or after the acceptance of the public work.

AB 1140 (Daly) of 2013 would have provided that if the Director determines, within a semiannual period, that there is a change in any prevailing rate of per diem wages in a locality, that determination applies to any public works contract that is awarded or for which notice to bidders is published on or after January 1, 2014. This bill was vetoed by Governor Brown.

AB 1646 (Committee on Labor and Employment, Ch. 954, Stats. 2000) established the authority of the LC to assess a civil wage and penalty against a contractor or subcontractor who fails to pay the prevailing wage.

PRIOR VOTES:

Senate Labor, Public Employment and Retirement Committee (Ayes 4, Noes 0)

Assembly Floor (Ayes 65, Noes 5)

Assembly Appropriations Committee (Ayes 11, Noes 2)

Assembly Labor and Employment Committee (Ayes 7, Noes 0)

**************

1. Brady Meixell & Ross Eisenbrey, Wage theft is a much bigger problem than other forms of theft – but workers remain mostly unprotected, Economic Policy Institute (Sept. 18, 2014), available at https://www.epi.org/publication/wage-theft-bigger-problem-forms-theft-workers/. ↑

2. Alejandro Lazo et al, When employers steal wages from workers, CalMatters (Jul. 25, 2022), available at https://calmatters.org/explainers/when-employers-steal-wages-from-workers/?series=unpaid-wages-california-workers. ↑

3. Cal. Labor Commissioner’s Office, 2020-2021 The Bureau of Field Enforcement Fiscal Year Report, Dept. of Industrial Relations (2021), available at https://www.dir.ca.gov/dlse/DLSEReports.htm. ↑

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Lola Smallwood-Cuevas, Chair

2023 - 2024 Regular

Bill No: AB 2182 Hearing Date: June 12, 2024

SUBJECT: Public works

KEY ISSUE

This bill makes several changes to state public works law. AB 2182 would 1) authorize the Director (Director) of the Department of Industrial Relations (DIR) to dismiss a contractor’s request to review a civil wage and penalty assessment, as specified; 2) provide representatives of a joint labor-management committee (JLMC) access to active public works job sites, as specified; 3) update California’s annualization laws to conform to federal regulations; 4) require any change in a prevailing wage rate, as determined by the Director, to take effect 10 days after its issuance for any contract that is awarded or for which notice to bidders is published after July 1, 2025, as specified; and 5) require contractors, upon receipt of a written request, to furnish payroll records to the Labor Commissioner (LC) within 10 days.

ANALYSIS

Existing federal law:

1. Permits, pursuant to the Labor Management Cooperation Act of 1978, the establishment of plant, area, and industrywide labor management committees, which have been organized jointly by employers and labor organizations representing employees in that plant, area, or industry, as specified. (29 U.S.C. §175a)
2. Specifies, under the Davis-Bacon Act (DBA), the terms “wages,” “scale of wages,” “wage rates,” and “prevailing wages” include:
3. The basic hourly rate of pay,
4. Any contribution irrevocably made by a contractor to a trustee or third party pursuant to a bona fide fringe benefit fund, plan or program, and
5. The rate of costs to the contractor which may be reasonably anticipated in providing bona fide fringe benefits pursuant to an enforceable commitment to carry out a financially responsible plan or program, which was communicated to the workers in writing. (29 U.S.C. §3141(2))
6. Provides that, among others, life insurance, health insurance, and pensions, are fringe benefits under the DBA. (40 U.S.C. §3141(2)(B))
7. Requires contractors, except under limited circumstances, to annualize their fringe benefit contributions or costs to determine the hourly credit that may be claimed towards their prevailing wage obligation. (29 C.F.R. 5.25(c))

Existing state law:

1. Establishes within the Department of Industrial Relations (DIR) the Division of Labor Standards Enforcement (DLSE) under the direction of the LC, and empowers the LC to ensure a just day’s pay in every work place and to promote justice through the robust enforcement of labor laws. (Labor Code §79-107)
2. Requires the LC to, with reasonable promptness, issue a civil wage and penalty assessment to the contractor or subcontractor, or both, if the LC or their designee determines after an investigation that there has been a violation of public works laws. (Labor Code §1741(a))
3. Authorizes an affected contractor or subcontractor to obtain review of a civil wage and penalty assessment by transmitting a written request to the office of the LC that appears on the assessment within 60 days after service of the assessment. (Labor Code §1742(a))
4. Requires, upon receipt of a timely request, a hearing to be commenced within 90 days before the Director, who shall appoint an impartial hearing officer. (Labor Code §1742(b))
5. Requires, within 45 days of the conclusion of the hearing, the Director to issue a written decision affirming, modifying, or dismissing the assessment. (Labor Code §1742(b))
6. Authorizes an affected contractor or subcontractor to obtain review of the decision of the Director by filing a petition for a writ of mandate to the appropriate superior court within 45 days after service of the decision. (Labor Code §1742(c))
7. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an employer that fails to pay the prevailing wage to its employees or that fails to provide required payroll records. (Labor Code §1771.2)
8. Specifies that the term “per diem wages”, as it relates to public works, includes employer payments for, among other things, health and welfare, pensions, and apprenticeship or other training programs, as specified. (Labor Code §1773.1(a))
9. Provides that employer payments are a credit against the obligation to pay the general prevailing rate of per diem wages. (Labor Code §1773.1(c))
10. Requires the credit for employer payments to be computed on an annualized basis when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, unless certain circumstances exist. (Labor Code §1773.1(e))
11. Requires the Director to ascertain and consider the applicable wage rates established by collective bargaining agreements and the rates that may have been predetermined for federal public works, within the locality and in the nearest labor market area, when determining the general prevailing rate of per diem wages. (Labor Code §§1770, 1773)
12. Provides that if during any quarterly period the director determines that there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published. (Labor Code §1773.6)
13. Requires each contractor and subcontractor to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. (Labor Code §1776(a))
14. Requires the payroll records to be certified and to be available for inspection at all reasonable hours at the principal office of the contractor, as specified. (Labor Code §1776(b))

