Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment above a specified threshold from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an employee or university employee aggrieved employee, as defined, to provide bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of a violation of the bill an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and thereafter file suit only if the vendor fails to provide prescribed documentation. The bill would require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to the president of the university within 5 business days. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would require a prevailing claimant to notify the president of the university of the decision. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment above a specified threshold from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an employee or university employee to provide a vendor with written notice of a violation of the bill and the opportunity to correct and cure the violation and thereafter file suit only if the vendor fails to provide prescribed documentation. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment above a specified threshold from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees designated authorized representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an employee or university employee to provide a vendor with written notice of a violation of the bill and the opportunity to correct and cure the violation and thereafter file suit only if the vendor fails to provide prescribed documentation. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment above a specified threshold from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee or similar meeting body established with the exclusive representative of university employees who perform the same or similar services. committee, as defined. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees designated representative or to be furnished to that individual employee or that individual employees authorized representative. The bill would require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendors contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.

This bill would authorize an employee or university employee to provide a vendor with written notice of a violation of the bill and the opportunity to correct and cure the violation and thereafter file suit only if the vendor fails to provide prescribed documentation. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants and would provide for the disqualification of the vendor, for a minimum of 5 years, from submitting any bid to the university, or executing, renewing, or extending any contract with or otherwise receiving payment from the university in exchange for services. claimants. The bill would make its provisions severable.

Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the university to be administered by the Regents of the University of California (regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the university by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the regents establishes a general prohibition on contracting out for services and functions that can be performed by university staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to university employment under prescribed circumstances.

This bill would make it unlawful for any vendor, as defined, to accept payment above a specified threshold from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendors contract with the university or as required by university policy. The bill would require a vendor to provide those employees with prescribed written notice relating to compensation. The bill would require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee or similar meeting body established with the exclusive representative of university employees who perform the same or similar services. The bill would also require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so. The bill would also require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employees designated representative or to be furnished to that individual employee or that individual employees authorized representative.

This bill would authorize an employee or university employee to provide a vendor with written notice of a violation of the bill and the opportunity to correct and cure the violation and thereafter file suit only if the vendor fails to provide prescribed documentation. The bill would establish remedies, including civil penalties and restitution, for prevailing claimants and would provide for the disqualification of the vendor, for a minimum of 5 years, from submitting any bid to the university, or executing, renewing, or extending any contract with or otherwise receiving payment from the university in exchange for services. The bill would make its provisions severable.

 UNFINISHED BUSINESS  

Bill No: SB 27

Author: Durazo (D) and Caballero (D), et al.

Amended: 9/8/23

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-0, 3/8/23

AYES: Cortese, Durazo, Laird, Smallwood-Cuevas

NO VOTE RECORDED: Wilk

SENATE JUDICIARY COMMITTEE: 8-1, 3/28/23

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Min, Wiener

NOES: Niello

NO VOTE RECORDED: Wilk, Stern

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/18/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones, Seyarto

SENATE FLOOR: 29-7, 5/30/23

AYES: Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, 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

NOES: Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

NO VOTE RECORDED: Allen, Blakespear, Dodd, Glazer

ASSEMBLY FLOOR: 61-14, 9/11/23 - See last page for vote

SUBJECT: University of California: vendors

SOURCE: AFSCME Local 3299

DIGEST:

This bill requires University of California (UC) vendors to provide their employees with the total compensation specified by the vendor’s contract, as well as make certain payroll information available to employees, the UC, and exclusive employee representatives. Additionally, this bill provides a pathway for employees of a vendor contracting with the UC to recover compensation and civil damages.

Assembly Amendments

(1) recast the provisions in the Public Contract Code, (2) refine the definition of “hourly value of employer-provided benefits”, (3) further specify an employee’s remedies, and (4) make technical and conforming changes.

ANALYSIS:

Existing law:

1. Establishes the UC as a public trust under the administration of the corporation in the form of a board “The Regents of the [UC]” (Regents) and grants the Regents powers necessary or convenient for the effective administration of the UC. Limits the Regents to such legislative control as may be necessary to insure the security of its funds, to ensure compliance with the terms of the endowments of the UC, and such competitive bidding procedures as may be made applicable to the UC by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services.
2. Provides that a person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.
3. Prohibits public agencies from contracting for services if approval of the contract is based solely on savings resulting from lower pay rates or benefits or the contract causes displacement of civil service employees.
4. Requires that, at the time of hiring, an employer must provide to each employee a written notice, containing specified information about pay rates, overtime, minimum wage, types of leave available, pay periods, and information about the employer.
5. Requires all employers to provide their employees with an accurate, itemized statement showing gross wages earned, total hours worked by the employee, all deductions, net wages earned, the period for which the employee is paid, all applicable hourly rates in effect during the pay period, the corresponding number of hours worked, the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number, and the name and address of the legal employing entity.
6. Specifies penalties for failure to pay at least minimum wage and procedures around filing a claim against an employer for alleged failure to comply with minimum wage law.
7. Requires the UC to award a contract for a project of $50,000 or more to the lowest bidder, or if the bids are substantially equal, the UC may award a contract to a disadvantaged business enterprise, woman business enterprise, or disabled veteran business enterprise.

This bill:

1. Establishes the Recovery of Earned but Unpaid Wages Act (Act) to prohibit a vendor from accepting payment from the UC for a contract for services if the vendor is performing services or supplying employees and paying those employees less than the total compensation rate specified in the vendor’s contract with the UC or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher.
2. Requires a vendor supplying the UC with employees to perform services to provide those employees with written notice that includes the following information each time the employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee’s hourly rate:
   1. The total compensation rate specified in the contract with the UC or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher; and
   2. The employee’s hourly rate of pay and hourly value of employer-provided benefits, which encompasses the employer’s actual cost for the employee’s benefits, including, but not limited to, retirement, health, dental, vision, and life and disability benefits calculated as an hurly dollar amount.
3. Requires a vendor to provide, each January and July, basic payroll information, as defined, to the UC and members of any joint labor-management committee and requires the vendor to make basic payroll information available for inspection to an employee or their authorized representative, upon request.
4. Requires a vendor to provide written notice to employees who agree to perform, or continue to perform, services for the UC. This notice shall include the following:

“Basic payroll information pertaining to all employees who accept an assignment or continue performing services for the [UC] will be shared with the [UC] and the organizations that represent [UC] employees. The information that will be shared includes your full name, university work location, mobile telephone number, email address, and home address. The purpose of sharing this information is to ensure that the [UC] and the organizations that represent [UC] employees can contact you if they discover you have been paid less than required by the vendor’s contract with the university or university policy and so that the [UC] can provide you with a timely offer of employment as soon as you become eligible.”

1. Requires any audit, verification, notice, report, or finding regarding vendor compensation to be provided to the UC and members of any joint labor-management committee.
2. Authorizes an aggrieved vendor employee or their UC coworker to first provide a vendor with written notice of an alleged violation of this Act, as specified, and provide the vendor with the opportunity to correct and cure the violation(s) within 60 days before an employee may file a suit based on the violation(s). If a vendor receives such notice, they must provide a copy to the UC Office of the President within five days of receipt.
3. Authorizes an aggrieved vendor employee or their UC coworker to bring a civil action against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor’s contract with the UC, or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher
4. Directs the courts to order the following if a plaintiff prevails in an action to enforce the rights and duties set forth in the Act:
   1. For any vendor that supplies the UC with an employee who is paid a total compensation rate less than the amount fixed by contract or required by existing approved or adopted UC policy or collective bargaining agreement to pay a civil penalty of $100 per underpaid employee per pay period for an initial violation (not to exceed $500 per employee) and $250 per employee per pay period for any subsequent violations (not to exceed $1000 per employee);
   2. For any vendor that knowingly and intentionally violates 2), 3), 4) and/or 5) above, payment of a civil penalty of $50 dollars per employee for the initial pay period and $100 per employee for each violation in a subsequent pay period, with a cap of $1000 per employee;
   3. Payment of wage and benefit compensation and civil penalties to the affected employee;
   4. At the court’s discretion, to the extent a vendor bills the UC at an hourly rate, and to the extent the vendor fails to pay its employees the amount in the contract, return to the UC funds paid to the vendor that exceed the compensation provided to underpaid employees, and;
   5. Payment of reasonable attorney’s fees and costs.
5. Provides the remedies shall not preclude or alter the UC’s ability to contract for services as permitted under existing collective bargaining agreements or preclude the UC from hiring in emergency circumstances or meeting other staffing needs.
6. Specifies the remedies are in addition to any other remedies provided by law, except for civil penalties provided in Labor Code Sections 226(f) or 1197.1.
7. Defines various terms for the purpose of the Act.
8. Makes the provisions in this bill severable.

Background

The UC employs approximately 18,600 patient care technical employees and about 10,000 service employees throughout its campuses and medical centers, representing two bargaining units out of a total of 37 with the UC. In 2017, the California State Auditor released a report stating “The University of California Office of the President: It Has Not Adequately Ensured Compliance With Its Employee Displacement and Service Contract Policies.” The report included a recommendation that the UC should “revise contracting policies to address situations where [UC] locations contemplate entering into services contracts instead of hiring [UC] employees to perform an activity. In these situations, the [UC] Office of the President should require [UC] locations to perform an analysis similar to the one it requires when current [UC] employees are displaced.”

At the end of the Legislative Session in 2019, ACA 14 (Gonzalez, 2019) narrowly failed passage on the Senate Floor. This constitutional amendment would have added the UC Equal Employment Opportunity Standards Act to Article IX of the California Constitution and required the Regents to ensure all contract workers paid to perform support services be afforded the same standards as UC employees performing similar services. Subsequently, on November 14, 2019, the UC adopted Regents Policy 5402, also called the Equal Pay for Equal Work policy, which generally prohibits contracting out services and functions that can be performed by UC staff and requires businesses that enter into service contracts with the UC to pay wages and benefits equivalent to what the UC pays it employees. This policy is reflected in Article 5 of existing bargaining unit contracts with the UC Service Unit and the Patient Care Technical Unit.

The UC recently conducted two audits to determine vendor compliance with Regents Policy 5402. The first audit found 78% of vendors comply with wage and benefit parity policy. The second audit found that processes and controls related to Policy 5402 and Article 5 need improvement at all UC locations. The UC states it plans to use these audit findings to inform efforts to improve its processes.

Comments

Purpose of this bill. According to the author, “The University of California has a policy called "Equal Pay for Equal Work” that requires service contract vendors to pay vendor employees’ wages and benefits equivalent to what UC pays directly hired service workers. However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University, or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages. SB 27 establishes the “Recovery of Earned but Unpaid Wages Act” by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy. SB 27 is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. Vendors must also provide written notice to their employees about the required compensation rates. Vendors will have the opportunity to cure discrepancies. However, refusal to comply allows vendor employees to pursue their earned but unpaid wages and compensation in court. It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3^rd party vendor compliance and is consistent with UC’s audit standards and process.”

Related/Prior Legislation

ACA 6 (Haney, 2023), if approved by voters, requires individuals who perform work for the UC Regents to have the right to specified basic state labor standards.

SB 1364 (Durazo, 2022) was similar to SB 27 and additionally provided for a vendor in violation to pay a ten percent civil penalty to the General Fund and be disqualified from contracting with the UC for five years. The bill was vetoed by the Governor, who stated “While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature.”

ACA 14 (Gonzalez, 2019) would have amended Article IX of California’s Constitution by adding the UC Equal Employment Opportunity Standards Act, which would have required the Regents of the UC to ensure that all contract workers who are paid to perform support services be afforded the same equal employment opportunity standards as UC employees that perform similar services. The constitutional amendment was sent to the Senate Inactive File.

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

According to the Assembly Appropriations Committee:

1. Annual costs of approximately $150,000 to UC for one position to staff the JLMC (General Fund (GF)).

Additionally, UC notes this bill’s definition of “hourly value of employer-provided benefits” would cause UC to incur significant costs of an unknown amount, but potentially a few million dollars annually (GF). According to UC, this bill only includes retirement, health, dental, vision, and life and disability benefits in calculating the vendor’s required pay rate, which is inconsistent with how pay is calculated under UC policy that includes other employer-funded benefits, such as a transportation subsidy. UC argues this lack of conformity may necessitate the provision of cash wages to UC employees to match the overall value of a vendor’s total compensation rate, in lieu of the benefits a vendor may offer, thus creating an artificial upward pressure on wages.

2) Annual cost pressures (GF or Trial Court Trust Fund) of an unknown amount,
potentially up to $150,000, to the courts in additional workload, as this bill
allows an aggrieved employee to bring a civil action for specified remedies,
including attorney’s fees. It is unclear how many actions may be filed statewide,
but the estimated workload cost of one hour of court time is $1,000. 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 GF to perform
existing duties. The 2023-24 state budget agreement includes $105.1 million in
ongoing GF revenue to continue backfilling the TCTF for expected revenue
declines

SUPPORT: (Verified 9/11/23)

AFSCME Local 3299 (source)
AFSCME

California Federation of Teachers AFL-CIO
California Labor Federation, AFL-CIO
California School Employees Association

OPPOSITION: (Verified 9/11/23)

American Staffing Association
California Association of Public Hospitals & Health Systems
Fidelity Investments
University of California

ARGUMENTS IN SUPPORT: AFSCME Local 3299 states “The University of California has in place a policy named Equal Pay for Equal Work. It requires companies that enter into service contracts with the University of California (UC) to pay company employees wages and benefits equal to what UC pays service workers. Recently, the University has begun an audit process to confirm to what extent its vendors are adhering to that policy and which vendors should be terminated for failing to do so. However, the UC policy or its audits do not provide a way for a worker to recover earned but unpaid wages. SB 27 would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates. A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts. We request the Legislature provide for this remedy and recovery by approving SB 27.”

ARGUMENTS IN OPPOSITION: The University of California states “The University fully supports WBP and it is already required for covered services. 1 WBP is enforceable through UC’s contracts with vendors and the collective bargaining agreements2 (CBA) with UC’s Service and Patient Care bargaining units, represented by AFSCME 3299. A systemwide audit3 of WBP demonstrated that UC has the tools to drive compliance and any remediation. The new enforcement mechanisms in SB 27 require payroll data to be shared with the union that represents UC’s covered service workers and provide that an aggrieved employee can file a civil suit to recover their earned but unpaid wages. Supporters have repeatedly stated the purpose of SB 27 is to enforce UC’s existing policy and not change it. However, the definition of “hourly value of employer-provided benefits,” as drafted, represents a departure from UC’s existing policy implementation and will result in significant costs and disruption to patient and student services across the UC system. SB 27 limits the type of benefits that count towards WBP and may create artificial upward pressure on wages. Fortunately, these issues can be resolved through some minor technical amendments, that recognize that employees may receive different levels of benefits (which may depend on how many dependents they have, for example) and that employers offer a variety of benefits that are not listed in SB 27.”

ASSEMBLY FLOOR: 61-14, 9/11/23

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

NOES: Alanis, Megan Dahle, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Hoover, Jim Patterson, Joe Patterson, Sanchez, Ta, Wallis

NO VOTE RECORDED: Chen, Lackey, Mathis, Pacheco, Blanca Rubio

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

9/11/23 19:53:13

**** END ****

SENATE THIRD READING

STR Bill Id:SB 27

Author:(Durazo and Caballero)

As Amended Ver:September 8, 2023

Majority vote

SUMMARY

Establishes the Recovery of Earned but Unpaid Wages Act (Act) to, among other things, prohibit a vendor from accepting payment from the University of California (UC) if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendor's contract with the UC or as required by university policy. The bill also requires vendors to comply with various reporting and notice requirements and establishes a process for aggrieved employees to bring a civil action against vendors who do not comply with the provisions of this Act.

