Tag Archive for Governor Gray Davis

Contractor Has to Shell Out $8 Million After Unions Win Argument That Hilton San Diego Bayfront Hotel Was a “Public Works” Project

Are you one of the 2000+ construction trade workers who built the Hilton San Diego Bayfront Hotel? The California Division of Labor Standards Enforcement (Labor Commissioner’s office) gave me the following information about what to do:

Send your contact information to this California Division of Labor Standards Enforcement district office address (presumably via a letter or postcard) explaining that you were a trades worker on the Hilton San Diego Bayfront Hotel:

California Division of Labor Standards Enforcement
7575 Metropolitan Drive, Room 210
San Diego, CA 92108

According to a representative in the DIR Legal Division, payments to former workers (in the form of checks) are supposed to be available 60-90 days after the June 17, 2013 official announcement. A third-party administrator is handling the processing of the payments.

The phone number for this San Diego district office is (619) 220-5451.

This morning (June 17, 2013) the California Department of Industrial Relations (DIR) issued a press release declaring that the Labor Commissioner Collects Over $8 Million in Wages for Public Works Job at Hilton Hotel in San Diego. Surely unions will portray this settlement as a victory for exploited workers against greedy capitalists. Actually, it is a symptom of absurd, ambiguous, union-backed definitions of public works in state law.

Right off the bat, you notice something odd: the headline of the press release includes the clarification that the hotel was a “public works job.” How did a Hilton hotel become a public works job? You thought “public works jobs” were government projects such as schools, courthouses, libraries, and post offices.

You thought wrong. In 2001, Governor Gray Davis signed the union-backed Senate Bill 975 into law. It expanded the definition of a “public works” project to include just about any assistance of any financial value from a government:

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.

In 2012, the Assembly Labor and Employment Committee rejected (on a party-line vote – Democrats opposed and Republicans in support) Assembly Bill 987, sponsored by Associated Builders and Contractors of California and introduced by Assemblywoman Shannon Grove (R-Bakersfield). This bill would have simplified a section of California Labor Code 1720 defining “public works” that two court decisions have described as “As statutes go, Section 1720 is hardly a triumph of the drafter’s art.” Unions like the law as written, and their triumph described below shows why they oppose any reasonable amendments to the law.

The United Port of San Diego owns property on the San Diego waterfront next to the San Diego Convention Center. In 2002, the Port issued a Request for Proposals for an entity to lease the land and build a hotel on the site. After choosing Hilton San Diego Convention Center, LLC to lease the land and build the hotel, the Port negotiated a lease that included a rent credit equal to 60 percent of the rent due each month for 11 years, not to exceed a total of $46.5 million. Subsequently the Port provided a “rent credit acceleration” for the hotel developer.

Hilton San Diego Convention Center, LLC chose Hensel Phelps, an investor in the project, as the general contractor. In April 2004, Hensel Phelps asked the Port if the hotel project was a public works job subject to the payment of state-mandated construction wage rates (so-called “prevailing wages”) to trade workers. In a memorandum dated May 12, 2004, the Port considered the available information and concluded that “the Hilton Hotel development is not considered a public works project subject to the payment of prevailing wages.” See that memo here: May 12, 2004 – Port Says Hilton San Diego Not Public Works.

After construction began in 2006, the Carpenters Contractors Cooperation Committee (CCCC) and Southern California Labor/Management Operating Engineers Contract Compliance Committee, two union-affiliated labor-management cooperation committees, referenced the rent credit and asked the California Department of Industrial Relations (DIR) to determine whether or not the Hilton Hotel was a public works project subject to state-mandated prevailing wage laws. The DIR began its own analysis of the project. See September 14, 2006 DIR Request to Port of San Diego for Hilton San Diego Documents.

In a response to the DIR dated October 2, 2007, Port of San Diego staff stated that it “believes that given the specific conditions of the RFP; challenges caused by extensive site remediation; the extent of public improvements; location; and size of the site, the transaction that was negotiated with Hilton represents the market for this particular site,” thus denying that the rent credit exceeded fair market value. The Port also warned that if the state decided to declare the hotel a public works project, it would discourage additional development of the area:

Port staff has received inquiries from other tenants, who are in the process of developing leaseholds, regarding this matter. We are concerned that attempts to treat private leaseholds as public projects will set off a chain reaction and have a chilling effect on redevelopment and reduce rental revenue to the Port, which will in turn negatively impact the Port’s ability to further its own capital projects.

Associated Builders and Contractors (ABC) of California (my former employer) and Associated General Contractors (AGC) of California submitted letters to the DIR arguing that the Hilton hotel was not a public works project. The Southern California Labor/Management Operating Engineers Contract Compliance Committee submitted a rebuttal to the ABC and AGC arguments.

November 30, 2007 San Diego Hilton Not a Public Works – ABC of CA Comment

December 7, 2007 San Diego Hilton Not a Public Works – AGC of CA Comment

December 19, 2007 San Diego Hilton is a Public Works – Operating Engineers Union Response

On April 1, 2008, the Director of the California Department of Industrial Relations determined that “the construction of the Hilton San Diego Convention Center Hotel and related development” is “a public work subject to prevailing wage requirements.” See April 1, 2008 DIR Director’s Decision – San Diego Hilton – Public Works.