This bill:

Civil Wage and Penalty Assessment Provisions

1. Authorizes the Director to dismiss a contractor or subcontractor’s request to review a civil wage and penalty assessment issued by the LC and instead issue a decision affirming the assessment if the contractor or subcontractor fails to appear for a prehearing conference or hearing, as specified.
2. Provides that within 15 days of the issuance of the decision, the Director may, upon a showing of good cause for the failure to appear, reconsider the dismissal of the request for review.
3. Requires that as a condition for filing a petition for a writ of mandate, to obtain review of the decision of the Director, the petitioner seeking the writ shall first post a bond with the LC equal to the total amount found to be due and owing as determined pursuant to the decision. Specifies the bond shall be issued by a surety duly authorized to do business in the state and shall be issued in favor of the LC.

Joint Labor-Management Committee Provisions

1. Provides that, effective July 1, 2025, representatives of a JLMC shall be permitted reasonable access to active public works job sites to monitor compliance with the prevailing wage and apprenticeship requirements.
2. Specifies that, for purposes of this section, “reasonable access” means access that is consistent with job site safety and security requirements and that does not disrupt performance of work. Reasonable access includes access to workers during non-work time.
3. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an awarding body, contractor, or subcontractor that willfully denies the committee’s representative reasonable access in violation of these provisions. Requires the action be brought within six months after the denial of access.
4. Requires a court in an action described in 6) above to award a prevailing JLMC the following:
5. A civil penalty of one thousand dollars ($1,000) for each occasion that reasonable access was denied.
6. Its reasonable attorney’s fees and costs incurred in maintaining the action, including expert witness fees.

Annualization Provisions

1. Removes an exemption that allows the Director to determine that annualization does not further the purpose of the law from a general rule requiring annualization when an employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer.
2. Provides that annualization, as specified, applies to all employer payments towards fringe benefits except for contributions to defined contribution pension plans that provide for both immediate participation and immediate vesting. An employer may take full credit for the hourly amounts contributed to these plans for public works projects even if the employer contributes at a lower rate or does not make contributions for private construction.
3. States that the employer shall have the burden of demonstrating that the credit for employer payments was properly calculated, as specified.
4. Requires the employer to, upon request of the LC, produce records of employee hours and employer payments on private construction sufficient for the LC to verify that the credit for employer payments was properly calculated on an annualized basis.
5. Revokes any exemptions to the annualization requirements of these provisions issued by the Director prior to January 1, 2025.
6. Requires prevailing wage fringe benefit credit issues not addressed by California statutes or regulations shall be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.

Prevailing Wage Rate Provisions

1. Makes inoperative on July 1, 2025 and repeals, on January 1, 2026, the provision that states if during any quarterly period the Director determines there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published.
2. Requires, if during any semiannual period the Director determines that there has been a change in any prevailing wage rate in any locality, the Director to make such change available to the awarding body and the Director’s determination to be final, except as specified.
3. Provides that the determination of a change in any prevailing wage by the Director shall apply on its effective date to any contract that is awarded or for which notice to the bidders is published after July 1, 2025.
4. Permits any contractor, awarding body, or representative of any craft, classification, or type of work affected by a change in rates on a particular contract to, within 20 days after publication of the new determination, file with the Director a verified petition to review the determination of that rate on the ground that it has not been determined in accordance with Labor Code §1773. Within two days after the filing of the petition, a copy of that petition shall be filed with the awarding body.
5. Requires the Director, or the Director’s authorized representative, to, upon notice to the petitioner, the awarding body, and other persons the Director deems proper, including the recognized collective bargaining representatives for the particular crafts, classifications, or types of work involved, initiate an investigation or hold a hearing. Within 20 days after the filing of that petition, or within a longer period as agreed upon by the Director, awarding body, and all interested parties, the Director shall make a final determination, as specified.
6. States that a determination issued by the Director is effective 10 days after its issuance. The Director shall include an issue date on the determination. The determination shall remain in effect until it is modified, rescinded, or superseded by the Director.
7. Provides that 15) through 19) above are operative on July 1, 2025.

