Background: In July of 2003, Department of Industrial Relations (DIR) determined that a habitat restoration contractor, under contract to the state, was in violation of prevailing wage laws because they did not pay the volunteers prevailing wages. This determination is a result of SB 975 (Alarcon), effective January 2002, which redefined “public works,” and SB 278 (Machado), effective January 2003, which required publicly-funded “public works” projects to pay prevailing wages to workers. DIR informed DFG’s contractors that most current contracts under the Fisheries Restoration Grant Program (and one would assume other such restoration programs throughout the state) are in violation of the prevailing wage laws. Issues of volunteerism, liability, proper prevailing wage rates have not been adequately resolved. Legislation is required immediately. AB 2690 (Hancock) is the vehicle currently being used but only addresses volunteer issues.

BILL NUMBER: SB 975 CHAPTERED BILL TEXT

CHAPTER 938
FILED WITH SECRETARY OF STATE OCTOBER 14, 2001
APPROVED BY GOVERNOR OCTOBER 14, 2001
PASSED THE SENATE SEPTEMBER 6, 2001
PASSED THE ASSEMBLY SEPTEMBER 4, 2001
AMENDED IN ASSEMBLY AUGUST 30, 2001
AMENDED IN ASSEMBLY JULY 18, 2001
AMENDED IN ASSEMBLY JULY 12, 2001
AMENDED IN ASSEMBLY JULY 10, 2001
AMENDED IN ASSEMBLY JUNE 25, 2001

INTRODUCED BY Senator Alarcon

FEBRUARY 23, 2001

An act to amend Section 63036 of the Government Code, and to amend Section 1720 of the Labor Code, relating to the California infrastructure and economic development bank.

LEGISLATIVE COUNSEL'S DIGEST

SB 975, Alarcon. California Infrastructure and Economic Development Bank.

Existing law, the Bergeson-Peace Infrastructure and Economic Development Bank Act, establishes the California Infrastructure and Economic Development Bank in the Trade and Commerce Agency. The act requires public works financed by the bank to comply with certain laws applicable to payment of prevailing wages on public works.

This bill would require any of those public works financed through the use of industrial development bonds under the California Industrial Development Financing Act to comply with those laws relating to payment of prevailing wages.

Existing law generally defines "public works" to include construction, alteration, demolition, or repair work done under contract and paid for in whole or in part out of public funds.

This bill would redefine "public works" to include installation and provide that "paid for in whole or in part with public funds" means certain payments, transfers, credits, reductions, waivers, and performances of work, but does not include the construction or
rehabilitation of affordable housing units for low- or moderate-income persons, as specified.

This bill would provide that certain private residential housing projects and development projects built on private property are not subject to the prevailing wage, hour, and discrimination laws that govern employment on public works projects.

This bill would also make technical, nonsubstantive changes.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. Section 63036 of the Government Code is amended to read:

63036. It is the intent of the Legislature that the activities of the bank be fully coordinated with any future legislative plan involving growth management strategies designed to protect California's land resource, and ensure its preservation and use it in ways which are economically and socially desirable. Further, all public works financed pursuant to this division, including those projects financed through the use of industrial development bonds under Title 10 (commencing with Section 91500), shall comply with Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.

