Building Trades Bill to Close Prevailing Wage Loophole Approved by Assembly

April 7, 2015 - A State Building Trades sponsored bill to protect prevailing wage on private construction projects that receive public subsidies was approved by the full Assembly Monday, by a vote of 50 to 28, with all Democrats in support and all Republicans opposed.

Assembly Bill 251 by Assembly member Marc Levine (D-San Rafael) protects prevailing wage by creating specific thresholds under which the “de minimis” exemption applies. Some projects receiving public subsidies are not required to pay prevailing wage if the subsidy is deemed so insignificant as to be “de minimis” by the Department of Industrial Relations. Existing law does not specifically define that threshold. As a result, subsidies on large projects that are a relatively low percentage of the entire cost can amount to millions of taxpayer dollars, yet the project still remains exempt from prevailing wage.

For example, in 2009, the DIR determined that a $500,000 public subsidy for the construction of a private animal shelter was de minimis; and in 2012 the DIR determined that a public subsidy of over $1.6 million for a developer’s infrastructure improvements was de minimis. As a result, prevailing wage was not required to be paid to workers on these projects.

AB 251 would specify that a public subsidy to a private project is “de minimis” only if the amount is less than $25,000 and less than one percent of the total project cost.

AB 251 would ensure that when significant taxpayer dollars are spent subsidizing a construction project, that the workers on those projects receive the prevailing wage they deserve.

The bill will next be considered by the Senate.

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