Payroll Records Requests

1. Requires, upon request of the LC, a contractor or subcontractor to make available for inspection by the LC any payroll records requested by the LC to verify the accuracy or completeness of certified payroll records required to be produced, as specified. The contractor or subcontractor has 10 days in which to comply following receipt of a written notice from the LC requesting records. In the event the contractor or subcontractor fails to comply with the 10-day period, the contractor or subcontractor shall be liable for specified penalties.
2. For purposes of 21) above, the term “payroll records” means all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

COMMENTS

1. Background:

Joint Labor-Management Committees

JLMCs, established pursuant to the federal Labor Management Cooperation Act of 1978, aim to improve communications and working relationships between labor and management, provide workers and employers with opportunities to explore joint approaches to problems, and develop ways to increase productivity and promote economic development. In California, they play a vital role in ensuring compliance with public works laws. Specifically, JLMCs are empowered to bring an action in any court of competent jurisdiction against an employer that fails to pay the prevailing wage to its employees or that fails to provide payroll records, as required by public works law. This bill would allow representatives of a JLMC access to an active job site to assist with their monitoring duties.

Opponents to the bill are concerned that granting this access may increase hazards for workers employed on a job site. To the extent that representatives of a JLMC do create a worksite issue, opponents request that a JLMC assume responsibility for this. The committee raises the following question; Does the language in the bill make it clear that a JLMC’s workers’ compensation and/or liability insurance policies are the exclusive remedy of the representative and neither the awarding body, contractor, nor subcontractor shall be liable?

Annualization

The prevailing wage in both federal and California law consists of two parts, 1) the basic hourly rate of pay; and 2) employer payments for fringe benefits, such as health insurance, vacation, and pension contributions, among others. Employers receive a credit towards the prevailing wage rate in exchange for providing specified fringe benefits. With few exceptions, this credit must be annualized. Annualization is generally necessary for computing the fringe benefit credit when a contractor employs workers on both public works and private projects. To annualize the per hour cost of providing a benefit, a contractor must divide the total cost of the fringe benefit by the total number of hours worked on both public and private work. This requirement prevents contractors from subsidizing private projects with public funding and it ensures workers are paid actual prevailing wages on public projects by preventing contractors from taking credit against the required prevailing wage for expenses not actually associated with the covered work.

In the past, the Director has issued contradictory public guidelines, private rulings, and enforcement decisions regarding what benefit payments are exempt from annualization. This bill would conform California’s policies to federal guidelines, thus eliminating ambiguity.

Prevailing Wage Calculations

The prevailing wage rate is the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft, classification or type of work within the locality and in the nearest labor market area. The Director issues wage determinations semiannually, on February 22 and August 22. In determining the rates, the Director ascertains and considers the applicable wage rates established by collective bargaining agreements (CBAs) and the rates that may have been predetermined for federal public works.

Existing law states that if the Director determines that there has been a change in the prevailing wage, such change shall be made available to an awarding body. This notification is for informational purposes and does not require an awarding body to update wages on existing and ongoing projects.

When bidding on a contract, union contractors must account for increases in labor costs arising out of wage rate increases determined within their CBA. If a CBA provides for a wage increase mid project, then union contractors have to abide by that. This is true regardless of existing law, which specifies updated wage rates, determined by the Director, do not apply to ongoing projects. Non-union contractors do not have to adjust wages mid project.

The prevailing wage provisions in this bill are substantially similar to the language in AB 1140 (Daly, 2013), which was vetoed by Governor Jerry Brown. In his veto message, he stated the following:

“This measure requires contractors on public works projects to increase workers' pay any time the state updates its prevailing wage rates. This is intended to address the circumstance where a non-union contractor is not required to adjust wages mid-project but a union contractor is subject to such adjustments pursuant to a collective bargaining agreement.

In most cases, projects are bid, awarded and completed in a relatively short period of time and this measure would have little, if any impact. Larger, long term projects are the more likely setting for the union/non-union wage differential this bill seeks to address. Unfortunately, introducing such wage adjustments as proposed by this measure is likely to lead to uncertainty in the cost of public works projects and increase costs ultimately borne by the taxpayers.

Finally, many collective bargaining agreements already address this limited circumstance by allowing wage rates to remain at the level determined by the state at the time of the bid, award or start of the contract. Given this, I do not find a statutory change warranted to address the issue raised by this measure.”

The questions raised in the veto message remain relevant today. Who will bear the costs related to increases in wage rates mid project? What effect will this have on future bids for public works projects? However, the committee also asks, is it fair to pay non-union workers employed on lengthy public works projects an outdated prevailing wage rate? Would applying mid-project wage rate increases maintain a level playing field?

Payroll Records Requests

Existing law requires contractors and subcontractors to keep accurate payroll records showing the name, address, social security number, work classification, straight time, and overtime hours worked each day and week, and the actual per diem wages paid to every employee employed by the contractor or subcontractor in connection with the public work. Certified copies of these records are available to employees, awarding bodies, DIR, and the public. The LC also receives these records monthly in an electronic format.

The definition of “payroll records” used within the Labor Code is far less comprehensive than the definition used in the California Code of Regulations (CCR). The CCR defines “payroll records” as all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

This bill specifies that when the LC requests to review a contractor’s payroll records to verify their accuracy, the contractor must make available all of the items specified in the CCR’s definition of payroll records. Contractors and subcontractors have 10 days to comply with a request from the LC, or they face a penalty of $100 per day until compliance is effectuated.

Opponents argue the 10-day time period is unattainable, however §16400 of the CCR already requires contractors to furnish, upon request, all of the items included in CCR’s definition of payroll records within a 10-day period.