SEC. 2. Section 1720 of the Labor Code is amended to read:
1720. (a) As used in this chapter, "public works" means:
(1) Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by any public utility company pursuant to order of the Public Utilities Commission or other public authority. For purposes of this paragraph, "construction" includes work performed during the design and preconstruction phases of construction including, but not limited to, inspection and land surveying work.
(2) Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. "Public work" shall not include the operation of the irrigation or drainage system of any irrigation or reclamation district, except as used in Section 1778 relating to retaining wages.
(3) Street, sewer, or other improvement work done under the direction and supervision or by the authority of any officer or public body of the state, or of any political subdivision or district thereof, whether the political subdivision or district operates under a freeholder's charter or not.
(4) The laying of carpet done under a building lease-maintenance contract and paid for out of public funds.
(5) The laying of carpet in a public building done under contract and paid for in whole or part out of public funds.
(6) Public transportation demonstration projects authorized pursuant to Section 143 of the Streets and Highways Code.
(b) For purposes of this section, "paid for in whole or in part out of public funds" means the payment of money or the equivalent of money by a state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer,
performance of construction work by the state or political subdivision in execution of the project, transfer of an asset of value for less than fair market price; fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, which are paid, reduced, charged at less than fair market value, waived or forgiven; money to be repaid on a contingent basis; or credits applied against repayment obligations.
(c) Notwithstanding subdivision (b):
(1) Private residential projects built on private property are not subject to the requirements of this chapter if the projects are not built pursuant to an agreement with a state agency, redevelopment agency, or local public housing authority.
(2) (A) If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development
project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.
(B) If the state or a political subdivision reimburses a private developer for costs that would normally be borne by the public, or provides directly or indirectly a public subsidy to a private development project that is de minimis in the context of the project, an otherwise private development project shall not thereby become subject to the requirements of this chapter.
(3) The construction or rehabilitation of affordable housing units for low- or moderate-income persons pursuant to paragraph (5) or (7) of subdivision (e) of Section 33334.2 of the Health and Safety Code that are paid for solely with moneys from a Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Health
and Safety Code or that are paid for by a combination of private funds and funds available pursuant to Section 33334.2 or 33334.3 of the Health and Safety Code does not constitute a project that is paid for in whole or in part out of public funds.
(4) "Paid for in whole or in part out of public funds" shall not include tax credits provided pursuant to Section 17053.49 or 23649 of the Revenue and Taxation Code.
(d) Notwithstanding any provision of this section to the contrary, the following projects shall not, solely by reason of this section, be subject to the requirements of this chapter:
(1) Qualified residential rental projects, as defined by Section 142 (d) of the Internal Revenue Code, financed in whole or in part through the issuance of bonds that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 of Division 1 (commencing with Section 8369.80) of the Government Code on or before December
31, 2003.
(2) Single-family residential projects financed in whole or in part through the issuance of qualified mortgage revenue bonds or qualified veterans' mortgage bonds, as defined by Section 143 of the Internal Revenue Code, or with mortgage credit certificates under a
Qualified Mortgage Credit Certificate Program, as defined by Section 25 of the Internal Revenue Code, that receive allocation of a portion of the state ceiling pursuant to Chapter 11.8 of Division 1 (commencing with Section 8869.80) of the Government Code on or before December 31, 2003.
(3) Low-income housing projects that are allocated federal or state low-income housing tax credits pursuant to Section 42 of the Internal Revenue Code, Chapter 3.6 of Division 31 (commencing with Section 50199.4) of the Health and Safety Code, or Sections 12206, 17058, or 23610.5 of the Revenue and Taxation Code, on or before
December 31, 2003.
(e) If a statute, other than this section, or an ordinance or regulation, other than an ordinance or regulation adopted pursuant to this section, applies this chapter to a project, the exclusions set forth in subdivision (d) shall not apply to that project.
(f) For purposes of this section, references to the Internal Revenue Code shall mean the Internal Revenue Code of 1986, as amended, and shall include the corresponding predecessor sections of the Internal Revenue Code of 1954, as amended.

BILL NUMBER: SB 278 CHAPTERED
BILL TEXT

CHAPTER 892
FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2002
APPROVED BY GOVERNOR SEPTEMBER 25, 2002
PASSED THE SENATE AUGUST 30, 2002
PASSED THE ASSEMBLY AUGUST 26, 2002
AMENDED IN ASSEMBLY AUGUST 15, 2002
AMENDED IN ASSEMBLY JUNE 26, 2001
AMENDED IN ASSEMBLY JUNE 14, 2001
AMENDED IN SENATE APRIL 17, 2001
AMENDED IN SENATE MARCH 28, 2001

INTRODUCED BY Senator Machado
(Principal coauthor: Assembly Member Hertzberg)

FEBRUARY 16, 2001

An act to add Section 1771.8 to the Labor Code, relating to public works.

LEGISLATIVE COUNSEL'S DIGEST

SB 278, Machado. Public works project: Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002.

Existing law, with certain exceptions, requires the payment of not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which a public works project is performed to all workers employed on that public works project.
Existing law provides that the body awarding any contract for certain public works projects is prohibited from requiring the payment of the general prevailing rate of per diem wages if the awarding body elects to adopt and enforce a prescribed labor compliance program relating to the payment of general prevailing rate wages and related laws.

The Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002, if approved by the voters at the November 5, 2002, statewide general election, would authorize, for the purposes of financing a safe drinking water, water quality, and water reliability program, the issuance of bonds in the amount of $3,440,000,000.

This bill would require the body awarding any contract for a public works project financed with funds made available by the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002, if that initiative measure is approved by the voters, to adopt and enforce that above-mentioned labor compliance program for application to that public works project.

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1. (a) The Legislature finds and declares all of the following:
(1) Payment of the prevailing rate of per diem wages to workers employed on public works projects is necessary to attract the most skilled workers for those projects and to ensure that work of the highest quality is performed on those projects.
(2) Public works projects should never undermine the wage base in a community, and requiring that workers on public works projects are paid the prevailing rate of per diem wages ensures that wage base is not lowered.
(3) It is a matter of statewide concern that every public agency in California pay the prevailing rate of per diem wages to workers employed on public works projects undertaken by those public agencies.
(b) Therefore, it is the intent of the Legislature, in enacting Section 2 of this act, that every public agency in California pay the prevailing rate of per diem wages to workers employed on public works projects undertaken by that public agency.
SEC. 2. Section 1771.8 is added to the Labor Code, to read:
1771.8. (a) The body awarding any contract for a public works project financed in any part with funds made available by the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002 (Division 26.5 (commencing with Section 79500) of the Water Code) shall adopt and enforce, or contract with a third party to adopt and enforce, a labor compliance program pursuant to subdivision
(b) of Section 1771.5 for application to that public works project.