Hensel Phelps filed an administrative appeal of the decision, and the DIR sought additional comments. See April 25, 2008 DIR Notice of Appeal – San Diego Hilton. Among the commenters were Associated Builders and Contractors of California: see May 8, 2008 San Diego Hilton Not a Public Works – Comments on Appeal – ABC of California.

On June 23, 2008, the DIR Director denied the appeal and affirmed his original decision that the Hilton San Diego Convention Center Hotel was a public work subject to prevailing wage requirements. Four days later, Hensel Phelps filed a lawsuit (Hensel Phelps Construction Company vs. California Department of Industrial Relations) in San Diego County Superior Court to overturn the DIR Director’s decision.

On February 25, 2010, a San Diego County Superior Court judge ruled that the Hilton San Diego Convention Center Hotel and related construction was not a “public work” subject to prevailing wage requirements. On April 23, 2010, the Director rescinded his earlier decision and ruled that the Hilton San Diego Convention was not a public works project. See April 23, 2010 DIR Rescinds Coverage Determination for San Diego Hilton.

But the Carpenters Contractors Cooperation Committee appealed the judgment to the Court of Appeal, Fourth Appellate District. On July 26, 2011, the court reversed the Superior Court decision and ruled that the rent credit was a payment of public funds, regardless of whether or not the rent reduction had a realizable monetary worth. See July 26, 2011 Hensel Phelps v San Diego Port District Appeals Court Decision – Prevailing Wage on Hilton San Diego Bayfront Hotel.

The State Building and Construction Trades Council of California had filed an amicus brief in the case. In its July 21, 2011 bulletin Court of Appeal Rules Prevailing Wage is Required on San Diego Hilton Project, it expressed outrage that “the Schwarzenegger Administration refused to file an appeal to defend the Department of Industrial Relations’ coverage decision” and that “the Port District and the Developer should be ashamed of themselves.”

The DIR press release explains what happened next:

Hensel Phelps Construction Company and the Labor Commissioner then negotiated the amount of wages due to the workers. All 2,051 workers will receive the full prevailing wages they earned on this project. They performed every aspect of construction, from foundation drilling to concrete pouring to steel erection to landscaping.

Hensel Phelps Construction Company will pay a third party administrator to process payments to the workers. The prime contractor will also pay an additional $400,000.00 to the Labor Commissioner as reimbursement for investigative costs.

Now we know that state-mandated construction wage rates cost an extra $8 million for a specific $350 million hotel project built in downtown San Diego in the mid-2000s. You can imagine the cost of prevailing wage for a project in a rural area during the recent economic downturn.

Is it surprising that the developers of the proposed Turtle Bay Sheraton Hotel in Redding suspended their plans earlier this year to build the hotel when unions managed (on their second try) to get the DIR to determine that hotel would be a “public works” project? See my February 15, 2013 post Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding and my January 31, 2013 post Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project.

Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project

UPDATE: My letter to the editor Kevin Dayton: Redding Needs a City Charter is in the February 4, 2013 Redding Record-Searchlight. Comments in response misrepresent “prevailing wage” as “living wage” just like at the Newport Beach City Council meeting on January 22, 2013. It’s possible that a political consultant has suggested using this strategy to take advantage of public ignorance about the calculation of “prevailing wages” and the resulting rates.

The City of Redding has been hit with a union-instigated obstacle to economic growth and job creation imposed by Senate Bill 975, enacted into law in 2001. This law (described below in greater detail) expanded the state’s definition of “public works” to include many private construction projects, thereby requiring companies working on these projects to pay state-mandated construction wage rates (so-called “prevailing wages”) instead of wages that reflect local market conditions.

On January 27, 2013, the California Department of Industrial Relations reversed an earlier decision from December 27, 2011 and determined that a proposed Sheraton hotel to be built in Redding by the Turtle Bay Exploration Park is a “public works” project after all.

Turtle Bay Exploration Center in Redding Loses to Unions

Turtle Bay Exploration Center in Redding Loses to Unions

This new decision was sought by three unions: the Plumbers & Pipefitters Union Local No. 228, the International Brotherhood of Electrical Workers (IBEW) Union Local No. 340, and the Sheet Metal Workers Union Local No. 162 (now absorbed into Sheet Metal Workers Union Local No. 104). As a result of a 22-page appeal of the original decision by the law firm of Adams Broadwell Joseph & Cardozo, the state has now decided that the privately-owned hotel would a public works project, equivalent to a courthouse, because the City of Redding waived rental payments on the land where the hotel will be built.

Now the proposed hotel project may be in jeopardy because the anticipated increased cost of construction may compromise the financial success of the hotel. A January 30, 2013 article in the Redding Record-Searchlight newspaper (Fate of Hotel at Turtle Bay in Limbo – Ruling: Park Must Pay Workers Prevailing Wage to build Sheraton Hotel) outlined the current status of the planned 130-room hotel:

…a park spokesman said he could not say when construction will start or whether the project is in jeopardy. Groundbreaking for the hotel had been scheduled this month.