Major Provisions

1. Requires a vendor that supplies the UC with employees to perform services to provide those employees with written notice of the total compensation rate specified in the vendor's contract with the UC or required by university policy, whichever is higher, and the employee's hourly rate of pay and hourly value of employer-provided benefits.
   1. Requires the vendor to provide employees with these notices at the time each employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee's hourly rate.
2. Requires, in January and July of each year, a vendor to provide basic payroll information to the UC and members of any joint-labor management committee.
   1. Requires the vendor to provide all employees who agree to perform services for the UC, or continue doing so, with a specified written notice about this requirement.
3. Requires basic payroll information of an employee performing services for the UC to be made available for inspection or furnished to the employee or their authorized representative upon request.
4. Requires any audit, verification, notice, report, or finding related to whether a vendor meets the required compensation rate for their employees, as outlined in their contract with the UC or university policy, to be shared with the UC and members of any joint labor-management committee.
5. Prohibits a vendor from accepting payment from the UC pursuant to a contract for services if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the total compensation rate specified in the vendor's contract with the UC or required by university policy, whichever is higher.
6. Authorizes an aggrieved employee to bring a civil action, including on behalf of an employee or employees against whom a violation of this Act was committed, against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor's contract with the UC or university policy, whichever is higher, or to enforce any other provisions of this part.
7. Requires an aggrieved employee, prior to bringing an action against a vendor, to first provide a vendor with written notice of the alleged violation and include the names or other information sufficient to identify the employees against whom the alleged violations were committed, dates of employment, the period of noncompliance, and the contact information.
   1. Requires a vendor that receives this notice to provide a copy of the written notice to the president of the UC within five business days of receipt.
8. States that upon providing the required written notice, an aggrieved employee may initiate a lawsuit against the vendor only if, within 60 days, the vendor fails to furnish documentation proving that every employee identified in the notice has been made whole, received the required notices, and is being compensated at a total rate that meets or exceeds the rate specified in the vendor's contract with the UC or in university policy, whichever is higher.
9. Requires a claimant that prevails in a civil action under this Act to notify the president of the UC of the decision.
10. Authorizes a court to order the following on behalf of a prevailing claimant:
11. For any vendor that pays an employee less than the compensation rate fixed by contract or university policy, whichever is higher, payment of penalties of $100 per employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
12. For any vendor that knowingly and intentionally violates the notice requirements of this section, payment of a civil penalty of $50 dollars per employee per pay period for an initial violation or $100 per employee per pay period for any subsequent violations, with a cap of $4000 per employee; and
13. Reasonable attorney's fees and costs.
14. Provides that if a vendor bills the UC based on an hourly rate and fails to pay its employees according to the vendor's contract or university policy, a court has the authority to require that the vendor return to the the UC any funds paid by the UC that exceed the amount the vendor paid to its employees for services rendered after January 1, 2024.
15. Directs compensation and civil penalties recovered pursuant to this Act to be paid to the employee against whom the violation was committed.
16. Provides that the remedies under this Act are in addition to any other remedies provided by law, with specified exceptions.
17. States that this Act does not preclude or alter the UC's ability to contract for services as permitted under existing policies or collective bargaining agreements.
18. States that this Act does not preclude the UC from hiring in emergency circumstances or to meet other staffing needs.
19. States that provisions of this Act are severable.

COMMENTS

The UC is one of California's largest employers, with around 227,000 faculty and staff system-wide.^[1] According to the UC, just under half of its in-house labor force is unionized.^[2] At times, however, UC seeks outside vendors to perform various services. The people working for these vendors are not necessarily represented by a union and don't necessarily receive the same pay and benefits as an in-house UC employee would.

In 2019, the Regents of the UC adopted Regents' Policy 5402.^[3] In general, Policy 5402 prohibited the UC from contracting out for services and functions that University staff could perform just as well. Recognizing that there might be "exigent and limited circumstances" when the UC needed to use an outside contract as "a solution of last resort," Policy 5402 allowed such outside contracts, but only under specified conditions. Of particular relevance to this bill, Policy 5402 mandated that any outside contracts adhere to an "Equal Pay for Equal Work" standard. Policy 5402 was adopted in the wake of the failure of Assembly Constitutional Amendment 14 (2019), which would have required the Regents to ensure all contract workers were provided pay and benefits equal to those of university employees performing similar services. While the UC has expressed commitment to upholding the terms of Policy 5402, there remains no enforcement mechanisms within the policy or in statute to ensure that the UC complies with the language of its own policy.

According to the Author

"The University of California has a policy called "Equal Pay for Equal Work" that requires service contract vendors to pay vendor employees' wages and benefits equivalent to what UC pays directly hired service workers.

However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages.

[This bill] establishes the "Recovery of Earned but Unpaid Wages Act" by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy.

[This bill] is consistent with UC's audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. The bill models how prevailing wage laws are enforced and requires vendors to supply the UC and the appropriate joint labor-management committee with the necessary basic payroll information.

Vendors must also provide written notice to their employees about the required compensation rates. The bill would also allow a contracting vendor company an opportunity to correct and cure any discrepancies.

It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3rd party vendor compliance and is consistent with UC's audit standards and process.

If an employer refuses to comply with the UC Equal Pay for Equal Work policy or correct and cure, employees would then have the right to pursue recovery of their earned but unpaid wages from the contracting vendor in court... not from UC."

In addition, the author notes that this bill will promote equity and maximize benefits for underserved and marginalized communities, because "recent surveys suggest that outsourced UC contractors are less white than UC employees and are also paid a lot less. This bill will help to ensure that low-income contract workers of color are paid fairly and in compliance with UC's policy of Equal Pay for Equal Work."

Arguments in Support

The American Federation of State, County, and Municipal Employees (AFSCME), Local 3299, sponsor of this bill, states, "Recently, the University has begun an audit process to confirm to what extent its vendors are adhering to that policy and which vendors should be terminated for failing to do so. However, the UC policy and its audits do not provide a way for a worker to recover earned but unpaid wages.

[This bill] would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates.

A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts.”

Arguments in Opposition

The UC is opposed unless amended, and states, "As drafted, [this bill] allows an aggrieved employee or a UC employee "coworker" to initiate civil litigation after providing 60 days to cure an alleged violation. The appropriate venue for UC employees to raise concerns about WBP is through Article 5 grievances, not civil court. The University requests the bill be amended to allow only an aggrieved employee to initiate civil litigation by striking [Section] 1441(a)(2).

The University supports Wage and Benefit Parity, and we are actively working with AFSCME and our vendors to enforce WBP. The University recently completed two comprehensive audits of the WBP policy: one to evaluate the processes in place to facilitate compliance and one to verify vendor compliance and correct any noncompliance. Although we identified areas for improvement, the vast majority of suppliers audited were in compliance; of those found to be noncompliant, all are in remediation.

The University is working in good faith to enforce WBP, and already has the tools necessary to collect vendor payroll information and to drive remediation for any noncompliance. While UC understands the desire for underpaid vendor employees to seek legal remedies from a vendor for wages earned but not paid, the University of California opposes [this bill] unless it is amended because it deviates from this premise by also allowing UC's represented employees to sue vendors directly, even though they have suffered no underpayment. Furthermore, if represented employees are aware of WBP violations, there is already a remedy available for them – they can grieve a violation of their collective bargaining agreement."

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Annual costs of approximately $150,000 to UC for one position to staff the JLMC (General Fund (GF)).
2. Annual cost pressures (GF or Trial Court Trust Fund) of an unknown amount, potentially up to $150,000, to the courts in additional workload, as this bill allows an aggrieved employee to bring a civil action for specified remedies, including attorney's fees. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. 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 GF to perform existing duties. The 2023-24 state budget agreement includes $105.1 million in ongoing GF revenue to continue backfilling the TCTF for expected revenue declines.

VOTES

SENATE FLOOR: 29-7-4

YES: Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, 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: Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Allen, Blakespear, Dodd, Glazer

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Kalra, Papan, Reyes, Robert Rivas

NO: Essayli, Dixon

ABS, ABST OR NV: Pacheco, Sanchez

ASM LABOR AND EMPLOYMENT: 5-0-2

YES: Kalra, Haney, Ortega, Reyes, Ward

ABS, ABST OR NV: Flora, Chen

ASM APPROPRIATIONS: 11-3-2

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Wilson

NO: Megan Dahle, Dixon, Sanchez

ABS, ABST OR NV: Mathis, Soria

UPDATED

VERSION: September 8, 2023

CONSULTANT: Martin Vindiola / L. & E. / (916) 319-2091 FN: 0002114

1. University of California Webpage. UC Employee Headcount. ↑

2. University of California: UCnet Webpage. Union-Represented Employees. ↑

3. Regents Policy 5402: Policy Generally Prohibiting Contracting for Services (Approved Nov. 14, 2019;

   Amended Jan. 23, 2020) Regents of the University of California. ↑

SENATE THIRD READING

STR Bill Id:SB 27

Author:(Durazo and Caballero)

As Amended Ver:September 1, 2023

Majority vote

SUMMARY

Establishes the Recovery of Earned but Unpaid Wages Act (Act) to, among other things, prohibit a vendor from accepting payment from the University of California (UC) if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendor's contract with the UC or as required by university policy. The bill also requires vendors to comply with various reporting and notice requirements and establishes a process for aggrieved employees to bring a civil action against vendors who do not comply with the provisions of this Act.

Major Provisions

1. Requires a vendor that supplies the UC with employees to perform services to provide those employees with written notice of the total compensation rate specified in the vendor's contract with the UC or required by university policy, whichever is higher, and the employee's hourly rate of pay and hourly value of employer-provided benefits.
   1. Requires the vendor to provide employees with these notices at the time each employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee's hourly rate.
2. Requires, in January and July of each year, a vendor to provide basic payroll information to the UC and members of any joint-labor management committee.
   1. Requires the vendor to provide all employees who agree to perform services for the UC, or continue doing so, with a specified written notice about this requirement.
3. Requires basic payroll information of an employee performing services for the UC to be made available for inspection or furnished to the employee or their authorized representative upon request.
4. Requires any audit, verification, notice, report, or finding related to whether a vendor meets the required compensation rate for their employees, as outlined in their contract with the UC or university policy, to be shared with the UC and members of any joint labor-management committee.
5. Prohibits a vendor from accepting payment from the UC pursuant to a contract for services if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the total compensation rate specified in the vendor's contract with the UC or required by university policy, whichever is higher.
6. Authorizes an aggrieved employee to bring a civil action, including on behalf of an employee or employees against whom a violation of this Act was committed, against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor's contract with the UC or university policy, whichever is higher, or to enforce any other provisions of this part.
7. Requires an aggrieved employee, prior to bringing an action against a vendor, to first provide a vendor with written notice of the alleged violation and include the names or other information sufficient to identify the employees against whom the alleged violations were committed, dates of employment, the period of noncompliance, and the contact information.
   1. Requires a vendor that receives this notice to provide a copy of the written notice to the president of the UC within five business days of receipt.
8. States that upon providing the required written notice, an aggrieved employee may initiate a lawsuit against the vendor only if, within 60 days, the vendor fails to furnish documentation proving that every employee identified in the notice has been made whole, received the required notices, and is being compensated at a total rate that meets or exceeds the rate specified in the vendor's contract with the UC or in university policy, whichever is higher.
9. Requires a claimant that prevails in a civil action under this Act to notify the president of the UC of the decision.
10. Authorizes a court to order the following on behalf of a prevailing claimant:
11. For any vendor that pays an employee less than the compensation rate fixed by contract or university policy, whichever is higher, payment of penalties of $100 per employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
12. For any vendor that knowingly and intentionally violates the notice requirements of this section, payment of a civil penalty of $50 dollars per employee per pay period for an initial violation or $100 per employee per pay period for any subsequent violations, with a cap of $4000 per employee; and
13. Reasonable attorney's fees and costs.
14. Provides that if a vendor bills the UC based on an hourly rate and fails to pay its employees according to the vendor's contract or university policy, a court has the authority to require that the vendor return to the the UC any funds paid by the UC that exceed the amount the vendor paid to its employees for services rendered after January 1, 2024.
15. Directs compensation and civil penalties recovered pursuant to this Act to be paid to the employee against whom the violation was committed.
16. Provides that the remedies under this Act are in addition to any other remedies provided by law, with specified exceptions.
17. States that this Act does not preclude or alter the UC's ability to contract for services as permitted under existing policies or collective bargaining agreements.
18. States that this Act does not preclude the UC from hiring in emergency circumstances or to meet other staffing needs.
19. States that provisions of this Act are severable.

COMMENTS

The UC is one of California's largest employers, with around 227,000 faculty and staff system-wide.^[1] According to the UC, just under half of its in-house labor force is unionized.^[2] At times, however, UC seeks outside vendors to perform various services. The people working for these vendors are not necessarily represented by a union and don't necessarily receive the same pay and benefits as an in-house UC employee would.

In 2019, the Regents of the UC adopted Regents' Policy 5402.^[3] In general, Policy 5402 prohibited the UC from contracting out for services and functions that University staff could perform just as well. Recognizing that there might be "exigent and limited circumstances" when the UC needed to use an outside contract as "a solution of last resort," Policy 5402 allowed such outside contracts, but only under specified conditions. Of particular relevance to this bill, Policy 5402 mandated that any outside contracts adhere to an "Equal Pay for Equal Work" standard. Policy 5402 was adopted in the wake of the failure of Assembly Constitutional Amendment 14 (2019), which would have required the Regents to ensure all contract workers were provided pay and benefits equal to those of university employees performing similar services. While the UC has expressed commitment to upholding the terms of Policy 5402, there remains no enforcement mechanisms within the policy or in statute to ensure that the UC complies with the language of its own policy.

According to the Author

"The University of California has a policy called "Equal Pay for Equal Work" that requires service contract vendors to pay vendor employees' wages and benefits equivalent to what UC pays directly hired service workers.

However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages.

[This bill] establishes the "Recovery of Earned but Unpaid Wages Act" by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy.

[This bill] is consistent with UC's audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. The bill models how prevailing wage laws are enforced and requires vendors to supply the UC and the appropriate joint labor-management committee with the necessary basic payroll information.

Vendors must also provide written notice to their employees about the required compensation rates. The bill would also allow a contracting vendor company an opportunity to correct and cure any discrepancies.

It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3rd party vendor compliance and is consistent with UC's audit standards and process.

If an employer refuses to comply with the UC Equal Pay for Equal Work policy or correct and cure, employees would then have the right to pursue recovery of their earned but unpaid wages from the contracting vendor in court... not from UC."

In addition, the author notes that this bill will promote equity and maximize benefits for underserved and marginalized communities, because "recent surveys suggest that outsourced UC contractors are less white than UC employees and are also paid a lot less. This bill will help to ensure that low-income contract workers of color are paid fairly and in compliance with UC's policy of Equal Pay for Equal Work."

Arguments in Support

The American Federation of State, County, and Municipal Employees (AFSCME), Local 3299, sponsor of this bill, states, "Recently, the University has begun an audit process to confirm to what extent its vendors are adhering to that policy and which vendors should be terminated for failing to do so. However, the UC policy and its audits do not provide a way for a worker to recover earned but unpaid wages.

[This bill] would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates.

A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts."

Arguments in Opposition

The UC is opposed unless amended, and states, "As drafted, [this bill] allows an aggrieved employee or a UC employee "coworker" to initiate civil litigation after providing 60 days to cure an alleged violation. The appropriate venue for UC employees to raise concerns about WBP is through Article 5 grievances, not civil court. The University requests the bill be amended to allow only an aggrieved employee to initiate civil litigation by striking [Section] 1441(a)(2).

The University supports Wage and Benefit Parity, and we are actively working with AFSCME and our vendors to enforce WBP. The University recently completed two comprehensive audits of the WBP policy: one to evaluate the processes in place to facilitate compliance and one to verify vendor compliance and correct any noncompliance. Although we identified areas for improvement, the vast majority of suppliers audited were in compliance; of those found to be noncompliant, all are in remediation.

The University is working in good faith to enforce WBP, and already has the tools necessary to collect vendor payroll information and to drive remediation for any noncompliance. While UC understands the desire for underpaid vendor employees to seek legal remedies from a vendor for wages earned but not paid, the University of California opposes [this bill] unless it is amended because it deviates from this premise by also allowing UC's represented employees to sue vendors directly, even though they have suffered no underpayment. Furthermore, if represented employees are aware of WBP violations, there is already a remedy available for them – they can grieve a violation of their collective bargaining agreement."

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

1. Annual costs of approximately $150,000 to UC for one position to staff the JLMC (General Fund (GF)).
2. Annual cost pressures (GF or Trial Court Trust Fund) of an unknown amount, potentially up to $150,000, to the courts in additional workload, as this bill allows an aggrieved employee to bring a civil action for specified remedies, including attorney's fees. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. 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 GF to perform existing duties. The 2023-24 state budget agreement includes $105.1 million in ongoing GF revenue to continue backfilling the TCTF for expected revenue declines.

