2016 LEGISLATIVE UPDATE: PREVAILING WAGE AND PUBLIC WORKS

January 7, 2016 by Peter McEntee, Susan Garea, Christopher Hammer, Dalisai Nisperos, Stephanie Platenkamp and Sarah Kanter

This legislative session Governor Brown again signed into law several new labor and employment statutes.  Many of the new laws this year expand enforcement tools and strengthen existing protections for employees in areas including leave and disability rights, pay equity, wage and hour protections, and prevailing wage and public works.  In this series of seven articles, we have summarized the new state laws by category.

AB 219 – Prevailing Wage for Ready-Mix Drivers on Public Works Projects

One of the most significant victories for the Teamsters in the California Legislature this year, AB 219 expands the definition of “public works” to include the hauling and delivery of ready-mixed concrete.  As a result of this change, employers will be required to pay ready-mix drivers the prevailing wage rate established for the geographic area in which the concrete factory or batching plant is located when working on public works jobs.  All public works contracts awarded on or after July 1, 2016 will be required to comply with this new prevailing wage measure.  Any employer that willfully refuses to pay the prevailing wage rate to ready-mix drivers on a public works project can be prosecuted for a criminal misdemeanor.

AB 1308 – Apprenticeship Program Standards Strengthened

Union-sponsored apprenticeship programs are heavily used in the building and construction trades industry, and create good jobs for California workers.  Assembly Bill 1308, sponsored by the State Building & Trades Council of California, strengthens apprenticeship program standards by requiring contractors to request apprentices before an existing program can be found deficient for failure to satisfy demand.  Prior to this bill, the Division of Apprenticeship Standards would rely on projections from the state Employment Development Department to justify approval of new programs even where there was no evidence contractors had actually been unable to obtain apprentices from existing programs.  This bill will protect existing programs that are high performing by authorizing new programs only when they do not substantially overlap with existing programs that are already meeting the apprentice needs of contractors.

AB 327 – Public Works:  Volunteers

Pursuant to existing law, all workers employed on public works projects are required to be paid at least the general prevailing wage rate for their work.  However, existing law excludes work performed by a volunteer, such as member of the California Conservation Corps or a community conservation corps.  The exclusion of volunteers from the prevailing wage rate requirement was set to expire on January 1, 2017.  This law extends the exemption for paying prevailing wages to volunteers on public works projects until January 1, 2024.

AB 566- School District Construction

AB 566 expands existing laws, which require that school district construction projects utilize skilled or organized labor.  Many school districts execute construction projects using a “lease-leaseback” arrangement, which does not require construction contractors to bid upon the projects on a competitive basis.  The school district merely leases property to a developer, which constructs a building, and then leases the building and the development site back to the district until the district takes ownership at the end of the lease.  Lease-leaseback prime contractors and any electrical, mechanical and plumbing subcontractors must commit to utilizing a minimum percentage of apprenticeship labor on the project or adopt a collectively bargained “project labor agreement” which contains the same commitments.  Currently, these requirements only apply to projects that are funded from specified sources.  AB 566 now applies these requirements to any lease-leaseback project valued above $1 million dollars, regardless of the project’s funding source.  The legislation, in part, also requires project subcontractors to use a “skilled and trained” workforce comprised of “skilled journeypersons” – individuals who have graduated from an approved apprenticeship program (or worked equivalent hours), or apprentices registered in an approved apprenticeship program.  As of January 1, 2019, a minimum 60% of the labor utilized for a project occupation must be filled by “skilled journeypersons,” where an approved apprenticeship program exists for that occupation.  As a result of this legislation, lease-leaseback contractor or subcontractor now must provide the district with monthly reports to demonstrate that labor requirements are being met.  If the district is not provided this information, it can immediately cease making payments to that entity.

AB 852 – Construction Worker Prevailing Wage

AB 852 increases construction worker access to prevailing wages by broadening the types of publicly financed healthcare facility construction projects subject to prevailing wage requirements.  The legislation expands the definition of public works construction projects to include construction, alteration, demolition, installation or repair work performed on specified health care facilities.  A violation of these requirements is a misdemeanor offense.  The legislation closes a loophole that would otherwise allow healthcare companies to receive low interest rate public financing without committing to pay a prevailing wage.  Previously, private construction projects funded by certain public “conduit bonds” were not considered to be public works and were not subject to prevailing wage requirements.

SB 331 – Negotiations of Public Contracts

In recent years, several local governments covered by the Meyers-Milias-Brown Act, have adopted Civic Openness in Negotiations (COIN) ordinances.  COIN ordinances generally set specific requirements regarding labor negotiations, particularly requiring independent negotiators, and public disclosure of offers, counteroffers and all communications between elected officials and union representatives.  The local governments that have adopted such ordinances claim they are necessary to ensure transparency to the public; however, these ordinances typically only focus on transparency regarding labor contract negotiations and not other public contracts that are often more expensive, and where transparency is just as important.  This bill requires that any local government that adopts a COIN ordinance must comply with the same requirements regarding any public contracts that the local government negotiates with any private person for services or goods to the local government, except for under certain exemptions, by enacting a Civic Reporting Openness in Negotiations Efficient Act (CRONEY.)  For such contracts, the local government must meet several requirements, including:

• must designate an unbiased independent auditor to review the cost of any proposed contract and make the report available to the public prior to the local government acting on the proposal,
• must disclose all offers and counteroffers within 24 hours,
• must disclose names of everyone present during negotiations, and

must disclose all verbal, written, electronic communication regarding the negotiations.

The material on this website is provided by Beeson, Tayer & Bodine for informational purposes only and does not constitute legal advice. Readers should consult with their own legal counsel before acting on any of the information presented. Some of the articles are updated periodically, and are marked with the date of the last update. Again, readers should consult with their own legal counsel for the most current information and to obtain professional advice before acting on any of the information presented.