“At this point we still hope to build the hotel, and operate a hotel there,” Turtle Bay’s Toby Osborn said Wednesday. “There is just a lot of uncertainty due to the ruling.”

…“Everybody woke up this morning and it was a different ballgame,” Osborn said. “Now we need to sit down and identify all the knowns and try to identify all the unknowns.”

But don’t worry, magnanimous union officials say they will help:

Andrew Meredith of the International Brotherhood of Electrical Workers Union Local 340 – one of the unions that appealed the ruling – said they were always confident the state would overturn its prevailing wage decision.

“That said, we are still committed to working with Turtle Bay to find a way to get this project off the ground,” Meredith said. “We know this is something that is important to the community.”

Turtle Bay met with the unions Wednesday to discuss how to move forward, including how the ruling will affect costs of building the hotel and restaurant.

What Is Senate Bill 975 and Why Is It an Obstacle to Private Construction Projects?

In 2001, Governor Gray Davis signed into law Senate Bill 975, a bill sponsored by the State Building and Construction Trades Council of California that expanded the definition of “public works” under California Labor Code Section 1720 to include many private projects. Existing law had defined “public works” as various types of construction “done under contract and paid for in whole or in part out of public funds.” Senate Bill 975 added a list of various kinds of non-monetary government assistance that qualified as public funds:

“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.

As business groups and Republican legislators predicted, the increased costs of construction labor resulting from prevailing wage requirements triggered by Senate Bill 975 scuttled numerous private commercial projects and private affordable housing projects, especially in the Central Valley, North State region (Redding and Chico), and other rural areas.

In these parts of the state, away from the coastal metropolitan cities, the disparity between state-mandated construction wage rates (so-called prevailing wages but actually based on union collective bargaining agreements) and actual median wages in the local market region is quite significant – as much as 30% or more, depending on the trade. See An Analysis of Market and Prevailing Wage Rates for the Construction Trades in California (2004) and The Effects of Prevailing Wage Requirements on the Cost of Low-Income Housing (2005).

Unions Derailed an Easy Local Solution to This Problem in 2011

Sundial Bridge in Redding, California

Sundial Bridge in Redding, California

There has been an ongoing grassroots effort in Redding to ask voters to enact a charter in order to circumvent costly and intrusive state meddling in local affairs. A charter would free the City of Redding from the mandates of the union-controlled California State Legislature, including state-mandated construction wage rates (so-called “prevailing wages”). See Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

In 2011, various local groups and individuals wanted voters to consider approving a robust charter, but union officials ultimately derailed the movement through a Charter City Exploratory Committee appointed by the city council.

The citizens of Redding need to enact a charter so their city has the same authority as the 121 California charter cities to establish its own prevailing wage policies. Why are the people of Redding acquiescing to the demands of unions and allowing the state legislature and a state agency to determine the fate of this hotel?

News Coverage of the Turtle Bay Hotel Prevailing Wage Saga:

Redding City Council Abandons Charter, Saves Prevailing Wage – State Building and Construction Trades Council web site – June 8, 2011

Cost of Turtle Bay Hotel Rests with Department of Industrial Relations; Prevailing Wage in Dispute – Redding Record-Searchlight – August 18, 2011

Turtle Bay Wins Ruling on Wages; Hotel Plan Not Subject to Prevailing Pay – Redding Record-Searchlight – December 28, 2011

Hotel construction cost estimates range from $13 million to $14.8 million. Total project costs are pegged at $21.2 million. Prevailing wage would have added roughly $1.25 million to that price tag, Osborn has said.

Hotel at Turtle Bay May Break Ground in JanuaryRedding Record-Searchlight – December 12, 2012

Unions Win Prevailing-Wage Case vs. Turtle BayRedding Record-Searchlight – January 29, 2013

Fate of Hotel at Turtle Bay in Limbo – Ruling: Park Must Pay Workers Prevailing Wage to build Sheraton Hotel – Redding Record-Searchlight – January 30, 2013

One More Costly Delay on Road to Turtle Bay Hotel – Redding Record-Searchlight (editorial) – January 30, 2013

Turtle Bay Nearing Compromise with Unions Over Hotel Construction – Redding Record-Searchlight – February 7, 2013

Finally, the Redding Employees Association of the Service Employees International Union (SEIU) is now suing the City of Redding for approving a contract with Vertex Business Solutions (Orcom Solutions), a provider of outsourced billing and customer care services to utilities, to take over billing and a call center from the city-owned Redding Electric Utility. It appears this contract would have been umambiguously legal if Redding operated as a charter city. See Union Sues Redding Over Outsourcing REU Call CenterRedding Record-Searchlight – January 18, 2013.

Happy Holidays: News Coverage of California Labor Issues on Labor Day 2012

It seems to me that Labor Day news coverage focusing on labor union issues in California was much less in 2012 than in past years. I have a big file of Labor Day press clips from when unions were flying high during the years of Governor Gray Davis (1999-2003), but this year’s news coverage is fairly sparse.

Here’s various Labor Day 2012 news stories, opinion pieces, and press releases about labor unions and labor policy issues in California:

Los Angeles Daily News article (On Labor Day, Trying Times for Organized Labor – Los Angeles Daily News – September 2, 2012) reports that unions are on the defensive in politics, in commerce, and in collective bargaining for government employees.