VOTES

SENATE FLOOR: 29-7-4

YES: Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, 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: Dahle, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto

ABS, ABST OR NV: Allen, Blakespear, Dodd, Glazer

ASM JUDICIARY: 7-2-2

YES: Maienschein, Connolly, Haney, Kalra, Papan, Reyes, Robert Rivas

NO: Essayli, Dixon

ABS, ABST OR NV: Pacheco, Sanchez

ASM LABOR AND EMPLOYMENT: 5-0-2

YES: Kalra, Haney, Ortega, Reyes, Ward

ABS, ABST OR NV: Flora, Chen

ASM APPROPRIATIONS: 11-3-2

YES: Holden, Bryan, Calderon, Wendy Carrillo, Mike Fong, Hart, Lowenthal, Papan, Pellerin, Weber, Wilson

NO: Megan Dahle, Dixon, Sanchez

ABS, ABST OR NV: Mathis, Soria

UPDATED

VERSION: September 1, 2023

CONSULTANT: Martin Vindiola / L. & E. / (916) 319-2091 FN: 0001514

1. University of California Webpage. UC Employee Headcount. ↑

2. University of California: UCnet Webpage. Union-Represented Employees. ↑

3. Regents Policy 5402: Policy Generally Prohibiting Contracting for Services (Approved Nov. 14, 2019;

   Amended Jan. 23, 2020) Regents of the University of California. ↑

Date of Hearing: August 23, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

SBPCA Bill Id:SB 27

Author:(Durazo) – As Amended Ver:June 15, 2023

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

SUMMARY:

This bill establishes the Recovery of Earned but Unpaid Wages Act (Act) regarding the University of California’s (UC’s) vendor contracts.

Specifically, this bill:

1. Requires a vendor supplying UC with service employees to provide those employees a written notice of the total compensation rate specified in the vendor’s contract, or as required by UC policy, whichever is higher (“required pay rate”), as well as the employee’s hourly rate of pay and hourly value of employer-provided benefits.
2. Requires, in January and July of each year, the vendor to provide basic payroll information to UC and members of any joint labor-management committee (JLMC). The vendor must also make an individual employee’s basic payroll information available for inspection, upon request, by that employee or their authorized representative.
3. Requires UC and JLMC members be provided any audit finding or other verification or report regarding whether a vendor has compensated employees at the required pay rate.
4. Prohibits a vendor from accepting payment from UC pursuant to a contract for services if the vendor is performing services or supplying UC with employees to perform services at a level of pay less than the required pay rate.
5. Authorizes an aggrieved employee, which extends to a university coworker of a vendor employee who experienced a violation, to bring a civil action against a vendor to recover compensation that has been earned, but was not paid, at the required pay rate, or provide other enforcement. However, an aggrieved employee must first provide a vendor with written notice of an alleged violation, after which the vendor has 60 days to correct and cure the violation, prior to bringing an action. If a claimant prevails, the court must order specified civil penalties, restitution and attorney’s fees to the aggrieved employee, and may require the vendor to refund UC the difference for services paid.

FISCAL EFFECT:

1. Annual costs of approximately $150,000 to UC for one position to staff the JLMC (General Fund (GF)).

Additionally, UC notes this bill’s definition of “hourly value of employer-provided benefits” would cause UC to incur significant costs of an unknown amount, but potentially a few million dollars annually (GF). According to UC, this bill only includes retirement, health, dental, vision, and life and disability benefits in calculating the vendor’s required pay rate, which is inconsistent with how pay is calculated under UC policy that includes other employer-funded benefits, such as a transportation subsidy. UC argues this lack of conformity may necessitate the provision of cash wages to UC employees to match the overall value of a vendor’s total compensation rate, in lieu of the benefits a vendor may offer, thus creating an artificial upward pressure on wages.

1. Annual cost pressures (GF or Trial Court Trust Fund) of an unknown amount, potentially up to $150,000, to the courts in additional workload, as this bill allows an aggrieved employee to bring a civil action for specified remedies, including attorney’s fees. It is unclear how many actions may be filed statewide, but the estimated workload cost of one hour of court time is $1,000. 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 GF to perform existing duties. The 2023-24 state budget agreement includes $105.1 million in ongoing GF revenue to continue backfilling the TCTF for expected revenue declines.

COMMENTS:

1. Purpose. According to the author:

[S]ince vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by [UC] or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages.

[This bill] establishes the [Act] by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC’s Equal Pay for Equal Work policy.

1. Support and Opposition. This bill is sponsored by the American Federation of State, County, and Municipal Employees, Local 3299, which argues a recent UC “audit found that over one thousand employees of its vendors have not been paid what they are owed. The UC policy and its audits do not provide a way for a worker to recover earned but unpaid wages.” This bill is also supported by other labor organizations.

This bill is opposed by UC unless “amended to allow only an aggrieved employee to file civil litigation to enforce [wage and benefit parity efforts]” and not a UC employee coworker. Regarding the aforementioned audit, UC argues “Although we identified areas for improvement, the vast majority of suppliers audited were in compliance; of those found to be noncompliant, all are in remediation.”

1. Equal Pay for Equal Work. UC is one of California’s largest employers, with approximately 227,000 faculty and staff system-wide. In 2019, UC Regents adopted Regents’ Policy 5402, which generally prohibits UC from contracting out for services and functions that UC staff could perform just as well, except under “exigent and limited circumstances.” Policy 5402 also mandates any outside contracts adhere to an “Equal Pay for Equal Work” standard, reducing any pay gap between UC employees and generally lower-wage contractors.

A recent UC audit of Policy 5402 compliance found that of the 64 included vendors included in the audit, 39 (or 61%) were compliant. This bill provides various enforcement mechanisms to ensure compliance with Policy 5402, including disclosure of specified pay information and authorization of an aggrieved employee to file, following a 60-day cure period, a civil claim against a vendor. As noted in the Assembly Judiciary Committee’s analysis of this bill, although generally an exception to the rule, granting a cause of action to a person who has not directly suffered harm, (in this case, the university coworker of a vendor employee), is not unprecedented in statute and “arguably justifiable due to the fact that contract workers, who are likely not unionized, may face significant barriers to holding their vendor-employers accountable in court, including retaliatory behavior by the vendor.”

1. Related Measures. ACA 6 (Haney), if approved by voters, requires individuals who perform work for the UC Regents to have the right to specified basic state labor standards. ACA 6 is pending in the Senate Elections and Constitutional Amendments Committee.
2. Prior Legislation. SB 1364 (Durazo), of the 2021-22 Legislative Session, was similar to this bill, but would have resulted in more significant penalties for a vendor found to be in violation of the bill, arguably discouraging a vendor from contracting with UC in the first place. SB 1364 was vetoed by Governor Newsom, who referenced the then-pending UC audit report:

While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature. However, my Administration will closely monitor UC’s steps to enforce their own policies and determine if a statutory change is required.

ACA 14 (Gonzalez), of the 2019-20 Legislative Session, would have limited contract services at UC and required UC to ensure all contract workers are afforded the same equal employment opportunity standards as UC employees performing similar services. ACA 14 failed passage on the Senate Floor.

SB 574 (Lara), of the 2017-18 Legislative Session, would have modified contractor requirements at UC, including establishing thresholds for employee compensation. SB 574 was vetoed by Governor Brown, who stated:

After twice vetoing prior attempts, I am tempted to sign this measure, for no other reason than it is a well-intentioned bill that seeks to improve the financial security of contracted workers, or, alternatively, expand direct employment at the UC for lower wage workers…

Good intentions, however, aren’t always enough.

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

Date of Hearing: June 28, 2023

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Ash Kalra, Chair

SBPCA Bill Id:SB 27

Author:(Durazo) – As Amended Ver:June 15, 2023

SENATE VOTE: 29-7

SUBJECT: University of California: vendors.

SUMMARY: Establishes the Recovery of Earned but Unpaid Wages Act (Act) to, among other things, prohibit a vendor from accepting payment from the University of California (UC) if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendor’s contract with the UC or as required by university policy. The bill also requires vendors to comply with various reporting and notice requirements and establishes a process for aggrieved employees to bring a civil action against vendors who do not comply with the provisions of this Act. Specifically, this bill:

Definitions

1. Defines “aggrieved employee” as either of the following:
   1. An employee against whom one or more alleged violations of this part was committed.
   2. A UC employee coworker of an employee against whom one or more alleged violations of this part was committed who performs services for the UC at or for the same UC location or department as the employee.
2. Defines “basic payroll information” for each vendor-supplied employee who performed services at any time during the preceding six-month period, as the following:
   1. The employee’s full name, job title, mobile telephone number, email address, and home address.
   2. Work location while performing services for the UC.
   3. The employee’s hourly rate of pay while performing services for the UC for each applicable pay period during the preceding six-month period.
   4. The hourly value of employer-paid benefits provided to the employee, if any, while performing services for the UC for each applicable pay period during the preceding six-month period.
   5. The employee’s hours of work while performing services for the UC for each applicable pay period during the six-month period.
3. Defines “contract” as any written instrument, purchase order, change order, order, requisition, service agreement, or other written or electronic document, however titled, reflecting an agreement that the vendor will perform services or supply the UC with employees to perform services in exchange for payment.
4. Defines “employee” as any contract worker, or individual employed by any vendor, or otherwise supplied to the UC by any vendor, to perform services for the UC.
   1. Specifies that “employee” also includes an individual treated by either the vendor, a subcontractor, or the UC as an independent contractor.
   2. Specifies that “employee” does not include any individual who is a parent, spouse, child, or legally adopted child of the employer, any sole proprietor, or any individual with an ownership interest of five percent or more in the vendor.
5. Defines “employer” as any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.
6. Defines “hourly value of employer-provided benefits” as the employer’s actual cost for the employee’s retirement, health, dental, vision, and life and disability benefits, if any, calculated as an hourly dollar amount.
   1. Specifies that “hourly value of employer-provided benefits” does not include any paid time off or any payroll expenses required by law.
   2. Specifies that for any employee who does not receive employer-provided benefits, the hourly value is zero dollars ($0).
7. Defines “joint labor-management committee” as any joint labor-management committee or similar meeting body or committee established jointly by the UC and the exclusive representative of UC employees who perform the same or similar services as the employees performing services for the UC.
8. Defines “services” as work that is subject to university policy.
   1. Specifies that “services” includes services that have been customarily performed by bargaining unit employees of the UC, including, but not limited to, the following services: cleaning, custodial, janitorial, or housekeeping services; food services; laundry services; grounds keeping; nonskilled crafts building maintenance; transportation and parking services; security services; billing and coding services; sterile processing; hospital and nursing assistant services; respiratory therapy; and medical imaging services.
   2. Specifies that “services” does not include financial investment or retirement planning advice, retirement plan recordkeeping, or asset management.
9. Defines “subcontractor” as any person, employer, supplier of labor, staffing agency, temporary services employer, or other entity that performs services for the UC or supplies employees to perform services, pursuant to a contract with a vendor.
10. Defines “total compensation rate” as the employee’s hourly rate of pay plus the hourly value of employer-provided benefits, or the equivalent compensation.
    
    
11. Defines “university policy” as a policy or collective bargaining agreement adopted or approved by the UC that requires vendors to provide employees’ wages and benefits of equivalent value to the wages and benefits provided to UC employees performing the same work.
12. Defines “vendor” as a contractor and includes any person, employer, supplier of labor, staffing agency, temporary services employer, labor broker, management services provider, or other entity that contracts with the UC to provide services or to supply the UC with its own employees or those of a subcontractor to perform services.
    1. Specifies that “vendor” also means any person acting either individually or as an officer, agent, or employee of a vendor.
    2. Specifies that “vendor” does not include a contractor in the “construction industry.”
       1. Defines “construction industry” for purposes of this part, as an employer that provides work associated with construction, including work involving alteration, demolition, building, excavation, renovation, remodeling, maintenance, improvement, repair work, and any other work, as specified.

Payroll Information and Notice Provisions

1. Requires a vendor that supplies the UC with employees to perform services to provide those employees with written notice of the total compensation rate specified in the vendor’s contract with the UC or required by university policy, whichever is higher, and the employee’s hourly rate of pay and hourly value of employer-provided benefits.
   1. Requires the vendor to provide employees with these notices at the time each employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee’s hourly rate.
2. Requires, in January and July of each year, a vendor to provide basic payroll information to the UC and members of any joint-labor management committee.
   1. Requires the vendor to provide all employees who agree to perform services for the UC, or continue doing so, with a specified written notice about this requirement.
3. Requires basic payroll information of an employee performing services for the UC to be made available for inspection or furnished to the employee or their authorized representative upon request.
4. Requires any audit, verification, notice, report, or finding related to whether a vendor meets the required compensation rate for their employees, as outlined in their contract with the UC or university policy, to be shared with the UC and members of any joint labor-management committee.

Civil Action Provisions

1. Prohibits a vendor from accepting payment from the UC pursuant to a contract for services if the vendor is performing services or supplying the UC with employees to perform services who are paid less than the total compensation rate specified in the vendor’s contract with the UC or required by university policy, whichever is higher.
2. Authorizes an aggrieved employee to bring a civil action, including on behalf of an employee or employees against whom a violation of this Act was committed, against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor’s contract with the UC or university policy, whichever is higher, or to enforce any other provisions of this part.
3. Requires an aggrieved employee, prior to bringing an action against a vendor, to first provide a vendor with written notice of the alleged violation and include the names or other information sufficient to identify the employees against whom the alleged violations were committed, dates of employment, the period of noncompliance, and the contact information.
   1. Requires a vendor that receives this notice to provide a copy of the written notice to the president of the UC within five business days of receipt.
4. States that upon providing the required written notice, an aggrieved employee may initiate a lawsuit against the vendor only if, within 60 days, the vendor fails to furnish documentation proving that every employee identified in the notice has been made whole, received the required notices, and is being compensated at a total rate that meets or exceeds the rate specified in the vendor's contract with the UC or in university policy, whichever is higher.
5. Requires a claimant that prevails in a civil action under this Act to notify the president of the UC of the decision.
6. Authorizes a court to order the following on behalf of a prevailing claimant:
7. For any vendor that pays an employee less than the compensation rate fixed by contract or university policy, whichever is higher, payment of penalties of $100 per employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
8. For any vendor that knowingly and intentionally violates the notice requirements of this section, payment of a civil penalty of $50 dollars per employee per pay period for an initial violation or $100 per employee per pay period for any subsequent violations, with a cap of $4000 per employee; and
9. Reasonable attorney’s fees and costs.
10. Provides that if a vendor bills the UC based on an hourly rate and fails to pay its employees according to the vendor's contract or university policy, a court has the authority to require that the vendor return to the the UC any funds paid by the UC that exceed the amount the vendor paid to its employees for services rendered after January 1, 2024.
11. Directs compensation and civil penalties recovered pursuant to this Act to be paid to the employee against whom the violation was committed.

Additional Provisions

1. Provides that the remedies under this Act are in addition to any other remedies provided by law, with specified exceptions.
2. States that this Act does not preclude or alter the UC’s ability to contract for services as permitted under existing policies or collective bargaining agreements.
3. States that this Act does not preclude the UC from hiring in emergency circumstances or to meet other staffing needs.
   
4. States that provisions of this Act are severable.
   

EXISTING LAW:

1. Establishes the UC as a public trust under the administration of the Regents. (Cal. Const., Art. IX, § 9 (a).)
2. Provides that the Regents are subject only to such legislative control as may be necessary to insure the security of its funds and compliance with the terms of the endowments of the university and such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services. (Cal. Const., Art. IX, § 9 (a).)
3. Prohibits a person or entity from entering into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, with the actual or constructive knowledge that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided. (Labor Code, § 2810.)
   
4. Requires that, at the time of hiring, an employer must provide to each employee a written notice containing the following information:
   
   1. The rate or rates of pay and basis thereof, including any rates for overtime, as applicable;
   2. Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
   3. The regular payday designated by the employer;
   4. The name of the employer;
   5. The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
   6. The telephone number of the employer;
   7. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
   8. Specified information about an employee’s right to paid sick leave; and
   9. Any other information the Labor Commissioner deems material and necessary.
      (Labor Code, § 2810.5 (a)(1).)

FISCAL EFFECT: According to the Senate Appropriations Committee, UC indicates that it would incur annual costs of about $150,000 to implement the provisions of this bill (General Fund).

COMMENTS: The UC is one of California’s largest employers, with around 227,000 faculty and staff system-wide.^[1] According to the UC, just under half of its in-house labor force is unionized.^[2] At times, however, UC seeks outside vendors to perform various services. The people working for these vendors are not necessarily represented by a union and don’t necessarily receive the same pay and benefits as an in-house UC employee would.