2. Need for this bill?

According to the author, “Currently, there are some deficiencies in California Prevailing Wage Law that need to be strengthened. There are 5 problems this bill seeks to address.”

3. Proponent Arguments

The sponsors of the measure, the State Building and Construction Trades Council of California, state, in regards to the measure’s JLMC provisions:

“This bill would also grant representatives from joint labor-management committees reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly.”

In regards to the prevailing wage provisions:

“Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.”

In regards to the payroll records provisions:

“Under current law, contractors on public works projects are required by Labor Code 1776 to produce certified payroll records so it is possible to verify that construction workers are being paid prevailing wages. The issue AB 2182 is fixing is that the definition of “payroll records” is broader than the definition in Labor Code 1776, and some contractors have used this as a reason to refuse to provide the Labor Commissioner with these backup payroll records.”

3. Opponent Arguments:

The Construction Employers Association is opposed to the measure, arguing in regards to the JLMC provisions:

“Under the bill, there could be representatives from multiple JLMCCs roaming worksites at any given time, increasing hazards for workers employed on the site who would have to contend with non-construction personnel. To the extent that employees of a JLMCC do create a worksite issue, the JLMCC should assume any liability for those issues that would otherwise belong to the contractor”

The Associated General Contractors of America are also opposed to the measure, arguing in regards to the prevailing wage provisions:

“There are numerous issues with AB 2182. First, changing the prevailing wage rate during a project would increase contractor costs. When a contractor enters into a contract with a public agency, the wage rates are defined as part of that contract and are reflected in a contractor’s bid price. Under AB 2182, the contractors would have to bear the semiannual prevailing wage rate changes, not the awarding public entity.”

In regards to the payroll records provisions:

“Under section 6 of AB 2182, if the Labor Commissioner makes a request, a contractor may have to produce a substantial number of documents in a short timeframe. This ten-day timeframe is simply unattainable to potentially provide all time cards, cancelled checks, cash receipts, trust fund forms, books, document, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.”

4. Dual Referral:

The Senate Rules Committee referred this bill to the Senate Labor, Public Employment and Retirement Committee and the Senate Judiciary Committee.

5. Prior Legislation:

SB 1162 (Cortese, 2024) would require contractors and subcontractors to include a worker’s date of birth in existing public works payroll records and in existing monthly compliance reports made to the public entity or other awarding body for projects with a skilled and trained workforce requirement. This bill is pending hearing in the Assembly Labor and Employment Committee.

AB 2135 (Schiavo, 2024) would increase from 18 to 24 months the time period by which the LC or their designee may issue a civil wage and penalty assessment, as specified, to the contractor or subcontractor, or both, on a public work project for violating the law. This bill is currently pending in the Senate Labor, Public Employment and Retirement Committee.

AB 2705 (Ortega, 2024) would align the limitations period and tolling provisions of any action by the LC to enforce the liability on a payment bond with the limitations period and tolling provisions applicable to a civil wage and penalty assessment issued by the LC for a violation of public works law. This bill is currently pending in the Senate Labor, Public Employment and Retirement Committee.

AB 1023 (Flora, Chapter 326, Statutes of 2021) revised the requirement to furnish payroll records monthly to require that the contractor or subcontractor furnish those records at least once every 30 days while work is being performed on the project and within 30 days after the final day of work performed on the project. The bill also required that the contractor or subcontractor furnish these records in an electronic format, in the manner prescribed by the Labor Commissioner, on the department’s internet website.

AB 1140 (Daly, 2013, vetoed) would have provided that if the Director determines, within a semiannual period, that there is a change in any prevailing rate of per diem wages in a locality, that determination applies to any public works contract that is awarded or for which notice to bidders is published on or after January 1, 2014.

SUPPORT

State Building and Construction Trades Council of California (Sponsor)

Air Conditioning Sheet Metal Association

California Democratic Party

California Labor Federation

California Legislative Conference of Plumbing, Heating & Piping Industry

California State Association of Electrical Workers

California State Pipe Trades Council

California State Treasurer

Finishing Contractors Association of Southern California

International Union of Operating Engineers, Cal-Nevada Conference

National Electrical Contractors Association (NECA)

Northern California Allied Trades

Northern California Floor Covering Association

Southern California Glass Management Association (SCGMA)

United Contractors (UCON)

Wall and Ceiling Alliance

Western Painting and Coating Contractors Association

Western States Council Sheet Metal, Air, Rail and Transportation

Western Wall and Ceiling Contractors Association (WWCCA)

OPPOSITION

Associated General Contractors of California

Associated General Contractors-San Diego Chapter

California Building Industry Association

Calleguas Municipal Water District

Construction Employers' Association

Western Electrical Contractors Association

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2182

Author:(Haney)

As Amended Ver:March 18, 2024

Majority vote

SUMMARY

Makes numerous changes to state public works law including authorizing the Director of Industrial Relations (Director) to dismiss the request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor's or subcontractor's failure to appear for a prehearing conference or hearing and granting joint labor-management committees (JLMCs) reasonable access to public works job sites.