The Santa Cruz Sentinel reported on the Monterey Bay Central Labor Council‘s annual Labor Day picnic in Santa Cruz. Quotes from attendees mainly refer to the legislative accomplishments of unions from 125 years ago. The Vice President of the Labor Council is quoted as saying, “Who had ever heard of a weekend before the unions came along? People assume it’s there and always has been there, and it hasn’t.” See Picnic Draws Union Members to DeLaveaga Park – Santa Cruz Sentinel – September 3, 2012.

As reported in the Sacramento Bee, unions provided food for the homeless on Labor Day and received some positive press coverage: Unions Supply Volunteers for Labor Day Lunch at Loaves & Fishes – Sacramento Bee – September 3, 2012. Many of the 75 comments about the article cynically accuse the unions of a public relations stunt.

KQED in San Francisco posted a blog providing a brief history of union power in San Francisco in the early 1900s. Labor Day Special: The San Francisco Waterfront Strike of 1901 – KQED – August 31, 2012.

Los Angeles Times pro-union columnist Michael Hiltzik provided a positive union perspective through a report on the rigors of apprenticeship training for the Ironworkers Union Local No. 416 and Ironworkers Union Local 433 in Southern California. (Ironworkers Union Gives Skills to Members, Public Safety to All – Los Angeles Times – September 2, 2012.) This column relies on the old image of labor unions: a brotherhood of men centered around tough, dangerous work in the construction trades. It also acknowledges some of the shortcomings of unions, including the result of the Ironworkers union having a monopoly on state-approved apprenticeship training for the trade:

Getting into the ironworkers apprenticeship program isn’t a snap. It may help to have a relative, or even a well-wishing neighbor or family friend, in the Ironworkers, but that’s not a prerequisite, nor is it enough. Applicants, who have to be at least 18 with a high school diploma or equivalent, must line up a construction contractor willing to sponsor them with at least six weeks of employment before they can start. That explains why, with the local construction market still soft and the building trades still suffering from about 40% unemployment, there’s a waiting list of about 5,000 applicants looking for sponsors right now.

So there’s a waiting list of 5000 people for how many spots? And nepotism is still important to get in? This is an example of how apprenticeship programs can be used to control who and how many people enter the construction workforce.

Meanwhile, Sacramento Bee columnist Dan Walters took a more relevant and contemporary view on the influence of labor unions in California. Here are excerpts from California Unions Hold Power but Face Peril – Sacramento Bee – September 3, 2012:

Anyone who was paying attention to the California Legislature during the hectic final days of the 2012 session last week could see the political clout of the state’s labor unions.

Countless union-backed bills whipped through the Capitol and onto Gov. Jerry Brown’s desk. Although union lobbyists lost a few battles, they could count many more victories.

With the Legislature’s Democratic majority utterly beholden to unions for political sustenance and with a governor, Jerry Brown, whose 2010 campaign relied on union financing, unions and their 2.4 million members are at the apogee of political influence.

Finally, a writer for the leftist San Diego Free Press asks this ridiculous question on September 3, 2012: Is This California’s Last Labor Day? This article focuses on Proposition 32, a statewide measure described on the November 6, 2012 ballot as follows: “Prohibits unions from using payroll-deducted funds for political purposes. Applies same use prohibition to payroll deductions, if any, by corporations or government contractors. Prohibits union and corporate contributions to candidates and their committees. Prohibits government contractor contributions to elected officers or their committees.”

This doesn’t seem unreasonable, but recognize that labor unions, big corporations, and government contractors are all in cahoots in California to perpetuate Big Government, at the expense of individuals and small businesses. Proposition 32 would stop some of that special interest money funding state and local political campaigns, while unions and their cronies in business are determined to keep the status quo by convincing a majority of voters to reject it.

In 2012, Election Day is more important to California unions than Labor Day. Perhaps that’s why there was little news coverage.

U.S. Chamber of Commerce Publishes Guide on “Sabotage, Stalking & Stealth Exemptions: Special State Laws for Labor Unions” – California Is Featured

I was pleased to see that the U.S. Chamber of Commerce released a report on August 10, 2012 through its “Workforce Freedom Initiative” on a fairly obscure topic that is usually left to the National Right to Work Committee and its research wing, the National Institute for Labor Relations Research: special exemptions from prosecution for union officials when their actions normally regarded as crimes are committed in the context of “lawful labor union activity” protected by the National Labor Relations Act (NLRA) or state labor relations laws (such as California’s Agricultural Labor Relations Act).

“Sabotage, Stalking & Stealth Exemptions: Special State Laws for Labor Unions” concludes that “The most glaring examples of union favoritism under state laws tend to occur in criminal statutes and allow individuals who engage in truly objectionable behavior to avoid prosecution solely because they are participating in some form of labor activity.”