In 2019, the Regents of the UC adopted Regents’ Policy 5402.^[3] In general, Policy 5402 prohibited the UC from contracting out for services and functions that University staff could perform just as well. Recognizing that there might be “exigent and limited circumstances” when the UC needed to use an outside contract as “a solution of last resort,” Policy 5402 allowed such outside contracts, but only under specified conditions. Of particular relevance to this bill, Policy 5402 mandated that any outside contracts adhere to an “Equal Pay for Equal Work” standard. Policy 5402 was adopted in the wake of the failure of Assembly Constitutional Amendment 14 (2019), which would have required the Regents to ensure all contract workers were provided pay and benefits equal to those of university employees performing similar services. While the UC has expressed commitment to upholding the terms of Policy 5402, there remains no enforcement mechanisms within the policy or in statute to ensure that the UC complies with the language of its own policy.

According to the author, “The University of California has a policy called "Equal Pay for Equal Work” that requires service contract vendors to pay vendor employees’ wages and benefits equivalent to what UC pays directly hired service workers.

However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages.

[This bill] establishes the “Recovery of Earned but Unpaid Wages Act” by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy.

[This bill] is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. The bill models how prevailing wage laws are enforced and requires vendors to supply the UC and the appropriate joint labor-management committee with the necessary basic payroll information.

Vendors must also provide written notice to their employees about the required compensation rates. The bill would also allow a contracting vendor company an opportunity to correct and cure any discrepancies.

It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3rd party vendor compliance and is consistent with UC’s audit standards and process.

If an employer refuses to comply with the UC Equal Pay for Equal Work policy or correct and cure, employees would then have the right to pursue recovery of their earned but unpaid wages from the contracting vendor in court... not from UC.”

In addition, the author notes that this bill will promote equity and maximize benefits for underserved and marginalized communities, because “recent surveys suggest that outsourced UC contractors are less white than UC employees and are also paid a lot less. This bill will help to ensure that low-income contract workers of color are paid fairly and in compliance with UC’s policy of Equal Pay for Equal Work.”

Arguments in Support

The American Federation of State, County, and Municipal Employees (AFSCME), Local 3299, sponsor of the bill, states, “Recently, the University has begun an audit process to confirm to what extent its vendors are adhering to that policy and which vendors should be terminated for failing to do so. However, the UC policy and its audits do not provide a way for a worker to recover earned but unpaid wages.

[This bill] would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates.

A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts.”

Arguments in Opposition

The UC is opposed unless amended, and states, “As drafted, [this bill] allows an aggrieved employee or a UC employee “coworker” to initiate civil litigation after providing 60 days to cure an alleged violation. The appropriate venue for UC employees to raise concerns about WBP is through Article 5 grievances, not civil court. The University requests the bill be amended to allow only an aggrieved employee to initiate civil litigation by striking Sec. 1441(a)(2).

The University supports Wage and Benefit Parity, and we are actively working with AFSCME and our vendors to enforce WBP. The University recently completed two comprehensive audits of the WBP policy: one to evaluate the processes in place to facilitate compliance and one to verify vendor compliance and correct any noncompliance. Although we identified areas for improvement, the vast majority of suppliers audited were in compliance; of those found to be noncompliant, all are in remediation.

The University is working in good faith to enforce WBP, and already has the tools necessary to collect vendor payroll information and to drive remediation for any noncompliance. While UC understands the desire for underpaid vendor employees to seek legal remedies from a vendor for wages earned but not paid, the University of California opposes [this bill] unless it is amended because it deviates from this premise by also allowing UC’s represented employees to sue vendors directly, even though they have suffered no underpayment. Furthermore, if represented employees are aware of WBP violations, there is already a remedy available for them – they can grieve a violation of their collective bargaining agreement.”

Related & Prior Legislation

ACA 6 (Haney) of 2023 would enact the Basic Labor Standards for Individuals Performing Work at the UC Act which would require individuals who perform work for the Regents of the UC to have the right to, and to be covered by, specified basic state labor standards as they apply in the private sector on or after January 1, 2025. This measure is currently pending a hearing in the Senate Labor, Public Employment and Retirement Committee.

SB 1364 (Durazo) of 2022 was substantially similar to this bill and would have required a vendor that contracts with UC to perform services, to provide their employees with the higher of the total compensation rate specified in the vendor’s contract with the university or as required by university policy. The bill also would have required a vendor, twice yearly, to provide basic payroll information, as defined, to the UC and members of any meeting body established with the exclusive representative of university employees who perform the same or similar services. This bill was vetoed by Governor Newsom.

ACA 14 (Gonzalez) of 2019 would have amended Article IX of the State Constitution by adding the UC Equal Employment Opportunity Standards Act. The Act would have required the Regents of the UC to ensure that all contract workers who are paid to perform support services are afforded the same equal employment opportunity standards as university employees performing similar services. This measure died on the Senate inactive file.

SB 574 (Lara) of 2017 would have modified contractor requirements, including establishing thresholds for employee compensation, for qualifying as a lowest responsible bidder or best value awardee for contracts for materials, goods, and services at the UC. This bill was vetoed by Governor Brown.

SB 959 (Lara) of 2016 was nearly identical to SB 574. This bill was vetoed by Governor Brown.

REGISTERED SUPPORT / OPPOSITION:

Support

AFSCME Local 3299 (Sponsor)
AFSCME
California Federation of Teachers 
California Labor Federation
California School Employees Association

Oppose Unless Amended

University of California

Other

American Staffing Association
California Association of Public Hospitals & Health Systems
Fidelity Investments

Analysis Prepared by: Martin Vindiola / L. & E. /

1. University of California Webpage. UC Employee Headcount. ↑

2. University of California: UCnet Webpage. Union-Represented Employees. ↑

3. Regents Policy 5402: Policy Generally Prohibiting Contracting for Services (Approved Nov. 14, 2019;

   Amended Jan. 23, 2020) Regents of the University of California. ↑

Date of Hearing: June 20, 2023

ASSEMBLY COMMITTEE ON JUDICIARY

Brian Maienschein, Chair

SBPCA Bill Id:SB 27

Author:(Durazo) – As Amended Ver:June 15, 2023

SENATE VOTE: 29-7

SUBJECT: UNIVERSITY OF CALIFORNIA: VENDORS

KEY ISSUE: IN ORDER TO FULFILL THE INTENT OF THE UNIVERSITY OF CALIFORNIA’S EQUAL PAY FOR EQUAL WORK STANDARD, SHOULD EMPLOYERS WHO CONTRACT WITH THE UC BE REQUIRED TO NOTIFY ITS WORKERS OF THE WAGES AND BENEFITS THEY ARE ENTITLED TO RECEIVE UNDER THE EQUAL PAY POLICY, REGULARLY PROVIDE PAYROLL INFORMATION TO THE UC, AND BE CIVILY LIABLE IF FOUND to be IN VIOLATION OF THE EQUAL PAY POLICY?

SYNOPSIS

The University of California is one of the largest employers in the state and, as of October 2021, employs over 230,000 people. In addition to their direct-hires, the University also contracts with vendors to provide labor and services. In 2019, the Regents of the University of California approved Policy 5402: Equal Pay for Equal Work. This policy, discussed in further detail below, states among other provisions, the University’s intent to ensure all contract workers receive the full pay and benefits to which direct-hire UC employees are entitled. There are not, however, any enforcement mechanisms within the Policy itself. Earlier this year, the UC completed an audit of its vendor contracts to evaluate compliance with the Policy and found significant numbers of their contracts were noncompliant, by the vendors, the UC, or both parties.

In an effort to facilitate enforcement of the UC’s equal pay policy, this bill would require vendors who contract with the UC to comply with regular reporting requirements regarding their employees who complete contracts with the UC and establish a cause of action for both affected contract workers and their direct hire counterparts. This bill is sponsored by AFSCME 3299 and supported by AFSCME, the California Federation of Teachers, the California Labor Federation, and the California School Employees Association. It is opposed by the American Staffing Association and opposed unless amended by the University of California. Should this bill pass this Committee, it would be referred to the Assembly Committee on Labor & Employment.

SUMMARY: Requires vendors who contract with the University of California to comply with various notice and reporting requirements, and authorizes a private right of action for employees of the vendor or employees of the University of California against the vendor for violations of the University’s Equal Pay for Equal Work policy. Specifically, this bill:

1. Establishes the Recovery of Earned but Unpaid Wages Act.
2. Defines the following for purposes of this bill:
   1. “Aggrieved employee” means either an employee against whom one or more alleged violations was committed or a university employee coworker of an employee against whom one or more alleged violations of this part was committed who performs services for the university at or for the same university location or department as the employee.
   2. “Basic payroll information” means, for each vendor-supplied employee who performed services at any time during the preceding six-month period, the following information:
      1. The employee’s full name, job title, mobile telephone number, email address, and home address;
      2. Work location while performing services for the university;
      3. The employee’s hourly rate of pay while performing services for the university for each applicable pay period during the preceding six-month period;
      4. The hourly value of employer-paid benefits provided to the employee, if any, while performing services for the university for each applicable pay period during the preceding six-month period;
      5. The employee’s hours of work while performing services for the university for each applicable pay period during the six-month period.
   3. “Employee” includes any contract worker, or individual employed by any vendor, or otherwise supplied to the university by any vendor, to perform services for the university. “Employee” also includes an individual treated by either the vendor, a subcontractor, or the university as an independent contractor. “Employee” does not include any individual who is a parent, spouse, child, or legally adopted child of the employer, any sole proprietor, or any individual with an ownership interest of 5 percent or more in the vendor.
   4. “Services” means work that is subject to university policy. “Services” includes services that have been customarily performed by bargaining unit employees of the university, including, but not limited to, certain specified services.
   5. “Vendor” means contractor and includes any person, employer, supplier of labor, staffing agency, temporary services employer, labor broker, management services provider, or other entity that contracts with the university to provide services or to supply the university with its own employees or those of a subcontractor to perform services. “Vendor” also means any person acting either individually or as an officer, agent, or employee of a vendor. “Vendor” does not include a contractor in the construction industry, as defined.
3. Requires a vendor that supplies the university with employees to perform services to provide those employees with written notice of various compensation rates within specified time frames.
4. Requires the vendor to provide basic payroll information to the university and members of any joint labor-management committee in January and July of each year, and requires the vendor to notify their employees of the required disclosure.
5. Prohibits a vendor from accepting payment from the university pursuant to a contract for services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the total compensation rate specified in the vendor’s contract with the university or required by university policy, whichever is higher.
6. Authorizes an aggrieved employee to bring a civil action, including on behalf of an employee or employees against whom a violation of this part was committed, against a vendor to compensation that has been earned but was not paid at the total compensation rate required by the vendor’s contract with the university or university policy, whichever is higher, or to enforce any other provisions of this part.
7. Requires an aggrieved employee, prior to bringing an action against a vendor, to first provide a vendor with written notice of the alleged violation and include the names or other information sufficient to identify the employees against whom the alleged violations were committed, dates of employment, the period of noncompliance, and the contact information.
8. Grants a vendor who may be liable in a claim brought pursuant to 6) a cure period of 60 days. In order to demonstrate that they have cured and corrected the alleged violations, the vendor must demonstrate that each employee identified in the notice has been made whole, that each has been provided with the required notices, and that each is receiving a total compensation rate no less than the rate specified in the vendor’s contract with the university or in university policy, whichever is higher.
9. Authorizes a court to order the following on behalf of a prevailing claimant:
10. For any vendor that pays an employee less than the compensation rate fixed by contract or university policy, whichever is higher, payment of penalties of $100 per employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
11. For any vendor that knowingly and intentionally violates 3) or 4) above, payment of a civil penalty of $50 dollars per employee per pay period for an initial violation or $100 per employee per pay period for any subsequent violations, with a cap of $4000 per employee; and
12. Reasonable attorney’s fees and costs.
13. Directs compensation and civil penalties recovered pursuant to 6) and 9) to be paid to the employee against whom the violation was committed.
14. Provides that the remedies under this bill are in addition to any other remedies provided by law, with specified exceptions.
15. States that it does not preclude or alter the UC’s ability to contract for services as permitted under existing policies or collective bargaining agreements.
16. States that it does not preclude the UC from hiring in emergency circumstances or to meet other staffing needs.

EXISTING LAW:

1. Establishes the UC as a public trust under the administration of the corporation known as “The Regents of the University of California” and grants the Regents all the powers necessary or convenient for the effective administration of this public trust. (California Constitution, Article XIV, Section 9.)
2. Limits legislative control over the UC to only such legislative control as may be necessary to insure the security of its funds, to ensure compliance with the terms of the endowments of the university, and such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services. (California Constitution, Article XIV, Section 9.)
3. Prohibits entering into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, with the actual or constructive knowledge that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided. (Labor Code Section 2810.)
4. Requires that, at the time of hiring, an employer must provide to each employee a written notice containing the following information:
   1. The rate or rates of pay and basis thereof, including any rates for overtime, as applicable;
   2. Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
   3. The regular payday designated by the employer;
   4. The name of the employer;
   5. The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
   6. The telephone number of the employer;
   7. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
   8. Specified information about an employee’s right to paid sick leave; and
   9. Any other information the Labor Commissioner deems material and necessary. (Labor Code Section 2810.5.)
5. Requires all employers to provide their employees with an accurate, itemized statement showing gross wages earned, total hours worked by the employee, all deductions, net wages earned, the period for which the employee is paid, all applicable hourly rates in effect during the pay period and the corresponding number of hours worked, the name of the employee and only the last four digits of their social security number or an employee identification number other than a social security number and the name and address of the legal entity that is the employer. (Labor Code Section 226.)
6. Specifies penalties for failure to pay at least minimum wage and sets forth procedures for filing a claim against an employer for alleged failure to comply with minimum wage law. (Labor Code Section 1197.1.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: The University of California is one of the largest employers in the state and, as of October 2021, employs over 230,000 people. (UC employee headcount, University of California at https://www.universityofcalifornia.edu/about-us/information-center/uc-employee-headcount.) In addition to their direct-hires, the University also contracts with vendors to provide labor and services. In 2019, the Regents of the University of California approved Policy 5402: Equal Pay for Equal Work. This policy, discussed in further detail below, states among other provisions, the University’s intent to ensure all contract workers receive the full pay and benefits to which direct-hire UC employees are entitled. There are not, however, any enforcement mechanisms within the Policy itself. According to the author:

SB 27 is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. The bill models how prevailing wage laws are enforced and requires vendors to supply the UC and the appropriate joint labor-management committee the basic payroll information necessary.

Vendors must also provide written notice to their employees about the required compensation rates. The bill would also allow a contracting vendor company an opportunity to correct and cure any discrepancies.

It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3rd party vendor compliance and is consistent with UC’s audit standards and process.

If an employer refuses to comply with the UC Equal Pay for Equal Work policy or correct and cure, employees would then have the right to pursue recovery of their earned but unpaid wages from the contracting vendor in court... not from UC.

It’s disappointing that UC is using their intellectual talent to oppose workers with unpaid wages, despite a total of 15 amendments that UC requested have been accepted.

UC can’t get sued under SB 27. UC won’t be liable for unpaid wages under SB 27. UC will continue outsourcing under SB 27.

And finally, UC’s own summary of its own audit concluded that over 1,000 Californians have not been paid what they earned. SB 27 will give them a recourse they won’t have without the Assembly Judiciary Committee’s vote.

Policy 5402: Equal Pay for Equal Work. As previously stated, the Regents of the University of California approved Policy 5402, also known as Equal Pay for Equal Work, in 2019. Relevant to this bill, the Policy states:

The labor conditions of contract workers shall be protected by ensuring they receive wages and benefits equivalent to what the University provides to its employees, and providing those who have performed services to the University on a long-term and continuous basis the opportunity to become University employees.

[…]

Since its founding, the University’s public mission has always been to unlock the doors of economic opportunity, uplift the human condition, and serve as an antidote to poverty. This begins from within.

UC’s employment and contracting practices for all individuals working on its campuses, medical centers, and laboratories must model what it demands of other employers. In particular, this means the University must remain vigilant in ensuring its use of contract workers does not contribute to the rise of poverty-level jobs, thereby exacerbating growing economic inequality and reliance on taxpayer-funded “safety-net” services. Contracting out should be used sparingly and treated as an option of last resort to address temporary needs, not as a means to replace employees with lower-wage contractors.

As a public trust and one of the largest employers in California, the University is committed to protecting and valuing the lives of those it serves, educates, and employs.

Policy 5402 was adopted in the wake of the failure of Assembly Constitutional Amendment 14 (2019), which would have required the Regents to ensure all contract workers were provided pay and benefits equal to those of university employees performing similar services. While the UC has expressed commitment to upholding the terms of Policy 5402, there remains no enforcement mechanisms within the policy or in statute to ensure that the UC complies with the language of its own policy.

