The Little Hoover Commission has released its anticipated report Level the Playing Field: Put California’s Underground Economy Out of Business. The Little Hoover Commission, formally known as the Milton Marks “Little Hoover” Commission on California State Government Organization and Economy, is an independent state oversight agency that was created in 1962. The Commission’s mission is to investigate state government operations and – through reports, recommendations and legislative proposals – promote efficiency, economy and improved service. The Governor appoints five members of the commission, and the Speaker of the Assembly and the Senate Rules Committee both appoint two. Rounding out the membership are two sitting Senators and two sitting Assembly Members.
In its report, the Commission makes 15 recommendations to give competitive advantage to compliant businesses:
- Accountability. The Governor should designate a limited-term leader with authority to coordinate state efforts and eliminate barriers preventing a successful fight.
- Enforcement. The Commission calls for improved enforcement efforts to reduce the scale of the underground economy, which has grown and thrived.
- Education. The state should develop new consumer education and outreach programs to reduce demand for underground economy goods and services. It also should better educate public officials on the harm caused by the underground economy and their role in curtailing it.
California loses between $800 million and $1.2 billion each year to the underground economy of employers paying workers in cash, withholding taxes or engaging in tax fraud. DIR director Christine Baker told the Little Hoover Commission that about 85 percent of employers move into compliance after receiving a warning letter from the DIR.
2015 Legislation
AB 19 (Chang) would require the Governor’s Office of Business and Economic Development, to review all regulations affecting small businesses adopted prior to January 1, 2016, in order to determine whether the regulations need to be amended in order to become more effective, less burdensome, or to decrease the cost impact to affected sectors.
Prevailing wage would be expanded to include the delivery of ready-mixed concrete by AB 219 by Assembly Member Daly.
AB 251 by Assembly Member Levine that would trigger prevailing wages if a public subsidy is both less than $25,000 and less than 1% of the total project cost was passed by Assembly Committees on party-line votes.
Assembly Member Ken Cooley introduced AB 266, which would, among other provisions, establish a system, including apprenticeship and certification, for cannabis employees.
Assembly Member Roger Hernández introduced AB 853 that would seem to make it virtually impossible for utilities to use contractors on any work “associated with the design, engineering, and operation of its nuclear, electrical, and gas infrastructure, including all computer and information technology systems.”
Assembly Member Brian Jones is author of AB 1038 that would permit an individual nonexempt employee to request an employee-selected flexible work schedule providing for workdays up to 10 hours per day within a 40-hour workweek.
Senator Wolk is author of SB 762 that would establish a pilot program to allow counties to select the lowest responsible bidder on the basis of best value for construction. In language that is sure to be changed SB 762 defines “Safety record” as “its experience modification rate for the most recent three-year period, and its average total recordable injury or illness rate and average lost work rate for the most recent three-year period.” The State Building and Construction Trades Council will insist that union contractors are “deemed safe” by their CBA.
PLA Update
Four supporters of fair and open competition joined PHCC and CFEC at a recent meeting of the Court Facilities Advisory Committee of the California Judicial Council this week. Brian Johnson and Matt Liefer of Helix Electric, Peter Casazza with Bergelectric and John Loudon of California Construction Compliance Group encouraged the Committee to reject any blanket PLA for Court construction. Johnson, Liefer and Casazza talked about their shared experience of courthouse construction experience in California and are excellent examples of the commitment required to fight for the rights of merit-shop contractors and their employees to perform public works in California. The committee took no action but they will eventually make a recommendation back to the full council on the role of PLAs in future court construction.