As you might guess, much of this report focuses on California laws, in particular laws that compromise private property rights when union officials are trespassing on private property on union business. It cites several examples:

  • criminal trespass and trespassing laws in California Penal Code Section 602 that do not apply to “persons engaged in lawful labor union activities”
  • rules in California Penal Code Section 640 against willfully blocking the free movement of another person in a public transportation system facility or vehicle except when related to “collective bargaining, labor relations, or labor disputes”
  • criminal laws in California Penal Code Section 420.1 against preventing, hindering, or obstructing someone from entering, leaving, or passing through land, except when the perpetrator is engaged in “lawful labor union activities”
  • laws in California Penal Code Section 552.1 criminalizing trespassing on or loitering at industrial facilities, except when people are lawfully “engaging in any organizational effort on behalf of any labor union, agent, or member thereof, or of any employee group, or any member thereof, employed or formerly employed in any place of business or manufacturing establishment described in this article, or for the purpose of carrying on the lawful activities of labor unions, or members thereof” or acting for the “purpose of investigation of the safety of working conditions on posted property by a representative of a labor union or other employee group who has upon his person written evidence of due authorization by his labor union or employee group to make such investigation.”

I’ve been told by management-oriented labor law attorneys that the “lawful labor union activities” in the California Penal Code are often raised by unions as a justification to trespass, but these exemptions generally pertain to union officials who have a valid claim to observe working conditions and monitor an employer’s compliance with a collective bargaining agreement (or a Project Labor Agreement).

Here is some additional information to flesh out some of the California examples in this guide:

Restraining Orders and Preliminary and Permanent Injunctions

The report dedicates a few paragraphs to the Ralphs Grocery v. United Food & Commercial Workers Union cases now to be considered at the California Supreme Court. These cases deal with two union privileges in state law that the U.S. Chamber of Commerce report does not specifically cite. Here’s a bit more detail:

On July 19, 2010, the California Third Appellate Court issued a decision invalidating the so-called Moscone Act, signed into law by Governor Jerry Brown in 1975, that limited the ability of state courts to issue any restraining order or preliminary or permanent injunction to stop a variety of actions related to labor disputes. (The Moscone Act is California Code of Civil Procedure Section 527.3.) This decision on a rather obscure topic actually generated an article in a major California newspaper: the July 20, 2010 San Francisco Chronicle: Pro-Union Law Struck Down by Appeals Court.

To summarize very crudely in layman’s terms, the court determined that the owner of private property with some degree of public access (such as a grocery store) can get an injunction from a state court to stop peaceful speech activity (such as picketing and handing out flyers) on that private property even when it is related to a labor dispute.

The appeals court also declared a second labor law to be invalid: California Labor Code Section 1138.1, which was part of Assembly Bill 1268, signed into law by Governor Gray Davis in 1999. This bill declared that unions and union officials and members were not responsible for unlawful acts committed by union members during labor disputes unless there was “clear proof of actual participation in, or actual authorization of those acts.” It also established very high standards for a court to issue a temporary or permanent injunction in any case involving or growing out of a labor dispute.

The most informed and aggressive opponent of AB 1268 was my former employer, Associated Builders and Contractors (ABC) of California. It was one of ABC of California’s “Dirty Dozen Most Unwanted Bills of 1999” during the first year of the Gray Davis administration.

ABC of California asserted that AB 1268 would encourage violence during labor disputes. A contractor who was then a member of ABC testified against the bill in a committee hearing along with attorney Brad Newman (now with the Paul Hastings, LLP law firm in Palo Alto), who also submitted a 17-page brief during the April 21, 1999 hearing to the bill’s author, State Senator Shelia Kuehl, pointing out the bill was unconstitutional. He also submitted a follow-up brief on the amended version of the bill. (Mr. Newman was vindicated after eleven years!)  ABC of California also had its members send faxes to Governor Davis asking him to veto the bill. I spoke on a Modesto conservative radio talk show about the bill. The Contra Costa Times published an August 29, 1999 editorial opposed to it. Davis signed it anyway.

The California Fifth Appellate Court issued a similar decision striking down the Moscone Act and AB 1268 on January 27, 2011.

The United Food and Commercial Workers Union (UFCW) appealed both court decisions to the California Supreme Court. See information about the appeal of the Third Appeals Court decision to the California Supreme Court here and information about the appeal of the Fifth Appeals Court decision to the California Supreme Court here.

Warning to Employers: Unions Assert Special Rights to Trespass in California

I’ve been told by management-oriented labor law attorneys that California employers can best protect themselves against trespassing issues by treating union trespassers in the same way as other trespassers. They tell me that if an employer treats visitors, solicitors, lunch trucks, and tool trucks differently than union “visitors,” that inconsistency can be exploited by union lawyers.

In addition, “An employer clearly acts at his own peril if he effects a citizen’s arrest of a union visitor on private property in California.” This was the advice given in 2001 by a California management-oriented labor law attorney in the wake of the June 13, 2001 Ninth Circuit U.S. Court of Appeals decision in Radcliffe v. Rainbow Construction Company.

Indeed, union representatives who visit job sites sometimes come armed with letters from their union attorneys claiming that this court decision and other state laws allow union officials and “non-employee union organizers” to enter private property for the purpose of engaging in labor compliance and other “lawful labor union activity.” I have a collection of such letters.