This bill proposes two primary mechanisms to track and enforce vendor compliance with the Equal Pay policy. First, the bill requires vendors to provide a series of notices to their employees assigned to positions within the UC system, including the total compensation rate specified by their contract with the university or the compensation rate required by Policy 5402. Creating greater awareness of the rate each should expect in a contract with the UC is undoubtedly an instrumental first step in ensuring that workers will be able to advocate on their own behalf against inequitable pay. Second, the bill requires vendors to provide “basic payroll information,” as defined, to the UC and any joint labor-management committee, or any other similar body between the UC and its unions have established. The information included in “basic payroll information” encompasses workers’ name, job title, and contact information among other details. The disclosure of this information, which is required to occur twice a year, seems designed to allow all the parties involved to aggregate information in order to ensure compliance with Policy 5402.

The bill also proposes an enforcement mechanism that would authorize an “aggrieved employee” to file a civil claim against a vendor who violates any of the provisions of the bill, including full payment pursuant to Policy 5402 or the reporting requirements. In order to bring a claim, however, a claimant must first give the vendor notice of the alleged violation and give the vendor 60 days to cure the violation. Only if approximately two months have elapsed without the vendor demonstrating they have cured the alleged violations may the aggrieved employee file a claim in court. Notably, the bill defines “aggrieved employee” as either an employee who is employed by a vendor who fails to provide the required notices or against whom the vendor otherwise commits a violation of the bill’s provisions or a university employee coworker who performs services at or for the same location or department as the vendor’s employee. Therefore, under this language, a direct-hire UC employee could file a claim on behalf of a contract worker.

Assuming the aggrieved employee is successful, the bill then directs the court to order a series of civil penalties scaled to match the extent of the violation, discussed in the subsequent section. It is important to note that the only entities that may be held liable under this bill are vendors that contract with the UC, not the UC itself.

Last year’s SB 1364 (Durazo, 2022) and How This Bill Differs From It. This bill is identical in intent to SB 1364 (Durazo, 2022), although a series of amendments in previous committees have somewhat modified the substance. The primary difference is that the potential consequences that a vendor faces if it is found to have violated the policy have been reduced. Under this bill, a vendor found in violation faces the following consequences: full compensation of the workers for the underpayments, scaled penalties for each violation, and payment of the prevailing party’s attorney’s fees and costs. Under SB 1364, a vendor faced two additional consequences if a court found the vendor in violation. First, SB 1364 gave the court the discretion to impose an additional penalty equal to 10 percent of the value of the vendor’s contract with UC. Second, SB 1364 required the court to disqualify the vendor from contracting with the UC again for at least five years. In response to concerns that SB 1364’s punishment for violations was so strong that it would scare off vendors, the supplemental civil penalty and five year contracting prohibition were omitted from the present version.

Despite making its way through the Legislature successfully, SB 1364 was ultimately vetoed by Governor Newsom. In his veto message, Governor Newsom stated:

It is my Administration’s understanding that the UC has been updating vendor contracts to include wage and benefit parity language and implementing campus and system level audit functions to monitor compliance and enforce these policies The University is expected to complete a comprehensive report of audit findings in the first quarter of next year. […] While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature. However, my Administration will closely monitor UC’s steps to enforce their own policies and determine if a statutory change is required.

The UC completed the audit mentioned in the Governor’s veto message was conducted earlier this year and found a significant portion of UC’s vendors were out of compliance with their Equal Pay policy. Of the 64 vendors included in the audit, 39 (or 61 percent) were compliant with the policy. Fifteen (or 24 percent) were noncompliant and another six vendors had contracts that reflected noncompliance by both the vendors and the UC. Of the 25 vendors that were noncompliant (which includes vendors that were noncompliant, instances where both the vendors and the UC were noncompliant, and cases where the UC was noncompliant or the audit process was not completed by the vendor), 17 had implemented remediation plans and eight were developing their remediation plans to be implemented by the Spring of 2023. (Supplier Wage and Benefit Parity Compliance Verification (Supplier WBP Audit) Final Report, University of California (2023) at pp. 4 – 5.)

The University of California, which opposes the bill unless amended, states concerns that the measure creates an avenue for university employees to seek redress that is redundant of, and less appropriate than, the existing grievance process for an existing collective bargaining agreement (CBA). The UC, which reiterates their intention to abide by the terms of their own policy, argues that the bill “deviates from [the desire for underpaid vendor employees to seek legal remedies from a vendor for wages earned but not paid] by allowing UC’s represented employees to sue vendors directly, even though they have suffered no underpayment.” In order to address this concern, the UC proposes that the author amend the bill to strike Section 1141 (a)(2), which defines “aggrieved employee” to include a university employee coworker of a directly affected employee. This amendment would effectively limit the cause of action to only those employees who are employed by a vendor, rather than the university, and experience either an underpayment pursuant to UC policy or lack of notice as required by the bill.

Generally causes of action exist where an individual has suffered some harm caused by an individual or entity. While there are many other examples of statutes in existing law that grant a cause of action to someone who has not directly suffered harm, doing so is generally an exception to the rule. In this case, the exception is arguably justifiable due to the fact that contract workers, who are likely not unionized, may face significant barriers to holding their vendor-employers accountable in court, including retaliatory behavior by the vendor. Conversely, workers who are unionized are theoretically better positioned to enforce the current bill’s provisions against noncompliant vendors. Additionally, while the university employee may not suffer immediate harm by the vendor’s underpayment, arguably allowing vendors to continue the regular practice of underpaying their contract workers may indirectly impact UC employees by undermining their own job security. Moreover, it is arguable that the bill’s most significant impact will be effectuated by its opportunity to cure provision. By requiring a worker to wait 60 days before filing a claim against the vendor (and subsequently requiring the vendor to alert the university of the notice), each party will not only be incentivized to come into compliance with the UC’s equal pay policy, but will have a reasonable opportunity to do so.

The measure is opposed by the American Staffing Association (ASA), which notes a particular concern regarding the bill’s disclosure requirements as detailed in a letter submitted to a previous committee. Specifically they contend that the bill’s requirement that vendors regularly share their employees’ basic payroll information with the UC “violates employees’ expectation that their employers will keep such information confidential.” Additionally, the ASA contends that this bill “runs afoul of the legislative purpose and intent of the California Privacy Rights Act of 2018.”

As to their first concern, one could argue that workers who report to a university campus to perform similar tasks as the university’s direct hires do not have an extensive expectation that their information will be kept confidential. To the degree that they do have this expectation, there is arguably a significant interest, and benefit to the employee, that their information be shared with the UC – which is to ensure that they are being paid equitably. Moreover, the bill requires the workers to receive notice of the disclosure, at which point the contract workers would be fully aware that their information will be communicated to the UC. Finally, the extent to which the information would be shared appears reasonably limited. Only the UC and a joint labor management committee would receive the specified information; it would not be widely distributed. To this point, the ASA’s concerns over the perceived contradiction with the CPRA seems misplaced. The CPRA, a 2020 ballot initiative amending the California Consumer Protection Act (CCPA), was intended to protect consumers, rather than employees or workers, from businesses who would otherwise be able to profit from consumers’ data.

The ASA identified one final concern regarding the breadth of the information the bill would require vendors to provide the UC, including information regarding work performed outside of a contract with the UC. The bill as currently in print now specifies that such disclosures apply only to work performed for the UC, and as the ASA has not submitted an updated position to this Committee, it appears that their concern has been addressed.

The University of California opted to develop its own policy to ensure that contract workers are paid equally for the same work completed as their direct hire counterparts. However, such a policy, absent enforcement, may ultimately achieve very little. This bill proposes one possible strategy to ensure that vendors are living up to the UC’s equal pay policy by arming contract workers and their UC employee co-workers with tools designed to hold vendors accountable.

ARGUMENTS IN SUPPORT: This bill is sponsored by the American Federation of State, County, and Municipal Employees (AFSCME) Local 3299. It is supported by AFSCME, the California Federation of Teachers (CFT), the California Labor Federation, and the California School Employees Association. In support of the measure the sponsors write:

The University of California has in place a policy named Equal Pay for Equal Work. It requires companies that enter into service contracts with the University of California (UC) to pay company employees wages and benefits equal to what UC pays service workers.

Recently, the University has begun an audit process to confirm to what extent its vendors are adhering to that policy and which vendors should be terminated for failing to do so. However, the UC policy and its audits do not provide a way for a worker to recover earned but unpaid wages.

SB 27 would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates.

A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts.

ARGUMENTS IN OPPOSITION: It is opposed by the American Staffing Association. They write the following regarding their concerns on the measure:

As a threshold matter, ASA supports SB 27’s overarching policy goal of ensuring compliance with the University of California’s (UC) Equal Pay for Equal Work policy. We do not object to the requirement that staffing agencies (vendors) provide employees written notice of their pay and benefits when they are assigned to perform services for UC, or the provision that allows workers who detect a discrepancy in their pay to provide notice and pursue remedies for that discrepancy. But, as explained below, ASA does have concerns regarding SB 27’s disclosure requirements as they pertain to employees’ personal and private information.

UC Vendors Should Not Be Required to Disclose Confidential Information Without Cause; in Particular, the Requirement to Share Non-UC Work Information Serves No Rational Purpose

SB 27 mandates that all UC vendors share with UC their employees’ “basic payroll information,” including the employees’ full names, job titles, mobile telephone numbers, email addresses, and home addresses. This violates employees’ expectation that their employers will keep such information confidential. As a general matter, employers only disclose such information pursuant to a valid governmental agency or law enforcement request. Here, no such request is present, and employees should not be forced to relinquish sensitive information—including home address, email addresses, and cell phone number—to a third party as a condition of their employment with a UC vendor.

In addition, requiring UC vendors to submit confidential employee data to the UC runs afoul of the legislative purpose and intent of the California Privacy Rights Act of 2018 (CPRA), as amended. The CPRA secured important privacy rights for California residents, including the right to know how personal information a business collects about them is used and shared, and the right to limit the use and disclosure of sensitive personal information. Employees’ names, telephone numbers, home addresses, and e-mail addresses data fall squarely under the definition of “personal information” under the CPRA. Such protections of privacy rights reflect the will of the people of California to have more control over their personal information and to safeguard it against misuse and disclosure. Mandatory disclosure of sensitive personal information to a third party contravenes these important public policy goals of the CPRA.

Finally, the law also includes within the purview of “basic payroll information” which must be shared an employee’s total hours of work in each pay period performing UC and non-UC work. ASA objects to sharing non-UC work information with the UC. Although the stated goal of sharing an employee’s UC work hours – based on the Senate Judiciary Committee’s analysis of this bill – is to allow the UC to audit a vendor’s payroll and detect violations of the Equal Pay for Equal Work policy, that does not justify the sharing of non-UC work hours with the UC. Work an employee performs for non-UC clients bears no relation to whether a staffing agency is fulfilling its obligations under the UC’s Equal Pay for Equal Work Act.

The University of California has submitted a position of oppose unless amended. They write the following:

As drafted, SB 27 allows an aggrieved employee or a UC employee “coworker” to initiate civil litigation after providing 60 days to cure an alleged violation. The appropriate venue for UC employees to raise concerns about WBP is through Article 5 grievances, not civil court. The University requests the bill be amended to allow only an aggrieved employee to initiate civil litigation by striking Sec. 1441(a)(2).

The University supports Wage and Benefit Parity, and we are actively working with AFSCME and our vendors to enforce WBP. The University recently completed two comprehensive audits of the WBP policy: one to evaluate the processes in place to facilitate compliance and one to verify vendor compliance and correct any noncompliance. Although we identified areas for improvement, the vast majority of suppliers audited were in compliance; of those found to be noncompliant, all are in remediation.

The University is working in good faith to enforce WBP, and already has the tools necessary to collect vendor payroll information and to drive remediation for any noncompliance. While UC understands the desire for underpaid vendor employees to seek legal remedies from a vendor for wages earned but not paid, the University of California opposes SB 27 unless it is amended because it deviates from this premise by also allowing UC’s represented employees to sue vendors directly, even though they have suffered no underpayment. Furthermore, if represented employees are aware of WBP violations, there is already a remedy available for them – they can grieve a violation of their collective bargaining agreement

REGISTERED SUPPORT / OPPOSITION:

Support

AFSCME Local 3299 (sponsor)

AFSCME
California Federation of Teachers AFL-CIO
California Labor Federation, AFL-CIO
California School Employees Association

Opposition

American Staffing Association

Oppose unless amended

University of California

Analysis Prepared by: Manuela Boucher-de la Cadena / JUD. / (916) 319-2334

 THIRD READING  

Bill No: SB 27

Author: Durazo (D) and Caballero (D), et al.

Amended: 5/18/23

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-0, 3/8/23

AYES: Cortese, Durazo, Laird, Smallwood-Cuevas

NO VOTE RECORDED: Wilk

SENATE JUDICIARY COMMITTEE: 8-1, 3/28/23

AYES: Umberg, Allen, Ashby, Caballero, Durazo, Laird, Min, Wiener

NOES: Niello

NO VOTE RECORDED: Wilk, Stern

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/18/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones, Seyarto

SUBJECT: University of California: vendors

SOURCE: AFSCME Local 3299 University of California

DIGEST:

This bill requires University of California (UC) vendors to provide their employees with the total compensation rate specified by the vendor’s contract, as well as make specified payroll information available to employees, the UC, and exclusive employee representatives. Additionally, this bill provides a pathway for employees of a vendor contracting with the UC to recover compensation and civil damages.

ANALYSIS:

Existing law:

1. Establishes the UC as a public trust under the administration of the corporation in the form of a board “The Regents of the [UC]” (Regents) and grants the Regents powers necessary or convenient for the effective administration of the UC. Limits the Regents to such legislative control as may be necessary to insure the security of its funds, to ensure compliance with the terms of the endowments of the UC, and such competitive bidding procedures as may be made applicable to the UC by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services.
2. Provides that a person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided.
3. Prohibits public agencies from contracting for services if approval of the contract is based solely on savings resulting from lower pay rates or benefits or the contract causes displacement of civil service employees.
4. Requires that, at the time of hiring, an employer must provide to each employee a written notice, containing specified information about pay rates, overtime, minimum wage, types of leave available, pay periods, and information about the employer.
5. Requires all employers to provide their employees with an accurate, itemized statement showing gross wages earned, total hours worked by the employee, all deductions, net wages earned, the period for which the employee is paid, all applicable hourly rates in effect during the pay period, the corresponding number of hours worked, the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number, and the name and address of the legal employing entity.
6. Specifies penalties for failure to pay at least minimum wage and procedures around filing a claim against an employer for alleged failure to comply with minimum wage law.
7. Requires the UC to award a contract for a project of $50,000 or more to the lowest bidder, or if the bids are substantially equal, the UC may award a contract to a disadvantaged business enterprise, woman business enterprise, or disabled veteran business enterprise.

This bill:

1. Establishes the Recovery of Earned but Unpaid Wages Act (Act) to prohibit a vendor from accepting payment from the UC for a contract for services if the vendor is performing services or supplying employees and paying those employees less than the total compensation rate specified in the vendor’s contract with the UC or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher.
2. Requires a vendor supplying the UC with employees to perform services to provide those employees with written notice that includes the following information each time the employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee’s hourly rate:
   1. The total compensation rate specified in the contract with the UC or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher, and;
   2. The employee’s hourly rate of pay and hourly value of employer-provided benefits.
3. Requires a vendor to provide, each January and July, basic payroll information, as defined, to the UC and members of any joint labor-management committee and requires the vendor to make basic payroll information available for inspection to an employee or their authorized representative, upon request.
4. Requires a vendor to provide written notice to employees who agree to perform, or continue to perform, services for the UC. This notice shall include the following:

“Basic payroll information pertaining to all employees who accept an assignment or continue performing services for the [UC] will be shared with the [UC] and the organizations that represent [UC] employees. The information that will be shared includes your full name, university work location, mobile telephone number, email address, and home address. The purpose of sharing this information is to ensure that the [UC] and the organizations that represent [UC] employees can contact you if they discover you have been paid less than required by the vendor’s contract with the university or university policy and so that the [UC] can provide you with a timely offer of employment as soon as you become eligible.”

