Earlier this month, California Governor Jerry Brown signed dozens of bills that affect employers. Many of these bills have special significance to the construction industry. Here is a brief review:
Assembly Bill 219 – Prevailing Wages for Concrete Delivery on Public Projects
AB 219 continues California’s aggressive expansion of prevailing wages. This bill expands the definition of “public works” for purposes of state prevailing wage law to include the hauling or delivery of ready-mixed concrete for a public works project.
Previously, delivery drivers hired by a material supplier were exempted from the prevailing wage. Before AB 219, labor law made a distinction between “suppliers” and “contractors.” Thus, ready-mixed concrete was held to be a finished product, and treated differently from a product that was assembled on site. The new law eliminates this distinction.
AB 219 applies to all public work contracts awarded on or after July 1, 2016. The bill requires concrete delivery companies who enter into contracts with any state agency or political subdivision of the state, to pay prevailing wage rates, and imposes misdemeanor penalties for a willful violation of this requirement. The bill also requires the concrete entity enter into a written subcontract agreement with the party engaging that entity on the project and provide employee payroll and time records as specified. AB 219 is significant as it blurs the distinction between contractors and suppliers for prevailing wage purposes and shows an attempt to expand the number of employees entitled to prevailing wages which are, as a general rule, significantly higher than regular wages.
Assembly Bill 622 – E-Verify
Starting in 1997, federal contractors were required to use an internet based system to verify the employment eligibility of employees working under covered federal contracts. E-Verify compares information from an employee’s Form I-9, Employment Eligibility Verification, to data from U.S. Department of Homeland Security and Social Security Administration records to confirm employment eligibility.
California prohibits the use of E-Verify by state or local agencies unless required by federal law or as a condition to receiving federal funds.
AB 622 prohibits employers from using E-Verify to check the employment authorization status of an existing employee or job applicant, unless such a check is required by a specific federal law, authorized by a federal agency, or is a condition of the employer receiving federal funds.
According to the author, this bill limits the misuse of E-Verify by prohibiting unscrupulous employers from engaging in unjust E-Verify practices against workers (consistent with federal law) and creates financial civil penalties for employers who maliciously use E-Verify against their workforce. It is another in a series of bills aimed at eliminating wage theft. It provides for a civil penalty of $10,000 for each violation of this section.
Assembly Bill 852 – Prevailing Wage for Certain Hospital Construction
AB 852 expands the definition of “public works” to include any construction, alteration, demolition, installation or repair work done, under a private contract, with a general acute care hospital when the project is paid for, in whole or in part, with the proceeds of conduit revenue bonds issued on or after January 1, 2016. AB 852 requires general prevailing wage rates to be paid to workers on such public works and imposes misdemeanor penalties for a willful violation of this requirement.
Assembly Bill 970 – Expanded Labor Commissioner Authority
Assembly Bill 970 expands the power of California’s Labor Commissioner to investigate and enforce minimum wage and overtime rules. It allows the Labor Commissioner to issue citations and penalties for wage and hour violations, unless a local entity has already issued a citation for the same violation. Previously, the Labor Commissioner could only order restitution to employees for any underpayments.
AB 970 also allows the Labor Commissioner to issue a citation to an employer who has illegally charged its employees for tools or equipment necessary to perform the employee’s duties. Previously, the only remedy available was for an employee to file a civil lawsuit.
The bill was sponsored by the California Rural Legal Assistance Foundation (CRLAF) and was opposed by a coalition of employer groups, including the California Chamber of Commerce. Opponents argued that the bill would subject employers to layers of penalties and enforcement efforts, increased annual assessments, and a limited opportunity to appeal.
One of the major arguments against the bill was that under the citation process, an employer challenging a citation can request an administrative hearing to contest the citation and may only challenge the administrative ruling pursuant to a writ of mandate. A writ of mandate limits the superior court’s scope of review of the evidence and arguments the court may consider for purposes of challenging the administrative ruling.
Assembly Bill 1506 – Enforcement of Wage-Statement Violations – PAGA
Assembly Bill 1506 amended the California Labor Code’s Private Attorneys General Act of 2004 (PAGA) to require an employee to notify an employer of certain wage statement violations before the employee can sue under PAGA. The bill also permits the employer to correct the employee’s pay stub to include missing dates of the pay period and the name and address of the employer.
Current law requires an employer to show on an employee’s check (or a separate statement if the employee is paid in cash), an itemized statement showing a) gross wages earned, b) total hours worked by the employee, as specified, c) the number of piece-rate units earned and any applicable piece-rate if the employee is paid on a piece-rate basis, d) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item, e) net wages earned, f) the inclusive dates of the period for which the employee is paid, g) the name of the employee and only the last four digits of his or her social security number or an employee identification number other than a social security number, h) the name and address of the legal entity that is the employer and, if the employer is a farm labor contractor, the name and address of the legal entity that secured the services of the employer, and i) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee and if the employer is a temporary services employer the rate of pay and the total hours worked for each temporary services assignment.