There seems to be demand from California employers for a guide concerning union trespassing, including information on union access to workers to pressure them to sign of union authorization cards. In the meantime, if your company is having problems with union officials and union organizers trespassing on your property or job site, you should consult with a management-oriented labor law attorney before you take any action.

Additional Coverage of This Guide:

States Exempt Labor Unions from Stalking, Trespassing Laws – August 10, 2012 – The Foundry: Conservative Policy News Blog of The Heritage Foundation

Fresno Bee Calls for CEQA (California Environmental Quality Act) Reform That Includes Stopping Union “Greenmail” for the Purpose of Coercing Developers to Sign Project Labor Agreements

The Fresno Bee published an editorial on Sunday, August 5, 2012 calling for Governor Jerry Brown to take a leadership role in reforming the California Environmental Quality Act, or CEQA (California Public Resources Code Section 21000 et seq.) so that unions can’t exploit it to block proposed projects until the owner signs a Project Labor Agreement giving unions monopoly control of the construction work.

See “EDITORIAL: Governor Again Moves Toward Needed CEQA Reform Steps – Changes to the State Law Should Be Vetted and Discussed by All Parties” – Fresno Bee – August 5, 2012.

Like other counties in the San Joaquin Valley (such as Kings, Tulare, and Kern counties), Fresno County has received numerous environmental comments on behalf of construction trade unions from the law firm of Adams, Broadwell, Joseph & Cardozo concerning proposed solar energy power plants. The ultimate objective is not saving the planet, but coercing the developer to sign a Project Labor Agreement.

The editorial states the following:

Brown recently has been dropping hints he is open to a significant reform of the law. It’s clearly needed, and we hope this isn’t another instance of him shooting off his mouth. California needs significant CEQA reform.

CEQA is being abused, and defenders of the law get defensive whenever anyone suggests it. The most pernicious abuse is known as “greenmail,” with groups threatening CEQA lawsuits to get labor concessions or other side deals.

See a Sacramento Bee article about Governor Brown’s comments: “California Gov. Jerry Brown Upsets Environmentalist Friends with His CEQA Critique” – Sacramento Bee – July 31, 2012.

Also, read the opinion piece from former California governors George Deukmejian, Pete Wilson, and Gray Davis calling for “modernization” of CEQA: “Keep California Green and Golden with CEQA Reforms” – San Diego Union-Tribune – July 12, 2012.

Real Reform of CEQA Will Be an Uphill Battle

The California State Legislature has considered one bill this year to significantly reform CEQA. On January 9, 2012, the Assembly Natural Resources Committee considered Assemblywoman Shannon Grove’s Assembly Bill 598, which would have given the California Attorney General the exclusive authority to file or maintain a lawsuit alleging that an Environmental Impact Report (EIR), negative declaration, or mitigated negative declaration does not comply with CEQA.

The committee rejected the bill on a 6-3 party-line vote, with Republicans in support and Democrats opposed. The hearing was an opportunity for the committee to discuss how certain parties, particularly labor unions, exploit public participation in the CEQA process to achieve objectives unrelated to environmental protection.

Assemblywoman Grove cited four specific examples of different unions (the Teamsters, the California Nurses Association, the United Food and Commercial Workers, and the Service Employees International Union) filing CEQA lawsuits to delay projects as leverage to extract labor concessions from businesses. She also noted that some businesses use CEQA to try to block potential competition.

Testifying on behalf of my former employer (Associated Builders and Contractors of California), I discussed how certain construction trade unions abuse CEQA as a weapon to delay projects until the owner agrees to require contractors to sign a Project Labor Agreement with unions. The Western Electrical Contractors Association (WECA) and the Chambers of Commerce Alliance of Ventura & Santa Barbara were the other public supporters of the bill.

Assemblywoman Linda Halderman (R-Fresno) cited a specific example of a union using CEQA to try to force a contractor to sign a Project Labor Agreement to install solar panels at Fresno-Yosemite International Airport. Assemblyman Steve Knight (R-Palmdale) adeptly exposed the Attorney General’s double standard of opposing the additional responsibilities assigned in AB 598 while remaining silent about adopting additional responsibilities through other legislation.

Legitimate environmental organizations such as the Sierra Club and the Planning and Conservation League opposed the bill. The Teamsters and United Food and Commercial Workers (UFCW) union opposed the bill in writing but did not speak at the hearing. Democrats on the committee opposed the bill, but some of them (along with the Attorney General’s office) acknowledged that some parties abuse CEQA. Assemblyman Bill Monning (D-Santa Cruz) said nothing about how the Carpenters union used CEQA in a recent high-profile campaign to delay and ultimately derail the proposed La Bahia Hotel in Santa Cruz.

San Diego Unified School District: the Only Local Government in California Evading Labor Compliance Fees to the California Department of Industrial Relations

The Ziggurat Exterior

I requested public records from the State Allocation Board‘s Office of Public School Construction (part of the California Department of General Services) to find out which educational districts in California were slipping out of the state’s new requirement to pay fees to the State Public Works Enforcement Fund, which supports the Compliance Monitoring Unit of the California Department of Industrial Relations.