1. Requires any audit, verification, notice, report, or finding regarding vendor compensation to be provided to the UC and members of any joint labor-management committee.
2. Authorizes an aggrieved vendor employee or their UC co-worker to first provide a vendor with written notice of an alleged violation of this Act, as specified, and provide the vendor with the opportunity to correct and cure the violation(s) within 60 days before an employee may file a suit based on the violation(s). If a vendor receives such notice, they must provide a copy to the UC Office of the President within five days of receipt.
3. Authorizes an aggrieved vendor employee or their UC co-worker to bring a civil action against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor’s contract with the UC, or required by existing approved or adopted UC policy or collective bargaining agreement, whichever is higher
4. Directs the courts to order the following if a plaintiff prevails in an action to enforce the rights and duties set forth in the Act:
   1. For any vendor that supplies the UC with an employee who is paid a total compensation rate less than the amount fixed by contract or required by existing approved or adopted UC policy or collective bargaining agreement to pay a civil penalty of $100 per underpaid employee per pay period for an initial violation (not to exceed $500 per employee) and $250 per employee per pay period for any subsequent violations (not to exceed $1000 per employee);
   2. For any vendor that knowingly and intentionally violates 2), 3), 4) and/or 5) above, payment of a civil penalty of $50 dollars per employee for the initial pay period and $100 per employee for each violation in a subsequent pay period, with a cap of $1000 per employee;
   3. Payment of wage and benefit compensation and civil penalties to the affected employee;
   4. At the court’s discretion, to the extent a vendor bills the UC at an hourly rate, and to the extent the vendor fails to pay its employees the amount in the contract, return to the UC funds paid to the vendor that exceed the compensation provided to underpaid employees, and;
   5. Payment of reasonable attorney’s fees and costs.
5. Provides the remedies shall not preclude or alter the UC’s ability to contract for services as permitted under existing collective bargaining agreements or preclude the UC from hiring in emergency circumstances or meeting other staffing needs.
6. Specifies the remedies are in addition to any other remedies provided by law, except for civil penalties provided in Labor Code Sections 226 or 1197.1.
7. Defines various terms for the purpose of the Act.
8. Makes the provisions in this bill severable.

Background

The UC employs approximately 18,600 patient care technical employees and about 10,000 service employees throughout its campuses and medical centers, representing two bargaining units out of a total of 37 with the UC. In 2017, the California State Auditor released a report stating “The University of California Office of the President: It Has Not Adequately Ensured Compliance With Its Employee Displacement and Service Contract Policies.” The report included a recommendation that the UC should “revise contracting policies to address situations where [UC] locations contemplate entering into services contracts instead of hiring [UC] employees to perform an activity. In these situations, the [UC] Office of the President should require [UC] locations to perform an analysis similar to the one it requires when current [UC] employees are displaced.”

At the end of the Legislative Session in 2019, ACA 14 (Gonzalez, 2019) narrowly failed passage on the Senate Floor. This constitutional amendment would have added the UC Equal Employment Opportunity Standards Act to Article IX of the California Constitution and required the Regents to ensure that all contract workers paid to perform support services be afforded the same standards as UC employees performing similar services. Subsequently, on November 14, 2019, the UC adopted Regents Policy 5402, also called the Equal Pay for Equal Work policy, which generally prohibits contracting out services and functions that can be performed by UC staff and requires businesses that enter into service contracts with the UC to pay wages and benefits equivalent to what the UC pays it employees. This policy is reflected in Article 5 of existing bargaining unit contracts with the UC Service Unit and the Patient Care Technical Unit.

The UC recently conducted two audits to determine vendor compliance with Regents Policy 5402. The first audit found 78% of vendors comply with wage and benefit parity policy. The second audit found that processes and controls related to Policy 5402 and Article 5 need improvement at all UC locations. The UC states it plans to use these audit findings to inform efforts to improve its processes.

Comments

Purpose of this bill. According to the author, “The University of California has a policy called "Equal Pay for Equal Work” that requires service contract vendors to pay vendor employees’ wages and benefits equivalent to what UC pays directly hired service workers. However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University, or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages. SB 27 establishes the “Recovery of Earned but Unpaid Wages Act” by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy. SB 27 is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. Vendors must also provide written notice to their employees about the required compensation rates. Vendors will have the opportunity to cure discrepancies. However, refusal to comply allows vendor employees to pursue their earned but unpaid wages and compensation in court. It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3^rd party vendor compliance and is consistent with UC’s audit standards and process.”

Related/Prior Legislation

SB 1364 (Durazo, 2022) was similar to SB 27 and additionally provided for a vendor in violation to pay a ten percent civil penalty to the General Fund and be disqualified from contracting with the UC for five years. The bill was vetoed by the Governor, who stated “While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature.”

ACA 14 (Gonzalez, 2019) would have amended Article IX of California’s Constitution by adding the UC Equal Employment Opportunity Standards Act, which would have required the Regents of the UC to ensure that all contract workers who are paid to perform support services be afforded the same equal employment opportunity standards as UC employees that perform similar services. The constitutional amendment was sent to the Senate Inactive File.

AB 2361 (Weber, 2018) would have required vendors to provide specified information to the UC regarding each active outsource contract; required the UC to post on a publicly available website specified types of contracts and contract information and information about contractors’ employees and their wages and benefits, and; deduct funds from the UC for failure to do so. The bill was vetoed by Governor Brown.

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

According to the Senate Appropriations Committee, UC indicates that it would incur annual costs of about $150,000 to implement the provisions of this bill (General Fund).

SUPPORT: (Verified 5/18/23)

AFSCME Local 3299 University of California (source)

AFSCME

AFSCME Council 36

AFSCME Council 57

AFSCME Local 1001 Metropolitan Water District

AFSCME Local 1902 Metropolitan Water District

AFSCME Local 206 Union of American Physicians and Dentists

AFSCME Local 4911 United EMS Workers

AFSCME/UNAC-UHCP United Nurses Associations of California- Union of Health Care Professionals

California Labor Federation, AFL-CIO

California School Employees Association

OPPOSITION: (Verified 5/18/23)

American Staffing Association

California Association of Public Hospitals and Health Systems

Fidelity Investments

University of California

ARGUMENTS IN SUPPORT: The sponsor, AFSCME Local 3299 University of California, states “SB 27 would allow vendor company employees to enforce [Policy 5402] by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates. A vendor would have an opportunity to correct and cure any violation under the [Act]. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts.”

ARGUMENTS IN OPPOSITION: According to the University of California, “the University is concerned that SB 27 seeks to expand University policy too far. Additionally, UC is concerned that the penalties will create a chilling effect for business partners who provide valuable staffing services in a tight labor market, thus impairing UC’s ability to provide safe and affordable health care or fulfill our education and research missions, including feeding and housing our students…First, SB 27 applies [wage and benefit parity] and other requirements to any vendor working with UC… not just those contracts covered by University policy… Thus, the scope of covered service contracts in SB 27 constitutes a significant expansion when compared to UC policy, which will bring serious fiscal and operational impacts to our healthcare and campus operations…Second, SB 27 allows an aggrieved employee – or [a] UC employee, even if they have no involvement with an alleged violation – to initiate civil litigation after providing 30 days to cure an alleged violation. The University does not believe any UC employee should have standing on this matter, and requests the bill be amended to allow aggrieved employees to initiate civil litigation… Finally, SB 27 prescribes remedies and damages to be awarded to each underpaid employee in the event the court finds a vendor was out of compliance. The University maintains a robust small business contracting effort, pursuant to PCC 10500.5, which includes women-owned, minority-owned, and veteran-owned businesses. The University is proud to support these California businesses, many of them sole proprietorships.”

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

5/23/23 11:04:12

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SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 27 (Durazo) - University of California: vendors

Bill Summary:

SB 27 would establish mechanisms for monitoring and enforcing compliance with the University of California’s (UC) Equal Pay for Equal Work policy, as specified.

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

The following information is revised to reflect amendments

adopted by the committee on May 18, 2023

Fiscal Impact:

UC indicates that it would incur annual costs of about $150,000 to implement the provisions of the bill (General Fund).

Author Amendments:

Delete the definition of “Agreement,” and clarify the definition to “Basic Payroll Information” to mean “work location while performing services for the university.”

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

SB 27 (Durazo) - University of California: vendors

Bill Summary:

SB 27 would establish mechanisms for monitoring and enforcing compliance with the University of California’s (UC) Equal Pay for Equal Work policy, as specified.

Fiscal Impact:

UC indicates that it would incur annual costs of about $150,000 to implement the provisions of the bill (General Fund, See Staff Comments).

Background:

UC is one of the State’s largest employers, with about 227,000 system-wide faculty and staff. UC indicates that just under half of its in-house labor force is unionized. At times, however, UC seeks outside vendors to perform various services. The people working for these vendors are not necessarily represented by a union and, in the past, did not necessarily receive the same pay and benefits that an in-house UC employee would have received-.

In 2019, the UC Regents adopted a new policy (Policy 5402) generally prohibiting it from contracting out for services and functions that could be performed by UC staff. Thus, when UC contracts for services, it does so in accordance with Regents Policy 5402 and Article 5 of the collective bargaining agreement ratified by AFSCME in January 2020. The new policy still allowed for outside contracting as a last resort, however, but was subject to certain criteria. Among other requirements, any outside contract had to conform to an Equal Pay for Equal Work Standard: the contracted outside workers had to receive equivalent pay and benefits to what a UC employee would have gotten for performing the same tasks. In practice, however, currently there is no existing mechanism for ensuring that outside contractors honor the Equal Pay for Equal Work requirement.

UC recently conducted an audit of the employment practices of all of its vendors covered by the Equal Pay for Equal Work policy. This is the audit to which the Governor referred when he vetoed SB 1364 (Durazo, 2022), the predecessor to this bill. In his veto message, the Governor indicated his preference to see the results of this audit before determining whether the sort of monitoring and enforcement regime proposd by the Author is necessary. The audit concluded that “processes and controls that facilitate compliance with Regents Policy 5402 and Article 5 require improvement at all UC locations.”

Proposed Law:

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

• Make it unlawful for any vendor, as defined, to accept payment from the university pursuant to a contract for prescribed services if the vendor is performing services or supplying the university with employees to perform services who are paid less than the higher of the total compensation rate specified in the vendor’s contract with the university or as required by university policy.
• Require a vendor to provide those employees with prescribed written notice relating to compensation. Further require a vendor, twice yearly, to provide basic payroll information, as defined, to the university and members of any joint labor-management committee, as defined.
• Require a vendor to provide specified additional written notice, including specific text, relating to the release of basic payroll information, to all employees who agree to perform services for the university or continue doing so.
• Require basic payroll information for an individual employee who performs services for the university, on request, to be made available for inspection by that individual employee or that individual employee’s authorized representative or to be furnished to that individual employee or that individual employee’s authorized representative.
• Require an auditor, vendor, the university, or any other person who conducts or receives an audit or other finding with regard to whether a vendor has compensated employees at the total compensation rate required by the vendor’s contract with the university or university policy to provide that audit or other finding to the university and members of any joint labor-management committee.
• Authorize an aggrieved employee, as defined, to bring a civil action against a vendor if an aggrieved employee first provides a vendor with written notice of an alleged violation of these provisions, as specified, and provides the vendor the opportunity to correct and cure the violation and the vendor fails to provide prescribed documentation.
• Require a vendor who receives written notice from an aggrieved employee to provide a copy of that notice to UC within five business days. 
• The bill would establish remedies, including civil penalties and restitution, for prevailing claimants.

Related Legislation:

• SB 1364 (Durazo, 2022) was similar to this bill, but contained additional penalties for violations. The bill was vetoed by the Governor.
• SB 574 (Lara, 2017) would have modified contractor requirements, including establishing thresholds for employee compensation, for qualifying as a lowest responsible bidder or best value awardee for contracts for materials, goods, and services at UC. The bill was vetoed by the Governor.
• SB 959 (Lara, 2016) was nearly identical to SB 574, and was also vetoed by the Governor.
• SB 376 (Lara, 2015) was nearly identical to SB 959, and was also vetoed by the Governor.

Staff Comments:

The Office of the Legislative Counsel has keyed this bill “non-fiscal.” However, the purview of this Committee, pursuant to Joint Rule 10.5, is to review and analyze bills that would, among other things, result in a substantial expenditure of state money. Thus, even though the bill was keyed “non-fiscal,” the Committee requested the bill to examine the extent to which it might potentially increase costs to the State.

UC indicates that the costs that would result from the current version of this bill are substantially lower than both (1) its previous versions, and (2) SB 1364 from 2022. Specifically, UC now cites that any costs related to the wage and benefit parity portions of the bill as currently drafted would be minor and absorbable. The only costs to UC would be for one position to staff the proposed Joint Labor Management Committee.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Thomas Umberg, Chair

2023-2024 Regular Session

Bill No: SB 27 (Author:Durazo)

Version: March 13, 2023

Hearing Date: March 28, 2023

Fiscal: No

Urgency: No

Consultant: TSG

SUBJECT

University of California: vendors

DIGEST

This bill establishes mechanisms for monitoring and enforcing compliance with the University of California’s (UC) Equal Pay for Equal Work policy which requires covered vendors who supply services to the UC to provide at least equal pay and benefits to their employees when compared with what UC employees would receive for performing the same work.

EXECUTIVE SUMMARY

In 2019, the Regents of the University of California (UC) adopted a new policy generally prohibiting UC from contracting out for services that could be performed by UC staff. The new policy still allows for some outside contracting, but only as a last resort and only subject to certain criteria. Of particular relevance to this bill, any outside contract has to conform to an Equal Pay for Equal Work Standard: the contracted outside workers must receive at least equivalent pay and benefits to what a UC employee gets for performing the same tasks. In practice, however, there is no ongoing mechanism for ensuring that outside contractors honor the Equal Pay for Equal Work requirement. This bill is designed to prevent subterfuge of UC’s Equal Pay for Equal Work policy by requiring any employer contracting with the UC for more than $1,000 worth of services to notify its workers of the wages and benefits they are entitled to receive under the policy and by requiring the contracting employer to provide payroll information to the UC and its employee unions every six months. In addition, the bill exposes contracting employers to liability for specified civil penalties payable to the employee as well as reasonable attorney’s fees and costs if the contractor violates the policy.

The bill is sponsored by the American Federation of State, County, and Municipal Employees Local 3299. Support comes from organized labor, who appreciate the way the bill prevents outside contractors from undermining the wages and benefits of unionized employees. Opposition comes from a vendor to UC who believes it may be inadvertently covered by the bill. The bill passed out of the Senate Labor, Public Employment and Retirement Committee by a vote of 4-0. If the bill passes out of this Committee, it will be re-referred to the Senate Rules Committee.

PROPOSED CHANGES TO THE LAW

Existing law:

1) Establishes the UC as a public trust under the administration of the corporation known as “The Regents of the University of California” and grants the Regents all the powers necessary or convenient for the effective administration of this public trust. (Cal. Const., art. XIV, § 9.)

2) Limits legislative control over the UC to only such legislative control as may be necessary to insure the security of its funds, to ensure compliance with the terms of the endowments of the university, and such competitive bidding procedures as may be made applicable to the university by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services. (Cal. Const., art. XIV, § 9.)

3) Prohibits entering into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, with the actual or constructive knowledge that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided. (Lab. Code § 2810.)

4) Requires that, at the time of hiring, an employer must provide to each employee a written notice containing the following information:

1. the rate or rates of pay and basis thereof, including any rates for overtime, as applicable;
2. allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
3. the regular payday designated by the employer;
4. the name of the employer;
5. the physical address of the employer’s main office or principal place of business, and a mailing address, if different;
6. the telephone number of the employer;
7. the name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
8. specified information about an employee’s right to paid sick leave; and
9. any other information the Labor Commissioner deems material and necessary. (Lab. Code § 2810.5.)

5) Requires all employers to provide their employees with an accurate, itemized statement showing gross wages earned, total hours worked by the employee, all deductions, net wages earned, the period for which the employee is paid, all applicable hourly rates in effect during the pay period and the corresponding number of hours worked, the name of the employee and only the last four digits of their social security number or an employee identification number other than a social security number and the name and address of the legal entity that is the employer. (Lab. Code § 226.)

6) Specifies penalties for failure to pay at least minimum wage and sets forth procedures for filing a claim against an employer for alleged failure to comply with minimum wage law. (Lab. Code § 1197.1.)