Major Provisions

1. Authorizes the Director to dismiss the request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor's or subcontractor's failure to appear for a prehearing conference or hearing after receiving notice, as specified. Within 15 days of the issuance of the decision, the Director may, upon a showing of good cause for the failure to appear, reconsider the dismissal of the request for review.
2. Requires, as a condition to filing a petition for a writ of mandate challenging the decision of the Director in their review of a civil wage and penalty assessment, the petitioner seeking the writ to first post a bond with the Labor Commissioner (LC) equal to the total amount found to be due and owing as determined pursuant to the decision.
3. Provides that, effective July 1, 2025, representatives of a JLMC, as specified, shall be permitted reasonable access to active public works job sites to monitor compliance with the prevailing wage and apprenticeship requirements.
4. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an awarding body, contractor, or subcontractor that willfully denies the committee's representative reasonable access. The action shall be brought within six months of the denial of access.
5. Requires a court in an action described in 4) above to award a prevailing JLMC the following:
   1. A civil penalty of one thousand dollars ($1,000) for each occasion that reasonable access was denied.
   2. Its reasonable attorney's fees and costs incurred in maintaining the action, including expert witness fees.
6. Removes an exception that allows the Director to determine that annualization does not further the purpose of the law from a general rule requiring annualization when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer.
7. States that annualization applies to all employer payments towards fringe benefits except for contributions to certain defined contribution pension plans.
8. States that the employer shall have the burden of demonstrating that the credit for employer payments was properly calculated.
9. Requires the employer to, upon request of the LC, produce records of employee hours and employer payments on private construction sufficient for the LC to verify that the credit for employer payments was properly calculated on an annualized basis.
10. Provides that any exemptions to the annualization requirements issued by the Director prior to January 1, 2025, are revoked.
11. Requires prevailing wage fringe benefit credit issues not addressed by California statutes or regulations to be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.
12. Requires, if during any semiannual period the Director determines that there has been a change in any prevailing wage rate in any locality, the Director to make such change available to the awarding body and the Director's determination to be final, except as specified. Such determination shall apply on its effective date to any contract that is awarded or for which notice to bidders is published after July 1, 2025.
13. Permits any contractor, awarding body, or representative of any craft, classification, or type of work affected by a change in rates on a particular contract to, within 20 days after publication of the new determination, file with the Director a verified petition to review the determination of that rate on the ground that it has not been determined in accordance with the law. Within two days after the filing of the petition, a copy of that petition shall be filed with the awarding body.
14. Requires the Director, or the Director's authorized representative, to, upon notice to the petitioner, the awarding body, and other persons the Director deems proper, including the recognized collective bargaining representatives for the particular crafts, classifications, or types of work involved, initiate an investigation or hold a hearing. Within 20 days after the filing of that petition, or within a longer period as agreed upon by the Director, awarding body, and all interested parties, the director shall make a final determination, as specified.
15. States that a determination issued by the Director is effective 10 days after its issuance. The Director shall include an issue date on the determination. The determination shall remain in effect until it is modified, rescinded, or superseded by the Director.
16. Provides that 12) through 15) above are operative on July 1, 2025.
17. Requires, upon request of the LC, a contractor or subcontractor to make available for inspection by the LC any payroll records requested by the LC to verify the accuracy or completeness of certified payroll records required to be produced pursuant to the general requirement that a contractor or subcontractor produce accurate payroll records. The contractor or subcontractor has 10 days in which to comply following receipt of a written notice from the LC requesting records. In the event the contractor or subcontractor fails to comply with the 10-day period, the contractor or subcontractor shall be liable for specified penalties.
18. For purposes of 17) above, the term "payroll records" means all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

COMMENTS

None.

According to the Author

"Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State's public works law and will provide transparency on public works projects."

Arguments in Support

The State Building and Construction Trades Council of California, sponsor of the bill, states, "Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based. This occurs if there is a single asterisk determination or if the determination has a double asterisk, but the work goes on for longer than the predetermined changes.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.

This bill would also grant representatives from joint labor-management committees reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly."

Arguments in Opposition

The Construction Employers' Association is opposed and states, "The measure provides that if DIR makes a determination concerning a new prevailing wage rate, the new rates shall take effect immediately, even for projects that are already underway. Bids are submitted to public agencies based on wage rates known at the time of bid and included in the applicable wage determinations. DIR typically issues wage determinations twice a year in February and in August. The applicable wage determinations for each project are determined by the bid advertisement date and in accordance with Labor Code section 1773.2, the awarding body must specify the wage rates in the call for bids, in the bid specifications and the contract. The rationale for not adjusting wage rates mid-stream is simple; contractors and subcontractors have no way to recoup the difference from public agencies because they are under contract. To the extent that the author would like to raise wages during the course of construction, the measure must provide that public agencies shall be responsible for paying any change order related to the new wage rates. Absent that, contractors and subcontractors will be working at a loss."

FISCAL COMMENTS

According to the Assembly Appropriations Committee,

1. Costs of an unknown, but potentially significant, amount to DIR to review prevailing wage petitions and make determinations (special fund). However, potential cost savings and assessment revenue gain of an unknown, but potentially significant, amount by allowing DIR to dismiss a request for review of a civil wage and penalty assessment and requiring a petitioner to post a bond with the LC before seeking a writ of mandate.
2. By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill may result in an increased number of civil claims, resulting in potentially significant cost pressures of an unknown amount to the courts (Trial Court Trust Fund (TCTF)). It is unclear how many new actions may be filed statewide, but one hour of court time is estimated to cost $1,000 in workload.  Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the General Fund (GF) to perform existing duties.  The Governor's proposed 2024-25 state budget includes $83.1 million ongoing GF to backfill declining TCTF revenue.
3. Costs of an unknown, but potentially significant, amount to state agencies executing a public works project, to the extent updating the prevailing wage rate paid on a project increases project costs (GF and special fund). Similarly, potential increase in local government project costs (non-reimbursable).