The Ziggurat Interior

School districts (K-12), community college districts, and other local governments pay these fees to support the agency’s monitoring and enforcement of contractors complying with laws related to state-mandated construction wage rates (so-called “prevailing wages”).

Personnel at the state’s obscure but powerful Office of Public School Construction were prompt and efficient in getting me the information, and I was able to obtain the records in person at the Department of General Services offices in the beautiful Ziggurat in West Sacramento.

Only one school district is avoiding the fees: the San Diego Unified School District (SDUSD). It submitted four applications for state grants to the State Allocation Board via the Office of Public School Construction to fund “New Construction (Overcrowding Relief Grant)” on four projects: The Language Academy (low bid $10 million), Euclid Elementary School (low bid $7 million), Zamorano Elementary School (low bid $8.4 million), and Encanto Elementary School (low bid $5.7 million). See the four applications here.

Administrative offices of the San Diego Unified School District.

In the funding applications for each of those projects, the San Diego Unified School District checked off a box in Question 17 (“Prevailing Wage Monitoring and Enforcement Costs”) indicating that the monitoring requirement to be used by the school district will be “Collective bargaining agreement, pursuant to Labor Code Section 1771.3(b)(3).”

This means that the San Diego Unified School District won’t need to pay fees to the state for labor law compliance activity on these projects because contractors working on them have to sign a Project Labor Agreement with unions. (See the special SDUSD “Project Stabilization Agreement” web page here for details.) In other words, the state is exempting the San Diego Unified School District from paying mandatory labor compliance fees because the school board requires contractors to sign a union agreement!

Under state law (Assembly Bill 436) and California Code of Regulations Title 8, Section 16452, the fee assessed by the Department of Industrial Relations cannot exceed one-quarter of one percent of the total amount of the total project construction costs. The State Allocation Board includes the costs of these fees in the funds it distributes to school districts.

The total cost of these four San Diego Unified School District projects is $31.1 million, meaning the school district was able to evade costs of $777,500 in fees to the California Department of Industrial Relations as a result of the school board requiring contractors to sign a Project Labor Agreement with unions.

Unions Have Promoted Complex Labor Compliance Schemes in California for Twenty Years

Since the early 1990s, construction trade unions have lobbied the California State Legislature to implement various schemes meant to supplement the California Division of Labor Standards Enforcement (headed by the Labor Commissioner) in its monitoring and enforcement of construction contractor compliance with California’s laws related to state-mandated construction wage rates (“prevailing wages”) on public works projects.

Basically, union leaders and lobbyists imposed and expanded complicated, convoluted, burdensome wage rate mandates on public works contractors for each trade in various geographical regions (based on the jurisdictions of unions as defined in collective bargaining agreements). Then they complained when the state bureaucracy could not actively scrutinize all of their non-union competitors for possible violations of those laws.

For example, as cited in the committee bill analyses for Senate Bill 588 (2001), which allowed union-affiliated labor-management cooperation committees to obtain addresses and (initially) names of workers on certified payroll records, unions argued that “Because DLSE has only 20 field investigators and 6 auditors in the public works unit, that agency cannot adequately enforce the law on more than 22,000 public works projects each year.”

Reflecting the political priorities of unions during the administrative of Governor Gray Davis (1999-2003), the University of California Labor Program – flush with taxpayer funding starting in 2000 – produced a report about the history and status of the state’s labor law enforcement agencies. Even while continually pushing for new labor laws, union officials and lobbyists called for more state funding for labor law enforcement, perhaps as part of the plot outlined in the guidebook first widely circulated in the early 2000s entitled Using the California Labor Laws Offensively: Organizing Through Enforcement of State Employment Laws.

Unions Exempted Their Construction Monopolies Under Project Labor Agreements from Labor Compliance Fees with Assembly Bill 436

The latest union-backed labor compliance scheme was enacted in 2011, after the California State Legislature gutted and amended Assembly Bill 436 on August 30, 2011 and turned it into a bill establishing new guidelines for local governments building projects using funding from four statewide bond measures. Here is a list of the four state bond measures covered by this law:

  1. The $13.05 billion Kindergarten-University Public Education Facilities Bond Act of 2002 (Proposition 47, approved by 59% of voters in November 2002).
  2. The $12.3 billion Kindergarten-University Public Education Facilities Bond Act of 2004 (Proposition 55, approved by 50.9% of voters in March 2004).
  3. The $3.34 billion Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002 (Proposition 50, approved by 55% of voters in November 2002 – note, don’t confuse this proposition with the $2.6 billion Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002 – Proposition 40 – on the statewide ballot in March 2002).
  4. The $9.95 billion Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century (Proposition 1A, approved by 54% of voters in November 2008).

AB 436 requires school districts, community college districts, water districts, the California High Speed Rail Authority, and the now-disbanded San Diego Model School Development Agency to pay a fee to the California Department of Industrial Relations, in an amount “sufficient to support the department’s costs in ensuring compliance with and enforcing prevailing wage requirements” as well as “labor compliance enforcement” on projects funded by the four state bond measures listed above.

The bill included a couple of exceptions under which these local governments do not have to pay a fee to the state for labor law monitoring and enforcement. One exception applies to local governments that already established in-house labor compliance programs under old laws that the state enacted in 2002 (but subsequently repealed) – a technical matter.

