Tag Archive for Assembly Bill 842 (2015)

California Bill Would Allow Contractors and Workers to Maintain Their Existing Health Insurance Under a Project Labor Agreement

Assemblyman Jim Patterson (R-Fresno) has introduced Assembly Bill 842 in the California legislature. Here is the Legislative Counsel’s digest of this bill:

AB 842 “would provide that a contractor that bids on or has been awarded work covered by a Project Labor Agreement that provides health care coverage to workers on the project that is the subject of the agreement, that includes essential health benefits, as described in the PPACA [federal Patient Protection and Affordable Care Act], and that provides evidence of that coverage to the entity awarding the contract, is exempt from a requirement to pay into a trust or custodial benefit plan for health and welfare or similar benefits for those workers an amount equal to the amount that the contractor would have been required to pay into that trust or custodial benefit plan for health care costs for those workers.”

In other words, a non-union employer that has a bone fide health insurance benefit program equivalent to or better than what is offered by the applicable multi-employer union-affiliated trust for the same trade in the same geographic region does not have to pay the health insurance component to the union trust fund. It can make employer payments to the company health insurance program on behalf of its employees. The company does not need to pay to both the union program and ALSO its own company program (the costly “double payments” dilemma) so that its employees can maintain their existing health insurance.

What does this mean in practice? The Salinas Taxpayers Association took a position in support of AB 842 because the bill was relevant to Project Labor Agreement controversies in Salinas. Here is the Salinas Taxpayers Association letter on Assembly Bill 842:

Salinas Taxpayers Association - Support AB 842 - Project Labor Agreement Equivalent Fringe Health Benefits - April 15, 2015

Salinas Taxpayers Association - Support AB 842 - Project Labor Agreement Equivalent Fringe Health Benefits - April 15, 2015

 

Several of the more than 200 government-mandated Project Labor Agreements imposed in California have included such language for not just health insurance but for ALL legitimate fringe benefits. One prominent example is the San Diego Unified School District. A Project Labor Agreement administrator was given the authority to determine if non-union contractors provided equivalent benefit plans. (Below, see the relevant language from the Project Labor Agreement.)

Note that unions (as well as labor compliance programs or personnel) monitor contractors that claim equivalent fringe benefit plans. Unions have also challenged decisions of PLA administrators concluding that non-union contractors have equivalent benefits. Two examples at San Diego Unified School District:

The United Union of Roofers, Waterproofers and Allied Workers Local Union No. 45 went after A Good Roofer, Inc. because the company did not submit its fringe benefit package to the Project Labor Coordinator for evaluation to determine if it was equivalent or better than the union package. The Roofers union demanded that A Good Roofer, Inc. pay employee fringe benefits (as designated in the union collective bargaining agreement) to the applicable union trust funds, along with interest, costs, and liquidated damages. See SDUSD PLA Grievance – A Good Roofer, Inc.

The San Diego County Building and Construction Trades Council went after the San Diego Unified School District claiming it improperly determined under Section 5.2 of the Project Labor Agreement that Standard Electronics had a fringe benefit program equivalent to the program administered by the International Brotherhood of Electrical Workers (IBEW) Union Local No. 569. See SDUSD PLA Grievance SDUSD & Standard Electronics.

Here is the language from the San Diego Unified School District Project Labor Agreement:

Section 5.2 Benefits. (a) Contractors shall pay contributions to the established employee benefit funds in the amounts designated in the appropriate Schedule A; and make all employee ­authorized deductions in the amounts designated in the appropriate Schedule A: provided, however, that the Contractor and Unions agree that only such bona fide employee benefits as accrue to the direct benefit of the employees (such as pension and annuity, health and welfare, vacation, apprenticeship, and training funds) shall be included in this requirement and required to be paid by the Contractor on the Project; and provided further, however, that such contributions shall not exceed the contribution amounts set forth in the applicable prevailing wage determination.

Unless otherwise required by law, Contractors who have fringe benefits for their core workforce equal to or better than those designated in the Schedule A do not have to pay the fringe benefit contribution designated in the Schedule A on the core work force and may utilize their own fringe benefits. The Project Labor Coordinator will be responsible for determining whether the benefits are equal to or better than those designated in the Schedule A’s. Contractors must submit their fringe benefit packages to the Project Labor Coordinator for evaluation prior to bidding. Contractors may only take credit against the prevailing wage in accordance with the Prevailing Wage Statute and the difference between the hourly cost, if any, of the fringe benefit provided and the hourly cost of the applicable fringe benefit portion of the wage determination must be paid to the worker as wages. Benefits designated in the Schedule A will be paid on all employees dispatched by the Union.

(b) Where applicable, the Contractor adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s) specifying the detailed basis on which payments are to be made into, and benefits paid out of, such trust funds for its employees. The Contractor authorizes the Parties to such trust funds to appoint trustees and successors’ trustees to administer the trust funds and hereby ratifies and accepts the trustees so appointed as if made by the Contractor.

(c) Each Contractor and Subcontractor is required to certify to the Project Labor Coordinator that it has paid all benefit contributions due and owing to the appropriate Trust(s) or fringe benefit programs prior to the receipt of its final payment and/or retention. Further, upon timely notification by a Union to the Project Labor Coordinator, the Project Labor Coordinator shall work with any Contractor or Subcontractor who is delinquent in payments to assure that proper benefit contributions are made, to the extent of requesting the District or the prime Contractor to withhold payments otherwise due such Contractor, until such contributions have been made or otherwise guaranteed.

This example shows that Assembly Bill 842 proposes a feasible policy. In fact, AB 842 could be expanded to encompass ALL bone fide fringe benefit plans and not just health insurance. Nevertheless, expect the State Building and Construction Trades Council of California and individual unions to oppose the bill.