This bill:

1. Defines the following terms, for purposes of this bill, as follows:

a) “basic payroll information” means, for each vendor-supplied employee who performed services for the university at any time during the preceding six-month period, the employee’s full name, job title, mobile telephone number, email address, and home address; the work location; and, for each pay period during the preceding six-month period, the hourly rate of pay, the hourly value of employer-paid benefits provided to the employee, the employee’s hours of work, and the employee’s hours of work performing services for the university;

b) “hourly value of employer-provided benefits” means the employer’s actual cost for the employee’s retirement, health, dental, vision, life and disability benefits, calculated as an hourly dollar amount. This does not include any paid time off or payroll expenses required by law;

c) “services” means work customarily performed by bargaining unit employees of the university;

d) “total compensation rate” means the employee’s hourly rate of pay plus the hourly value of employer-provided benefits or the equivalent compensation; and

e) “vendor” includes any person or entity that contracts with the UC to perform services or to supply the UC with employees to perform services, but does not include a contractor in the construction industry, as defined, that has entered into a valid collective bargaining agreement.

1. Requires a vendor that supplies the UC with employees to perform services to provide those employees with written notice of the total compensation rate specified in the vendor’s contract or required by university policy, whichever is higher, and the employee’s hourly rate of pay and hourly rate of employer-provided benefits. These notices must be provided at the time each employee is initially assigned to perform services, each January thereafter, and within seven days of any change to the employee’s hourly rate.
2. Requires that, in January and July of each year, a vendor must provide basic payroll information to the UC and any joint labor-management committee and requires the vendor to provide all employees who agree to perform services for the UC with a specified written notice about this requirement.
3. Requires a vendor to make basic payroll information for an individual employee who performs services for the university available for inspection by that individual employee or that individual employee’s authorized representative upon request.
4. Specifies that if an auditor, vendor, UC, or any other person conducts or receives an audit, verification, notice, report or finding regarding compliance with UC’s vendor compensation policy, that information shall be provided to the UC and to the members of any join labor-management committee.
5. Makes it unlawful for a vendor to accept payment of more than $1000 from the UC pursuant to a contract for services if the vendor is paying its employees less than the total compensation rate specified in the contract or required by university policy, whichever is higher.
6. Allows any vendor employee or UC employee to confront a vendor with written notice of a violation of this bill and provides the vendor with the opportunity to correct and cure the violation within 30 days before the employee may file a lawsuit based on the violation.

8) Allows an aggrieved employee or any university employee to bring a civil action against a vendor to enforce the provisions of the bill.

9) Directs the courts to order payment of all of the following to a plaintiff if the plaintiff prevails in an action to enforce the rights and duties set forth in the bill:

1. for any vendor that pays an employee less than the compensation rate fixed by contract or university policy, whichever is higher, payment of penalties of $100 per employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
2. for any vendor that knowingly and intentionally violates (3) or (4) above, payment of a civil penalty of $50 dollars per employee per pay period for an initial violation or $100 per employee per pay period for any subsequent violations, with a cap of $4000 per employee; and
3. reasonable attorney’s fees and costs.
4. Provides that the remedies under this bill are in addition to any other remedies provided by law, with specified exceptions.

1. States that it does not preclude or alter the UC’s ability to contract for services as permitted under existing policies or collective bargaining agreements.
2. States that it does not preclude the UC from hiring in emergency circumstances or to meet other staffing needs.
3. Contains a severability clause.

COMMENTS

1. Background on contracted labor at the UC and the Equal Pay for Equal Work standard

The UC is one of California’s largest employers, with around 227,000 faculty and staff system-wide.^[1] According to the UC, just under half of its in-house labor force is unionized.^[2] At times, however, UC seeks outside vendors to perform various services. The people working for these vendors are not necessarily represented by a union and, in the past, did not necessarily receive the same pay and benefits as an in-house UC employee would.

Under pressure to reduce its reliance on outsourced labor, in 2019 the Regents of the UC adopted Regents’ Policy 5402.^[3] In general, Policy 5402 prohibited the UC from contracting out for services and functions that University staff represented by AFSCME Local 3299 could perform just as well. Recognizing that there might be “exigent and limited circumstances” when the UC needed to use an outside contract as “a solution of last resort,” Policy 5402 allowed such outside contracts, but only under specified conditions. Of particular relevance to this bill, Policy 5402 mandated that any outside contracts adhere to an “Equal Pay for Equal Work” standard. Under that standard:

[t]he labor conditions of contract workers shall be protected by ensuring they receive wages and benefits equivalent to what the University provides to its employees, and providing those who have performed services to the University on a long-term and continuous basis the opportunity to become University employees.

This bill creates mechanisms for monitoring whether vendors are honoring the Equal Pay for Equal Work standard in practice. It also establishes penalties to be imposed on vendors– after an opportunity to cure – if it is revealed that they are not honoring the standard.

2. The solution proposed by the bill

The bill establishes two mechanisms for ensuring that vendors not only agree to abide by the Equal Pay for Equal Work in order to obtain a contract with UC, but that they actually comply with it in practice.

First, the bill requires vendors to tell any employee they assigning to perform services for the UC how much the vendor’s contract with the UC requires the vendor to compensate their workers or how much UC policy requires vendors to compensate their workers, whichever is higher. To ensure that workers get the message, the vendor is supposed to provide this information again each January and within seven days of any change in the worker’s hourly rate of compensation. In this way, the workers will be armed with the information they need to quickly verify whether or not the vendor is actually complying with the Equal Pay for Equal Work standard. If the vendor is not, the worker will be able to seek compensation accordingly. (See Comment 3, below, for a discussion of the legal remedies offered by the bill.)

Second, the bill obligates vendors twice a year to send “basic payroll information” to the UC and members of any joint labor-management committee or similar meeting body that the UC and the unions representing its employees have established. This basic payroll information includes details about each worker’s rate of pay and compensation for the last six months, as well as the number of hours that the worker has logged overall, and while assigned to perform services for the UC during that same period. The resulting data permits the UC and the unions representing UC employees to audit the vendor’s payroll and detect any violations of the Equal Pay for Equal Work standard. If they discover any such violations, they can alert the impacted worker (since the basic payroll information includes contact information for the vendor’s workers as well) and either the impacted worker can seek compensation for the violation or a UC employee can seek compensation on the worker’s behalf. (See Comment 3, below, for a discussion of the legal remedies offered by the bill.) The ability of UC workers to seek redress on behalf of the contracted employee helps mitigate against scenarios in which contracted workers may feel too intimidated to pursue the compensation to which they are entitled. In other words, it enables UC staff to protect their own interest in securing equal pay for contract workers by demanding that pay on the contract workers’ behalf.

3. Right to cure and remedies

In addition to creating the compliance monitoring regime described in Comment 2, above, the bill also establishes an enforcement mechanism in the event that vendors fall below the Equal Pay for Equal Work standard, either inadvertently or in an attempt to skirt the law.

Under that enforcement mechanism, any employee of a vendor or of the UC could initiate a claim. To start, the employee would have to notify the vendor of the alleged violation and give the vendor 30 days in which to cure it. Within those 30 days, the vendor has an opportunity to provide documentation that the vendor has or will make all of its workers who are performing services for the UC whole and that each of those workers received notification about the compensation to which they are entitled under the Equal Pay for Equal Work standard.

If the vendor fails to cure the violation in time, the employee that initiated the claim can proceed to file a civil action against the vendor in superior court. If the employee prevails in that action, the employee is entitled to an award of attorney’s fees and costs. What else the employee may obtain from the case depends on the violation alleged. If the violation involved under-compensation, then the vendor must make the affected worker whole and pay the affected worker statutory penalties in an amount determined by the gravity and extent of the violation. If the violation at issue involves failure to provide the notices to workers or failure to share the basic payroll information with the UC and the UC employee unions as required under the bill, then a more modest set of penalties applies, capped at a maximum of $4,000 per employee.

These are stiff remedies. As the inclusion of a right to cure underscores, however, their purpose is not so much to punish violations as to discourage vendors from violating the Equal Pay for Equal Work standard in the first place and to encourage those vendors to fix any inadvertent lapse promptly.

4. Divergence from prior bill on the same topic

In its intent and in most of its substantive details, this bill is nearly identical to SB 1364 (Durazo, 2022). The primary difference is that the potential consequences that a vendor faces if it is found to have violated the policy have been reduced somewhat. Under this bill, a vendor found in violation faces the consequences outlined in Comment 3, above: full compensation of the workers for the underpayments, scaled penalties for each violation, and payment of the prevailing party’s attorney’s fees and costs. Under SB 1364, a vendor faced two additional consequences if a court found the vendor in violation. First, SB 1364 gave the court the discretion to impose an additional penalty equal to 10 percent of the value of the vendor’s contract with UC. Second, SB 1364 required the court to disqualify the vendor from contracting with the UC again for at least five years. In response to concerns that SB 1364’s punishment for violations was so strong that it would scare off vendors, the additional civil penalty and mandatory disqualification have been dropped from this bill.

5. Relevance of the current audit

In testimony on this bill before the Senate Labor, Public Employment and Retirement Committee, UC highlighted that it is currently undertaking an audit of the employment practices of all of its vendors covered by the Equal Pay for Equal Work policy. This is the audit to which the Governor referred when he vetoed SB 1364 (Durazo, 2022), the predecessor to this bill. In his veto message, the Governor indicated his preference to see the results of this audit before determining whether the sort of monitoring and enforcement regime established by SB 27 is necessary.

UC emphasizes that this audit is not only meant to uncover any instances in which a vendor has not complied with the policy, but also to ensure that any worker who has not been paid what is due to them under the policy is promptly made whole.

The results of the audit are expected by mid-April.

The performance of this audit is, by all accounts, a significant and welcome undertaking. Even assuming that the audit is an effective way to discover and rectify current abuses, however, it is not the same as an enduring method for monitoring and enforcing compliance with the Equal Pay for Equal Work Policy. To provide the same sort of permanent, built-in mechanisms for ensuring policy compliance that this bill establishes, the UC would presumably have to guarantee additional future audits at regularly scheduled intervals.

6. Are additional vendors to the UC inadvertently swept in?

During testimony before the Senate Labor, Public Employment and Retirement Committee, the UC expressed concern that, while the Equal Pay for Equal Work policy only applies to employees in the bargaining unit represented by AFSCME Local 3299, the language of this bill can be interpreted as applying to all UC vendors.

The logic behind that interpretation goes something like the following. The bill defines “services” to mean “work customarily performed by bargaining unit employees of the university, including, but not limited to…” a list of different tasks. That definition clearly encompasses services that are subject to the Equal Pay for Equal Work Policy, but is clearly not limited to just those services. Since other services are implicated as well, the bill can be read to require all vendors providing services to the UC to carry out all the requirements of the bill regardless of whether they are currently covered by the Equal Pay for Equal Work Policy or not. The same concern can be heard in the letter of opposition to the bill submitted by Fidelity Investments. Fidelity worries that though the services it provides to UC are not currently covered by the UC’s policy, they would nonetheless be subject to SB 27.

The author does not intend for the bill to cover services – like those provided by Fidelity -- that are not currently subject to the UC policy. At the same time, the open-ended nature of the definition of services in the bill is deliberate; the author would like the bill’s process for monitoring and enforcing equal compensation policies to extend to other bargaining units if, in the future, the university policy covers those additional bargaining units as well.

The parties are in dialog regarding this matter and the author’s office is awaiting proposed amendments from the University of California to review.

7. Arguments in support of the bill

According to the author:

The University of California has a policy called “Equal Pay for Equal Work” that requires service contract vendors to pay vendor employees’ wages and benefits equivalent to what UC pays directly hired service workers. However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University, or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages. SB 27 establishes the “Recovery of Earned but Unpaid Wages Act” by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC’s Equal Pay for Equal Work policy. SB 27 is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. Vendors must also provide written notice to their employees about the required compensation rates. Vendors will have the opportunity to cure discrepancies. However, refusal to comply allows vendor employees to pursue their earned but unpaid wages and compensation in court.

As the sponsor of the bill, the American Federation of State, County, and Municipal Employees 3299 writes:

[…] SB 27 would allow vendor company employees to enforce the UC policy of Equal Pay for Equal Work by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates. A vendor would have an opportunity to correct and cure any violation under the bill. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts. We request the Legislature provide for this remedy and recovery […].

In support, the California Labor Federation writes:

The enforcement mechanisms in this bill are important to ensure that the UC’s Equal Pay for Equal Work policy is followed. Contracted workers are not covered by any collective bargaining agreement, making it difficult to track wages and benefits. As one of California’s largest employers, the University of California has a duty to lead by example and enforce fair business practices. SB 27 will ensure that all workers are compensated fairly and equitably for work performed for UC regardless of status.

8. Arguments in opposition to the bill

In opposition to the bill unless it is amended, Fidelity Investments writes:

Fidelity must respectfully oppose SB 27 unless it is amended to clarify that Fidelity is not subject to the bill’s provisions. It is our understanding that the author and sponsor of SB 27 do not intend for the bill to apply to Fidelity’s contract with UC since the contract is not covered under Regents Policy 5402 or the AFSCME collective bargaining agreement. However, the current text of the bill would apply to Fidelity as the definition of “services” is very broad.

SUPPORT

American Federation of State, County, and Municipal Employees, Local 3299 - University of California (sponsor)

American Federation of State, County, and Municipal Employees, AFL-CIO

California Labor Federation

OPPOSITION

Fidelity Investments

RELATED LEGISLATION

Pending Legislation: None known.

Prior Legislation:

SB 1364 (Durazo, 2022) was nearly identical to this bill, though it included additional penalties for violations. In his message vetoing SB 1364, Governor Newsom wrote: “I appreciate the intent of this bill, which is to ensure Regents Policy 5402 and the ratified agreement with American Federation of State, Municipal Employees Local 3299 are appropriately enforced. It is my Administration’s understanding that the UC has been updating vendor contracts to include wage and benefit parity language and implementing campus and system level audit functions to monitor compliance and enforce these policies. The University is expected to complete a comprehensive report of audit findings in the first quarter of next year. I urge the UC to make the audit findings publicly available and present those findings during an open session of a regularly scheduled UC Regents meeting. Additionally, this bill includes provisions related to sharing information with contracted workers regarding wage and benefit parity. These are important transparency aims for workers and I further urge the UC to identify and implement additional mechanisms that meet these goals. While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature. However, my Administration will closely monitor UC’s steps to enforce their own policies and determine if a statutory change is required.”

ACA 14 (Gonzalez, 2019) would have amended Article IX of the State Constitution by adding the University of California (UC) Equal Employment Opportunity Standards Act. The Act would have required the Regents of the UC to ensure that all contract workers who are paid to perform support services are afforded the same equal employment opportunity standards as university employees performing similar services. This bill died on the Senate inactive file.

SB 574 (Lara, 2017) would have modified contractor requirements, including establishing thresholds for employee compensation, for qualifying as a lowest responsible bidder or best value awardee for contracts for materials, goods, and services at the UC. In his message vetoing the bill, Governor Brown wrote: “Good intentions […] aren’t always enough. The mechanism to create this social change locks in cumbersome and overly costly contracting rules that provide little flexibility, regardless of circumstance. This will not serve the university or the state well.”

SB 959 (Lara, Ch. 2016) was nearly identical to SB 574. In his message vetoing the bill, Governor Brown wrote: “[I]t would be prudent to await the recommendations from the State Auditor before embarking on the path prescribed by this bill.”

SB 376 (Lara, 2015) was nearly identical to SB 959. In his message vetoing the bill, Governor Brown wrote: “The effort to provide increased compensation to those who work for UC - either directly or on a contract basis - is well-intentioned, but I’m not prepared to embrace the provisions of this bill.”

PRIOR VOTES:

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

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

1. UC Employee Headcount. Regents of the University of California, https://www.universityofcalifornia.edu/about-us/information-center/uc-employee-headcount (as of Mar. 22, 2023). ↑

2. Union-Represented Employees. Regents of the University of California, https://ucnet.universityofcalifornia.edu/labor/index.html (as of Mar. 22, 2023). ↑

3. Regents Policy 5402: Policy Generally Prohibiting Contracting for Services (approved Nov. 14, 2019;

   amended Jan. 23, 2020) Regents of the University of California, https://regents.universityofcalifornia.edu/governance/policies/5402.html (as of Mar. 22, 2023). ↑

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Dave Cortese, Chair

2023 - 2024 Regular

Bill No: SB 27 Hearing Date: March 8, 2023

SUBJECT: University of California: vendors

KEY ISSUES

Should the Legislature require vendors to provide their employees with the total compensation rate specified by the vendor’s contract, as well as make specified payroll information available to employees, the UC, and exclusive employee representatives upon request?

Should the Legislature provide a pathway for employees of a vendor contracting with the UC for services to recover compensation and civil damages?