But there was also an exception based on politics that earned the criticism of business associations and various newspaper editorial boards. Assembly Bill 436 was peppered with this provision for every kind of local government: “if it enters into a collective bargaining agreement that binds all of the contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages.”

A “collective bargaining agreement that binds all of the contractors performing work on the project” is a Project Labor Agreement.

Assembly Bill 436 was authored by Assemblyman Jose Solorio (D-Anaheim) and supported by the State Building and Construction Trades Council of California.

A Project Labor Agreement Doesn’t Ensure Contractors Are Complying with Labor Laws

I’ve heard union officials say at local government meetings over the years that there would be no need for the government to monitor contractors for labor law compliance if the government required all of its contractors to sign Project Labor Agreements (PLAs) with unions. Allegedly, unions check the paperwork and certified payroll records of their signatory contractors to make sure those companies aren’t violating the law.

Associated Builders and Contractors – California Cooperation Committee (ABC-CCC) investigated contractor labor law compliance for projects at the City of Milpitas and the Los Angeles Unified School District on which contractors were required to sign Project Labor Agreements with unions. ABC-CCC found numerous violations and disproved this contention. In fact, the discovery suggested that having a Project Labor Agreement (ironically) encourages labor law violations because chances are lower than people will be snooping around looking for them.

Despite these cases, the California State Legislature passed AB 436 to ensure that school districts that require contractors to sign a Project Labor Agreement with unions are rewarded for reducing the number of bidders and participating subcontractors (i.e. cutting competition) and raising costs of behalf of construction unions.

Did the San Diego Unified School District Operate a Flawed Labor Compliance Program?

A study commissioned by the San Diego Unified School District and released by Rea & Parker Research in November 2011 about the performance of the district’s Project Labor Agreement reports “There has been an increase in reporting violations and deficiencies pertaining to labor compliance since the PSA was adopted.” Without evidence, the report goes on to contend that “the increase is due to increased attention to worker payroll and benefits under the PSA than before…” It also suggests that “It is known that PSA projects grant access to union representatives and that deficiencies may be due to increased attention to labor issues, and it may be that this increased attention may have resulting (sic) in increased protection of the wages and benefits of workers than may have existed prior to the PSA.”

Well, the unions will certainly cite this sentence as (unsubstantiated) “proof” that Project Labor Agreements provide sufficient monitoring and enforcement of contractor compliance with laws concerning state-mandated construction wage rates. But how did Rea & Parker isolate the Project Labor Agreement as a cause of the increase in discovered violations? There is at least one additional variable Rea & Parker Research should have considered: the operations of the twelve-year old San Diego Unified School District’s in-house labor compliance program.

The California Department of Industrial Relations has allowed the San Diego Unified School District to operate its own in-house labor compliance program under the strict criteria of California Labor Code 1771.5(b) since it first approved the program on September 14, 2000. When the school district sought permanent approval for its own labor compliance program a year later, it claimed that the program was “successfully operated since September 14, 2000” and provided documentation to the Department of Industrial Relations that “demonstrates SDUSD’s ability to monitor and enforce Public Works Prevailing Wage law consistent with CCR §16434 and Labor Code §1771.5.”

Was the San Diego Unified School District labor compliance program failing to fulfill its claims of successful operation, and if so, should the California Department of Industrial Relations retroactively revoke the program’s approval for the nine years before the school district implemented the Project Labor Agreement for the first project in the fall of 2009?

This is a serious matter that has implications for school district finances and for the paychecks of construction trade employees of many contractors that worked for the school district over the past twelve years. The standard project cost threshold for state-mandated construction wage rates is $1000. But local governments operating labor compliance programs approved under California Labor Code Section 1771.5 are qualified to set a higher project cost threshold of $25,000 for construction work and $15,000 for alteration, demolition, repair, or maintenance work.

For example, according to this report, in 2009-10 the San Diego Unified School District was able to exempt 114 contracts worth a total of $11,583,770.80 from state-mandated construction wage rates. In 2010-11, the San Diego Unified School District was able to exempt 258 contracts worth $61,822,251.08 from state-mandated construction wage rates, as reported here.

I expect there will be much more extensive research into the labor compliance program at San Diego Unified School District, now that the school board has placed a $2.8 billion bond measure on the November 6, 2012 ballot and passed a resolution to lock that taxpayer-funded work under a union Project Labor Agreement.

Speculation About Condoleezza Rice Running for Major Office Is Nothing New: the San Francisco Chronicle Printed My Letter to the Editor About It in 2001


Editor — California Democratic Party Chairman Art Torres says Condoleezza Rice wouldn’t make a good governor because “you need someone who understands the problems of working people in this state.”

Apparently Torres thinks an understanding of working people’s problems is attained through raising $26 million in campaign contributions from big corporations and special-interest groups.

Actually, Rice would probably be a provocative candidate with a more insightful and focused perspective on working people’s problems than Gov. Gray Davis.

If the same old broken record of class warfare is all that Democratic Party officials can muster against Rice, then she could be a formidable candidate against Davis in 2002.



Letters to the Editor – San Francisco Chronicle – May 7, 2001