Prevailing wage: per diem wages.
If enacted, AB 889 would tighten the regulatory framework surrounding employer contributions to fringe benefits tied to prevailing wage determinations, primarily affecting public works projects. By revoking existing exemptions to the annualized calculation method, the bill aims to ensure that contributions are more accurately reflected, preventing employers from disproportionately funding benefits through public contracts. This change may compel contractors to adjust their payment strategies and could potentially impact contract bids as they reassess their cost structures amid tighter requirements.
Assembly Bill 889, introduced by Assembly Member Hadwick, seeks to amend Section 1773.1 of the Labor Code pertaining to prevailing wages for public works. The bill specifically targets the method of calculating per diem wages, which are the minimum wages that must be paid to workers on public projects. Currently, employers can take credit for certain employer payments in this calculation, and the bill aims to remove exceptions that allow annualized credit based on previous high payments for private construction. Instead, it would require that credits taken in the calculation of per diem wages go through a more stringent verification process and align closely with federal regulations established under the Davis-Bacon Act.
The bill's implications raise several points of contention among stakeholders. Proponents argue that aligning state wage laws with existing federal standards enhances consistency and fairness in public contracting practices. However, opponents of the bill express concern that the added compliance burdens could lead to higher project costs, which may ultimately be passed on to taxpayers. Additionally, there are apprehensions about how these changes may affect competition in bidding for public works contracts, especially for small businesses that might struggle to adapt to the increased regulatory requirements.