Previously, if any of the required information was missing, an employee could bring a civil action against an employer for civil penalties after the employee gives written notice by certified mail to the Labor and Workforce Development Agency and the employer of the specific violations. The employer was not given the opportunity to cure the violations.
The new law permits the employer to correct a violation of failing to provide its employees with a wage statement containing the inclusive dates of the pay period and the name and address of the legal entity that is the employer. However, the employer’s right to cure these particular violations is limited to once in a 12-month period. The bill also does not provide a cure period if any of the other required information is missing.
Assembly Bill 1509 – Retaliation
Current law prohibits employers from discharging, discriminating, retaliating, or taking adverse action against an employee for engaging in protected conduct. Common examples of protected conduct include making an oral or written complaint regarding unpaid wages or unsafe working conditions. An employee who is retaliated against is entitled to seek reinstatement and reimbursement for lost wages.
AB 1509 extends those protections by prohibiting employers from retaliating against a worker because that worker is related to another worker who engaged in protected activity.
Assembly Bill 1513 – Piece-Rate Compensation
AB 1513 will make it more difficult for employers to pay piece-rate compensation. Under a piece-rate system, employees are paid based on the number of units, or pieces, they complete, rather than on the number of hours they work. The per hour payment received by the employee is calculated by the total paid to the employee divided by the number of hours worked. However, employers can find themselves in hot water if the employee’s compensation falls below minimum wage when compared to the total hours worked.
Under the new legislation, employers must pay piece-rate employees for “non-productive” time such as rest and recovery periods, separately from and in addition to the piece-rate compensation, as follows:
- Rest and recovery periods: Employers must pay at an average hourly rate. The hourly rate is determined by dividing the employee’s total compensation for the workweek by the total hours worked that week.
- Other non-productive time: Employers must pay piece-rate employees for other non-productive time at a rate that is no less than the minimum wage.
The bill expands current law requiring employers to furnish employees with itemized statements to cover these new requirements. Itemized statements provided to employees compensated on a piece-rate basis must now state the total hours of compensable rest and recovery periods, rate of compensation, gross wages for those periods during the pay period, the total hours of other non-productive time, and gross wages paid for that period. Until January 1, 2021, employers will have an affirmative defense to any claim for recovery of wages, damages, or statutory penalties for periods prior to and including December 31, 2015, if the employer complies with the bill’s specified requirements by December 15, 2016.
Senate Bill 358 – Wage Equality
SB 358 prohibits employers from paying any of its employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility. The bill requires employers to show that a wage differential is based on one or more specific factors, including seniority, merit, quantity or quality of production, or a bona fide factor other than sex, and further show the factor relied upon is applied reasonably. This bill further prohibits discrimination or retaliation against an employee who invokes these provisions.
SB 358 is discussed in detail in a previous Haight alert which can be found by clicking here.
Senate Bill 560 – CSLB Enforcement of Workers’ Compensation Insurance Coverage
SB 560 authorizes the enforcement division of the Contractors State License Board (“CSLB”) to enforce the obligation of licensed contractors to carry valid and current workers’ compensation insurance.
Under previous law, the CSLB was able to issue citations and notices to appear when it found that a contractor was operating without a valid CSLB issued license. It did not have the authority to issue a notice to appear when it discovered that the contractor was not carrying workers’ compensation insurance.
Senate Bill 588 – Penalties Including Stop Work Orders for Non-Payment of Wages
Senate Bill 588 allows the Labor Commissioner to file a lien or levy on an employer’s property (including bank accounts and real property) in order to assist the employee in collecting unpaid wages when there is a judgment against the employer.
The bill also requires an employer with an unpaid wage judgment against it to obtain a surety bond between $50,000 and $150,000 (depending on the amount of the unpaid judgment). The bill also allows the Labor Commissioner to impose a civil fine of $2,500 and impose daily fines on repeat offenders of $100 for each calendar day that the employer conducts business capped at $100,000.
The bill was co-sponsored by the Service Employees International Union, the Koreatown Immigrant Workers Alliance, and the Wage Justice Center. They write: [This bill] gives the Labor Commissioner additional tools to collect from employers who have exhausted all appeals for their non-payment of wages and have final judgments owed. It requires a business that has an outstanding unpaid judgment against them to purchase a wage bond of $150,000. If it fails to do that, the employer can be subject to a stop work order and a lien at the Labor Commissioner’s discretion.
This bill also gives the Labor Commissioner the authority to hold individual business owners accountable for their debts to workers. The supporters of the bill argue it will discourage business owners from rolling up their operations and walking away from their debts to workers and starting a new company.
This document is intended to provide you with information about construction law related developments. The contents of this document are not intended to provide specific legal advice. This communication may be considered advertising in some jurisdictions.