ANALYSIS

Existing law:

1. Establishes the UC as a public trust under the administration of the corporation in the form of a board “The Regents of the [UC]” (Regents) and grants the Regents powers necessary or convenient for the effective administration of the UC. Limits the Regents to such legislative control as may be necessary to insure the security of its funds, to ensure compliance with the terms of the endowments of the UC, and such competitive bidding procedures as may be made applicable to the UC by statute for the letting of construction contracts, sales of real property, and purchasing of materials, goods, and services. Provides that the Regents be comprised of seven ex officio members, as specified, 18 members appointed by the Governor and approved by the Senate, a majority of the membership concurring, and permits a student representative if appointed by the Regents. (California Constitution, Article IX, Sec. 9)
   
2. Provides that a person or entity shall not enter into a contract or agreement for labor or services with a construction, farm labor, garment, janitorial, security guard, or warehouse contractor, where the person or entity knows or should know that the contract or agreement does not include funds sufficient to allow the contractor to comply with all applicable local, state, and federal laws or regulations governing the labor or services to be provided. (Labor Code §2810)
   
3. Prohibits public agencies from contracting for services if approval of the contract is based solely on savings resulting from lower pay rates or benefits or the contract causes displacement of civil service employees. (Government Code §19130)
   
4. Requires that, at the time of hiring, an employer must provide to each employee a written notice, containing specified information about pay rates, overtime, minimum wage, types of leave available, pay periods, and information about the employer. (Labor Code §2810.5)
   
5. Requires all employers to provide their employees with an accurate, itemized statement showing gross wages earned, total hours worked by the employee, all deductions, net wages earned, the period for which the employee is paid, all applicable hourly rates in effect during the pay period, the corresponding number of hours worked, the name of the employee and the last four digits of his or her social security number or an employee identification number other than a social security number, and the name and address of the legal employing entity. (Labor Code §226)
   
6. Specifies penalties for failure to pay at least minimum wage and procedures around filing a claim against an employer for alleged failure to comply with minimum wage law. (Labor Code §1197.1)
   
7. Authorizes a court, at its discretion, to award costs to harmed bidders, their employees, or labor organizations as a result of prevailing wage violations for public works projects. (Labor Code §1750)
   
8. Requires prevailing wage for public works projects exceeding $1000 and authorizes a joint-labor management committee to bring an action against an employer that fails to pay prevailing wage to its employees. (Labor Code §1771-1771.2)
   
9. Prohibits UC employees from participating in the selection of architectural, landscape architectural, land surveying, real property development services, or construction project management firms if the employee has a relationship with a person or business entity seeking such a contract. (Public Contracts Code §10510.5)
   
10. Requires the UC to award a contract for a project of $50,000 or more to the lowest bidder, or if the bids are substantially equal, the UC may award a contract to a disadvantaged business enterprise, woman business enterprise, or disabled veteran business enterprise. (Public Contracts Code §10501)
    

This bill:

1. Establishes the Recovery of Earned but UnPaid Wages Act (Act) to prohibit a vendor from accepting payment of more than $1000 from the UC for a contract for services if the vendor is performing services or supplying employees and paying those employees less than the total compensation rate specified in the vendor’s contract with the UC or required by existing UC policy, whichever is higher.
   
2. Requires a vendor to provide employees with written notice with the following information each time the employee is assigned to perform services for the UC and thereafter, each January, and within seven days of a change to the employee’s hourly rate:
   1. The total compensation rate specified in the contract with the UC or required by UC policy, whichever is higher, and;
   2. The employee’s hourly rate of pay and hourly value of employer-provided benefits.
      
3. Requires a vendor to provide, each January and July, basic payroll information to the UC and members of any joint labor-management committee or similar body and requires the vendor to make basic payroll information available for inspection to an employee or their designated/authorized representative, upon request.
   
4. Requires a vendor to provide written notice to employees who agree to perform, or continue to perform, services for the UC. This notice shall include the following:

“Basic payroll information pertaining to all employees who accept an assignment or continue performing services for the [UC] will be shared with the [UC] and the organizations that represent [UC] employees. The information that will be shared includes your full name, work location, mobile telephone number, email address, and home address. The purpose of sharing this information is to ensure that the [UC] and the organizations that represent [UC] employees can contact you if they discover you have been paid less than required by contract or [UC] policy and so that the [UC] can provide you with a timely offer of employment as soon as you become eligible.”

1. Requires any audit, verification, notice, report, or finding regarding vendor compensation to be provided to the UC and members of any joint labor-management committee.
   
2. Authorizes any UC or vendor employee to provide a vendor with written notice of violation of this Act and provide the vendor the opportunity to correct and cure the violation(s) within 30 days before an employee may file a suit based on the violation(s).
   
3. Authorizes any UC or vendor employee to bring a civil action against a vendor to recover compensation that has been earned but was not paid at the total compensation rate required by the vendor’s contract with the UC, or UC policy, whichever is higher.
   
4. Directs the courts to order the following if a plaintiff prevails in an action to enforce the rights and duties set forth in the Act:
   1. For any vendor that supplies the UC with an employee who is paid a total compensation rate less than the amount fixed by contract or UC policy to pay a civil penalty of $100 per underpaid employee per pay period for an initial violation and $250 per employee per pay period for any subsequent violations;
   2. For any vendor that knowingly and intentionally violates 2), 3), 4) and/or 5) above, payment of a civil penalty of $50 dollars per employee for the initial pay period and $100 per employee for each violation in a subsequent pay period, with a cap of $4000 per employee;
   3. Payment of wage and benefit compensation and civil penalties to the aggrieved employee;
   4. At the court’s discretion, return to the UC funds paid to the vendor that exceed the compensation provided to underpaid employees, and;
   5. Payment of reasonable attorney’s fees and costs.
      
5. Provides the remedies shall not preclude or alter the UC’s ability to contract for services as permitted under existing collective bargaining agreements or preclude the UC from hiring in emergency circumstances or meeting other staffing needs.
   
6. Specifies the remedies are in addition to any other remedies provided by law, except for civil penalties provided in Labor Code Sections 226 or 1197.1.
   
7. Makes the provisions in this bill severable.
   
8. For the purpose of the Act, defines:
   1. “Agreement” or “contract” as any written instrument, order, purchase order, change order, requisition, service agreement, or any other written or electronic document, reflecting an agreement that a vendor will perform services or supply the UC with employees to perform services in exchange for payment.
   2. “Basic payroll information” for each vendor-supplied employee who performed services for the UC at any time during the preceding six-month period as:
      1. Full name, job title, mobile telephone number, email address, and home address of the employee;
      2. Work location;
      3. Hourly rate of pay for each pay period;
      4. Hourly value of employer-paid benefits for each pay period, meaning the employer’s actual cost for the employee’s retirement, health, dental, vision, life, and disability benefits calculated as an hourly dollar amount, not including any paid time off or payroll expenses;
      5. Hours of work for each pay period, and;
      6. Hours of work performing services for the UC for each pay period. “Services” means work customarily performed by bargaining unit employees of the UC, including but not limited to: cleaning, custodial, janitorial, housekeeping, food, laundry, grounds keeping, nonskilled building maintenance, transportation, parking, security, billing and coding, sterile processing, hospital, nursing assistant, respiratory therapy, and medical imaging.
   3. “Employee” as any contract worker, or individual employed by any vendor, or otherwise supplied to the UC by a vendor to perform services for the UC, including an individual treated by either the vendor, subcontractor, or UC as an independent contractor.
   4. “Employer” as any person, association, organization, partnership, business trust, limited liability company, or corporation who directly or indirectly, or through an agent, employs or exercises control of wages, hours, or working conditions of any person.
   5. “Subcontractor” as any person, employer, supplier of labor, staffing agency, temporary services employer, or other entity that performs services for the UC or supplies employees to perform services per a contract with the vendor.
   6. “Joint labor-management committee” as any committee or similar meeting body or committee established jointly by the UC and the exclusive representative of UC employees who perform the same or similar services as the employees performing services for the UC.
   7. “Vendor” as any person, entity, or agent that contracts with the UC to perform services or supply the UC with its employees or those of a subcontractor to perform services, excluding a licensed contractor that has entered into a valid collective bargaining agreement.
   8. “Total compensation rate” as the employee’s hourly rate of pay plus the hourly value of employer-provided benefits, or the equivalent compensation.

COMMENTS

1. Background:

The UC employs approximately 18,600 patient care technical employees and about 10,000 service employees throughout its campuses and medical centers, representing two bargaining units out of a total of 37 with the UC. In 2017, the California State Auditor released a report stating “The University of California Office of the President: It Has Not Adequately Ensured Compliance With Its Employee Displacement and Service Contract Policies.” The report included a recommendation that the UC should “revise contracting policies to address situations where [UC] locations contemplate entering into services contracts instead of hiring [UC] employees to perform an activity. In these situations, the [UC] Office of the President should require [UC] locations to perform an analysis similar to the one it requires when current [UC] employees are displaced.”

In the years leading up to the COVID-19 pandemic, the UC and the sponsor of this bill negotiated outsourcing UC service and health jobs to companies that paid their workers lower wages and fewer benefits. At the end of the Legislative Session in 2019, ACA 14 (Gonzalez, 2019) narrowly failed passage on the Senate Floor. This constitutional amendment would have added the UC Equal Employment Opportunity Standards Act to Article IX of the California Constitution and required the Regents to ensure that all contract workers paid to perform support services be afforded the same standards as UC employees performing similar services. Subsequently, on November 14, 2019, the UC adopted Regents Policy 5402^[1], also called the Equal Pay for Equal Work policy, which generally prohibits contracting out services and functions that can be performed by UC staff and requires businesses that enter into service contracts with the UC to pay wages and benefits equivalent to what the UC pays it employees. This policy is reflected in Article 5^[2] of existing bargaining unit contracts with the UC Service Unit and the Patient Care Technical Unit.

2. Need for this bill?

SB 1364 (Durazo, 2022) was similar to SB 27 but it also provided for a vendor in violation to pay a ten percent civil penalty to the General Fund and be disqualified from contracting with the UC for five years. This bill builds upon the work of SB 1364. In his veto message, the Governor stated “It is my Administration's understanding that the UC has been updating vendor contracts to include wage and benefit parity language and implementing campus and system level audit functions to monitor compliance and enforce these policies. The University is expected to complete a comprehensive report of audit findings in the first quarter of next year… Additionally, this bill includes provisions related to sharing information with contracted workers regarding wage and benefit parity. These are important transparency aims for workers and I further urge the UC to identify and implement additional mechanisms that meet these goals.”

Currently, the UC is undergoing the audit pursuant to the Governor’s SB 1364 (Durazo, 2022) veto message in which he called upon the UC to make its findings on vendor contract wage and benefit disparity publicly available and present the findings during an open session of a regularly scheduled UC Regents meeting. The audit is expected to be completed for review this month and released to AFSCME service and patient care technical units by April of this year.

The author states “The University of California has a policy called "Equal Pay for Equal Work” that requires service contract vendors to pay vendor employees’ wages and benefits equivalent to what UC pays directly hired service workers. However, since vendor employees are not employed directly by UC, and there is no legal requirement to inform these workers by the University, or any state agency how vendor wages and benefits compare to what UC policy requires, there is no effective way for workers to know about or recover earned but unpaid wages. SB 27 establishes the “Recovery of Earned but Unpaid Wages Act” by creating an enforcement mechanism by requiring UC vendors to supply payroll information to UC and the joint labor-management committee to ensure compliance with UC's Equal Pay for Equal Work policy. SB 27 is consistent with UC’s audit standards, requiring that any audit or other notice or finding about wage benefit parity compliance also go to the joint labor-UC management committee. Vendors must also provide written notice to their employees about the required compensation rates. Vendors will have the opportunity to cure discrepancies. However, refusal to comply allows vendor employees to pursue their earned but unpaid wages and compensation in court. It is important to highlight that the bill will not negatively impact any strides UC is making toward any 3^rd party vendor compliance and is consistent with UC’s audit standards and process.”

3. Committee Recommendation and Discussion:

Suggested technical amendment: Section 1442(b)(2) requires the vendor to make payroll information available to an employee or their “designated” representative, and also uses the term “authorized” representative in the same section. The committee may wish to consider amending this section to the use of one consistent term for the sake of clarity, whether it is “designated” or authorized.”

This bill would create a process for vendors to submit and share payroll information with the UC and employees to ensure they are adhering to existing UC policy. At issue is the ability of vendor and UC employees to initiate correction and recover the difference between their compensation and what a UC employee would have received. This bill would allow an aggrieved employee or any UC employee to initiate a process whereby the vendor shall correct and cure or be subject to compensation, civil penalties, and reasonable attorney fees. According to the author’s office, there is precedent for this. California prevailing wage laws give joint-labor management committees the right to sue for prevailing wage violations, although the aggrieved employee(s) may not be part of that committee. Prevailing wage law also recognizes that losing bidders on public works projects, or labor organizations and employees that have a contract with the bidder, may be harmed by violations of prevailing wage requirements and affords them the right to sue for damages. The court, at its discretion, may award costs and reasonable attorney fees.

4. Proponent Arguments:

The sponsor, American Federation of State, County, and Municipal Employees (AFSCME) Local 3299, states “SB 27 would allow vendor company employees to enforce [Policy 5402] by requiring their employer to supply UC and any joint labor-management committee the basic payroll information necessary to know if a vendor is abiding by UC policy. The bill would also require a vendor to supply a written notice to their employees of the relevant compensation rates. A vendor would have an opportunity to correct and cure any violation under the [Act]. A failure to cure will give impacted employees the right to recover their earned but unpaid wage amounts.”

5. Opponent Arguments:

None

6. Double Referral:

This bill has been double referred and if passed by our committee, will be sent to the
Senate Committee on Judiciary for hearing.

4. Prior Legislation:

SB 1364 (Durazo, 2022) was similar to SB 27 and additionally provided for a vendor in violation to pay a ten percent civil penalty to the General Fund and be disqualified from contracting with the UC for five years. This bill was vetoed by the Governor, who stated “While I support the enforcement of Regents Policy 5402 and the terms of Article 5, as UC is still implementing their audit mechanisms of the policies, this bill is premature.”

ACA 14 (Gonzalez, 2019) would have amended Article IX of California’s Constitution by adding the UC Equal Employment Opportunity Standards Act, which would have required the Regents of the UC to ensure that all contract workers who are paid to perform support services be afforded the same equal employment opportunity standards as UC employees that perform similar services. This constitutional amendment was sent to the Senate Inactive File.

AB 2361 (Weber, 2018) would have required vendors to provide specified information to the UC regarding each active outsource contract; required the UC to post on a publicly available website specified types of contracts and contract information and information about contractors’ employees and their wages and benefits, and; deduct funds from the UC for failure to do so. This bill was vetoed by Governor Brown.

SB 574 (Lara, 2017) would have modified the requirements for qualifying as a lowest responsible bidder or best value awardee for contracts for materials, goods, and services at the UC. This bill was vetoed by Governor Brown, who stated the bill was well-intentioned, but would not serve the UC well because it would have locked the UC into contracting rules with little flexibility.

SB 959 (Lara, 2016) was nearly identical to SB 574. This bill was vetoed by Governor Brown.

SB 376 (Lara, 2015) would have modified the requirements for qualifying as a lowest responsible bidder or best value awardee for contracts for specified services at the UC by (1) requiring a bidder to certify in writing, for specified types of service contracts, that its employees are compensated at a level that does not materially undercut the average per-employee total compensation for UC employees who perform comparable work, and (2) making the $100,000 threshold for competitive bidding applicable to any renewal or extension of an existing contract for goods, materials, and services to be performed if it involved an expenditure of $100,000 or more annually. This bill was vetoed by Governor Brown.

SUPPORT

AFSCME Local 3299 (Sponsor)

AFSCME Council 36

AFSCME Council 57

AFSCME Local 1902 Metropolitan Water District

AFSCME Local 1001 Metropolitan Water District

AFSCME Local 206 Union of American Physicians and Dentists

AFSCME/UNAC-UHCP United Nurses Associations of California- Union of Health Care Professionals

AFSCME Local 4911 United EMS Workers

OPPOSITION

None

-- END --

1. UC Board of Regents. “Regents Policy 5402: Policy Generally Prohibiting Contracting for Services. February 27, 2023. https://regents.universityofcalifornia.edu/governance/policies/5402.html ↑

2. UC Board of Regents. “Current Contract.” February 27, 2023. https://ucnet.universityofcalifornia.edu/labor/bargaining-units/ex/contract.html ↑