According to the Legislative Analyst's Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

VOTES

ASM LABOR AND EMPLOYMENT: 7-0-0

YES: Ortega, Flora, Alanis, Wendy Carrillo, Lee, Ward, Zbur

ASM APPROPRIATIONS: 11-2-2

YES: Wicks, Arambula, Bryan, Calderon, Wendy Carrillo, Mike Fong, Grayson, Haney, Hart, Pellerin, Villapudua

NO: Sanchez, Jim Patterson

ABS, ABST OR NV: Dixon, Ta

UPDATED

VERSION: March 18, 2024

CONSULTANT: Megan Lane / L. & E. / (916) 319-2091 FN: 0003236

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2182

Author:(Haney) – As Amended Ver:March 18, 2024

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

SUMMARY:

This bill allows the prevailing wage applicable to a public works project to be adjusted when an updated wage rate is determined by the Department of Industrial Relations (DIR) director, and makes other changes related to the enforcement of public works law.

Specifically, this bill:

1. Allows the DIR director to dismiss a request for review of a civil wage and penalty assessment if a contractor (or subcontractor) requesting the review fails to appear for a prehearing conference or hearing. The DIR director may reconsider the dismissal upon a showing of good cause for the failure to appear.
2. Requires a petitioner seeking a writ of mandate to review the DIR director’s decision regarding an assessment to first post a bond with the Labor Commissioner (LC) equal to the total amount due pursuant to the decision.
3. Permits, beginning July 1, 2025, representatives of a joint labor-management committee (JLMC) reasonable access to active public works job sites to monitor compliance with prevailing wage and apprenticeship requirements.
4. Allows a JLMC to bring an action in court against an awarding body or contractor that willfully denies such reasonable access and requires a court to award a prevailing JLMC a civil penalty of $1,000 for each occasion of denial and reasonable attorney’s fees and costs.
5. Revises how the credit for employer payments to employee benefits is calculated; requires, upon request of the LC, employers to produce certain records to the LC to ensure an accurate calculation; and authorizes the LC to deny the credit if such records are not produced.
6. Allows, beginning January 1, 2025, a contractor, awarding body, or representative of a craft affected by a change in the prevailing wage rate on a particular contract to file, within 20 days of the new determination, a verified petition to update the applicable prevailing wage rate. DIR must investigate the petition and make a final determination on the applicable wage rate within 20 days of the filing. The determination is effective 10 days after issuance.
7. Requires, upon request of the LC, a contractor to make certain payroll records available for inspection by the LC. The contactor has 10 days to comply before becoming liable for a penalty of $100 per worker per calendar day of non-compliance, paid to the awarding body.

FISCAL EFFECT:

1. Costs of an unknown, but potentially significant, amount to DIR to review prevailing wage petitions and make determinations (special fund). However, potential cost savings and assessment revenue gain of an unknown, but potentially significant, amount by allowing DIR to dismiss a request for review of a civil wage and penalty assessment and requiring a petitioner to post a bond with the LC before seeking a writ of mandate.
2. By allowing a JLMC to bring a civil action against an awarding body or contractor that willfully denies the JLMC reasonable access to a job site, this bill may result in an increased number of civil claims, resulting in potentially significant cost pressures of an unknown amount to the courts (Trial Court Trust Fund (TCTF)). It is unclear how many new actions may be filed statewide, but one hour of court time is estimated to cost $1,000 in workload.  Although courts are not funded on the basis of workload, increased pressure on staff and the TCTF may create a need for increased court funding from the General Fund (GF) to perform existing duties.  The Governor’s proposed 2024-25 state budget includes $83.1 million ongoing GF to backfill declining TCTF revenue.
3. Costs of an unknown, but potentially significant, amount to state agencies executing a public works project, to the extent updating the prevailing wage rate paid on a project increases project costs (GF and special fund). Similarly, potential increase in local government project costs (non-reimbursable).

According to the Legislative Analyst’s Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

COMMENTS:

1. Purpose. According to the author:

Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State’s public works law and will provide transparency on public works projects.

1. Support and Opposition. This bill is sponsored by the State Building and Construction Trades Council, which argues contractors “can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current [collective bargaining agreement] rates. Using current prevailing wage rates maintains a level playing field.” This bill is also supported by other labor organizations.

This bill is opposed by contractor associations, with the Construction Employers’ Association arguing that if wage rates are adjusted mid-project, “contractors and subcontractors have no way to recoup the difference from public agencies because they are under contract,” unless the measure provides “that public agencies shall be responsible for paying any change order related to the new wage rates.”