(b) This section shall become operative only if the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002 (Division 26.5 (commencing with Section 79500) of the Water Code) is approved by the voters at the November 5, 2002, statewide general election.

AB 2690 (Hancock): Introduced, February 2004. The most current version of this bill appears to address the volunteer issue, and repeals Section 1720.4 of the Labor Code. It also applies retroactively to January 1, 2002. This bill does not address the prevailing wage issue including the past liabilities for non-volunteer labor.

Fish and Game Code 1501.5. (a) The department may enter into contracts for fish and wildlife habitat preservation, restoration, and enhancement with public and private entities whenever the department finds that the contracts will assist in meeting the department's duty to preserve, protect, and restore fish and wildlife.
(b) The department may grant funds for fish and wildlife habitat preservation, restoration, and enhancement to public agencies, Indian tribes, and nonprofit entities whenever the department finds that the grants will assist it in meeting its duty to preserve,
protect, and restore fish and wildlife.
(c) Contracts authorized under this section are contracts for services and are governed by Article 4 (commencing with Section 10335) of Chapter 2 of Part 2 of Division 2 of the Public Contract Code. No work under this section is public work or a public improvement, and is not subject to Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.
(d) This section does not apply to contracts for any of the following:
(1) Construction of office, storage, garage, or maintenance buildings.
(2) Drilling wells and installation of pumping equipment.
(3) Construction of permanent hatchery facilities, including raceways, water systems, and bird exclosures.
(4) Construction of permanent surfaced roadways and bridges.
(5) Any project requiring engineered design or certification by a registered engineer.
(6) Any contract, except contracts with public agencies, nonprofit organizations, or Indian tribes that exceed fifty thousand dollars ($50,000) in cost, excluding the cost for gravel, for fish and wildlife habitat preservation, restoration, and enhancement for any
one of the following:
(A) Fish screens, weirs, and ladders.
(B) Drainage or other watershed improvements.
(C) Gravel and rock removal or placement.
(D) Irrigation and water distribution systems.
(E) Earthwork and grading.
(F) Fencing.
(G) Planting trees or other habitat vegetation.
(H) Construction of temporary storage buildings.

Labor Code 1771.5. (a) Notwithstanding Section 1771, an awarding body may not require the payment of the general prevailing rate of per diem wages or the general prevailing rate of per diem wages for holiday and overtime work for any public works project of twenty-five thousand dollars ($25,000) or less when the project is for construction work, or for any public works project of fifteen thousand dollars ($15,000)
or less when the project is for alteration, demolition, repair, or maintenance work, if the awarding body elects to initiate and enforce a labor compliance program pursuant to subdivision (b) for every public works project under the authority of the awarding body.
(b) For the purposes of this section, a labor compliance program shall include, but not be limited to, the following requirements:
(1) All bid invitations and public works contracts shall contain appropriate language concerning the requirements of this chapter.
(2) A prejob conference shall be conducted with the contractor and subcontractors to discuss federal and state labor law requirements applicable to the contract.
(3) Project contractors and subcontractors shall maintain and furnish, at a designated time, a certified copy of each weekly payroll containing a statement of compliance signed under penalty of perjury.
(4) The awarding body shall review, and, if appropriate, audit payroll records to verify compliance with this chapter.
(5) The awarding body shall withhold contract payments when payroll records are delinquent or inadequate.
(6) The awarding body shall withhold contract payments equal to the amount of underpayment and applicable penalties when, after investigation, it is established that underpayment has occurred.
(c) For purposes of this chapter, "labor compliance program" means a labor compliance program that is approved, as specified in state regulations, by the Director of the Department of Industrial Relations.
(d) For purposes of this chapter, the Director of the Department of Industrial Relations may revoke the approval of a labor compliance program in the manner specified in state regulations.

Issues to address:
· Where do prevailing wage laws apply?
· What exemptions exist?
· Is there liability for: the state, contractors and/or landowners (including in-kind and cash cost shares that may not meet prevailing wage requirements)?
· Are the issues of “volunteerism” and “amnesty” being adequately addressed?
· How will this impact the DFG Fisheries Restoration Grant Program, as well as other state programs?
· What parties are currently “negotiating” the issues?
· What mechanisms exist to rectify outstanding issues/problems?
· What forums exist to allow for inclusion of all stakeholders?