1. Prevailing Wage for Public Works. The prevailing wage rate is determined by DIR and generally based on the basic hourly rate paid on public works projects to a majority of workers engaged in a particular craft or classification within a locality. Requiring an across-the-board rate ensures bidders are not awarded public works contracts by virtue of paying low wages and undercutting competitors who provide higher compensation. Existing law requires payment of prevailing wage to all workers employed on a public works project valued over $1,000, such as publicly funded construction, alteration, demolition, installation, maintenance, or repair work done under contract. This bill makes numerous changes to public works law to: (a) expedite the civil wage and penalty assessment process, (b) allow JLMCs greater access to public works job sites to monitor compliance with the law, (c) require the provision of certain records to the LC to enforce compliance with the law, and (d) establish a process to increase the prevailing wage rate applicable to a public works project.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 17, 2024

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Liz Ortega, Chair

ABPCA Bill Id:AB 2182 (

Author:Haney) – As Amended Ver:March 18, 2024

SUBJECT: Public works

SUMMARY: Makes numerous changes to state public works law including authorizing the Director of Industrial Relations (Director) to dismiss the request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor’s or subcontractor’s failure to appear for a prehearing conference or hearing and granting joint labor-management committees (JLMCs) reasonable access to public works job sites. Specifically, this bill:

1. Authorizes the Director to dismiss the request of a contractor or subcontractor for a review of a civil wage and penalty assessment due to the contractor’s or subcontractor’s failure to appear for a prehearing conference or hearing after receiving notice, as specified. Within 15 days of the issuance of the decision, the Director may, upon a showing of good cause for the failure to appear, reconsider the dismissal of the request for review.
2. Requires, as a condition to filing a petition for a writ of mandate challenging the decision of the Director in their review of a civil wage and penalty assessment, the petitioner seeking the writ to first post a bond with the Labor Commissioner (LC) equal to the total amount found to be due and owing as determined pursuant to the decision.
3. Provides that, effective July 1, 2025, representatives of a JLMC, as specified, shall be permitted reasonable access to active public works job sites to monitor compliance with the prevailing wage and apprenticeship requirements.
4. Authorizes a JLMC to bring an action in any court of competent jurisdiction against an awarding body, contractor, or subcontractor that willfully denies the committee’s representative reasonable access. The action shall be brought within six months of the denial of access.
5. Requires a court in an action described in 4) above to award a prevailing JLMC the following:
   1. A civil penalty of one thousand dollars ($1,000) for each occasion that reasonable access was denied.
   2. Its reasonable attorney’s fees and costs incurred in maintaining the action, including expert witness fees.
6. Removes an exception that allows the Director to determine that annualization does not further the purpose of the law from a general rule requiring annualization when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer.
7. States that annualization applies to all employer payments towards fringe benefits except for contributions to certain defined contribution pension plans.
8. States that the employer shall have the burden of demonstrating that the credit for employer payments was properly calculated.
9. Requires the employer to, upon request of the LC, produce records of employee hours and employer payments on private construction sufficient for the LC to verify that the credit for employer payments was properly calculated on an annualized basis.
10. Provides that any exemptions to the annualization requirements issued by the Director prior to January 1, 2025, are revoked.
11. Requires prevailing wage fringe benefit credit issues not addressed by California statutes or regulations to be governed by the version of the United States Department of Labor Field Operations Handbook in effect on January 1, 2023.
12. Requires, if during any semiannual period the Director determines that there has been a change in any prevailing wage rate in any locality, the Director to make such change available to the awarding body and the Director’s determination to be final, except as specified. Such determination shall apply on its effective date to any contract that is awarded or for which notice to bidders is published after July 1, 2025.
13. Permits any contractor, awarding body, or representative of any craft, classification, or type of work affected by a change in rates on a particular contract to, within 20 days after publication of the new determination, file with the Director a verified petition to review the determination of that rate on the ground that it has not been determined in accordance with the law. Within two days after the filing of the petition, a copy of that petition shall be filed with the awarding body.
14. Requires the Director, or the Director’s authorized representative, to, upon notice to the petitioner, the awarding body, and other persons the Director deems proper, including the recognized collective bargaining representatives for the particular crafts, classifications, or types of work involved, initiate an investigation or hold a hearing. Within 20 days after the filing of that petition, or within a longer period as agreed upon by the Director, awarding body, and all interested parties, the director shall make a final determination, as specified.
15. States that a determination issued by the Director is effective 10 days after its issuance. The Director shall include an issue date on the determination. The determination shall remain in effect until it is modified, rescinded, or superseded by the Director.
16. Provides that 12) through 15) above are operative on July 1, 2025.
17. Requires, upon request of the LC, a contractor or subcontractor to make available for inspection by the LC any payroll records requested by the LC to verify the accuracy or completeness of certified payroll records required to be produced pursuant to the general requirement that a contractor or subcontractor produce accurate payroll records. The contractor or subcontractor has 10 days in which to comply following receipt of a written notice from the LC requesting records. In the event the contractor or subcontractor fails to comply with the 10-day period, the contractor or subcontractor shall be liable for specified penalties.
18. For purposes of 17) above, the term “payroll records” means all time cards, cancelled checks, cash receipts, trust fund forms, books, documents, schedules, forms, reports, receipts or other evidences which reflect job assignments, work schedules by days and hours, and the disbursement by way of cash, check, or in whatever form or manner, of funds to a person(s) by job classification and/or skill pursuant to a public works project.

EXISTING LAW:

1. Establishes the LC within the Department of Industrial Relations (DIR), to enforce, among other things, wage and hour law, anti-retaliation provisions, and employer notice requirements. Labor Code §79 et seq.
2. Authorizes an affected contractor or subcontractor may obtain review of a civil wage and penalty assessment by transmitting a written request to the office of the LC that appears on the assessment within 60 days after service of the assessment. Labor Code §1742(a).
3. Requires, upon receipt of a timely request, a hearing to be commenced within 90 days before the Director, who shall appoint an impartial hearing officer. Labor Code §1742(b).
4. Requires, within 45 days of the conclusion of the hearing, the Director to issue a written decision affirming, modifying, or dismissing the assessment. Labor Code §1742(b).
5. Authorizes an affected contractor or subcontractor to obtain review of the decision of the Director by filing a petition for a writ of mandate to the appropriate superior court within 45 days after service of the decision. Labor Code §1742(c).
6. Authorizes a JLMC established pursuant to the federal Labor Management Cooperation Act of 1978 to bring an action in any court of competent jurisdiction against an employer that fails to pay the prevailing wage to its employees or that fails to provide payroll records as required by law. Labor Code §1771.2(a).
7. Provides that employer payments are a credit against the obligation to pay the general prevailing rate of per diem wages. Labor Code §1773.1(c).
8. Requires the credit for employer payments to be computed on an annualized basis when the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, unless certain circumstances exist. Labor Code §1773.1(e).
9. Provides that if during any quarterly period the director shall determine that there has been a change in any prevailing rate of per diem wages in any locality they shall make such change available to the awarding body and their determination shall be final. Such determination by the Director shall not be effective as to any contract for which the notice to bidders has been published. Labor Code §1773.6.
10. Requires each contractor and subcontractor to keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by the contractor or subcontractor in connection with the public work. Labor Code §1776(a).
11. Requires the payroll records to be certified and to be available for inspection at all reasonable hours at the principal office of the contractor on the following basis:
    1. A certified copy of an employee’s payroll record shall be made available for inspection or furnished to the employee or the employee’s authorized representative on request.
    2. A certified copy of all payroll records shall be made available for inspection or furnished upon request to a representative of the body awarding the contract and the Division of Labor Standards Enforcement.
    3. A certified copy of all payroll records shall be made available upon request by the public for inspection or for copies thereof. Labor Code §1776(a).

FISCAL EFFECT: Unknown

COMMENTS: According to the author, “Workers deserve to be paid the current prevailing wage – regardless of whether a project was bid on years ago, or days ago. AB 2182 levels the playing field for construction workers by making sure that when they begin a project, they are earning the current wage – not the wage that was set when the project was announced. AB 2182 also ensures that contractors are complying with all parts of the State’s public works law and will provide transparency on public works projects.”

The author continues, “The bill promotes equity solutions and maximizes benefits for underserved and marginalized communities by ensuring that workers who are from these same communities working on public works projects have strong labor protections and are paid the most current wage to support their families.”

Arguments in Support

The State Building and Construction Trades Council of California, sponsor of the bill, states, “Under existing law, the prevailing wage determination that is in effect when a public works project is advertised for bid governs the project regardless of how long the project lasts. Thus, if work does not start for a long time after the advertisement for bids, or the work goes on for a long time, the required prevailing wage will not keep up with the CBA on which the determination is based. This occurs if there is a single asterisk determination or if the determination has a double asterisk, but the work goes on for longer than the predetermined changes.

This bill would make current prevailing wage determinations applicable to projects, so the required prevailing wage or benefits will keep up with the actual prevailing wage rates. Contractors can estimate materials costs when they bid and they can also estimate future increases in labor costs when they bid. Union-signatory contractors already must do this because they must pay the current CBA rates. Using current prevailing wage rates maintains a level playing field.

This bill would also grant representatives from joint labor-management committees reasonable access to active public works jobsites to ensure compliance with prevailing wage and apprenticeship requirements so that workers are treated fairly.”

Arguments in Opposition

The Construction Employers’ Association is opposed and states, “The measure provides that if DIR makes a determination concerning a new prevailing wage rate, the new rates shall take effect immediately, even for projects that are already underway. Bids are submitted to public agencies based on wage rates known at the time of bid and included in the applicable wage determinations. DIR typically issues wage determinations twice a year in February and in August. The applicable wage determinations for each project are determined by the bid advertisement date and in accordance with Labor Code section 1773.2, the awarding body must specify the wage rates in the call for bids, in the bid specifications and the contract. The rationale for not adjusting wage rates mid-stream is simple; contractors and subcontractors have no way to recoup the difference from public agencies because they are under contract. To the extent that the author would like to raise wages during the course of construction, the measure must provide that public agencies shall be responsible for paying any change order related to the new wage rates. Absent that, contractors and subcontractors will be working at a loss.”

Prior Legislation

AB 1140 (Daly) of 2013 would have provided that if the Director determines, within a semiannual period, that there is a change in any prevailing rate of per diem wages in a locality, that determination applies to any public works contract that is awarded or for which notice to bidders is published on or after January 1, 2014. This bill was vetoed by Governor Brown.

REGISTERED SUPPORT / OPPOSITION:

Support

State Building and Construction Trades Council (Sponsor)

Opposition

Associated General Contractors of California
Associated General Contractors-San Diego Chapter
Construction Employers' Association

Analysis Prepared by: Megan Lane / L. & E. /