SENATE BILL REPORT

SB 5822

BYSenators Cantu, Matson, Saling and McCaslin

Reforming prevailing wage statutes.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 23, 1989; February 24, 1989

Majority Report:  Do pass and be referred to Committee on Ways & Means.

      Signed by Senators Lee, Chairman; Anderson, Vice Chairman; McDonald, Matson, Saling, West.

Senate Staff:Jonathan Seib (786-7427)

                  February 27, 1989

Senate Committee on Ways & Means

Senate Hearing Date(s):March 3, 1989; March 6, 1989

Majority Report:  That Substitute Senate Bill No. 5822 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bluechel, Cantu, Hayner, Johnson, Lee, Matson, Newhouse, Saling.

Minority Report:  That it not be substituted.

      Signed by Senators Bauer, Fleming, Gaspard, Moore, Niemi, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Steve Jones (786-7440)

                  March 7, 1989

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 6, 1989

BACKGROUND:

RCW 39.12 requires employers to pay their workers no less than the prevailing wage on all public works projects funded by the state, its counties, municipalities or other political subdivisions.

"Prevailing wage" is defined as the wage and benefits paid in the largest city in the county where the work is performed to a majority of workers in a particular occupation.  If there is not a majority paid at the same rate, then the prevailing wage is the average wage and benefits in a locality for a particular occupation.  On projects subject to both federal and state prevailing wage laws, the higher wage rate applies.

The industrial statistician of the Department of Labor and Industries determines prevailing wages.  The determination is based on surveys of contractors and union locals, typically conducted every two and one-half years, regarding wages and benefits paid on all projects. 

Public works contract specifications and contracts must contain a provision stating the minimum wage (no lower than the prevailing wage) which must be paid by any person doing the whole or any part of the work contemplated by the contract.  There are no other notice requirements.

In January, 1988, the State Supreme Court held that the prevailing wage requirements apply to off-site fabricators of nonstandard project items.

A recent Legislative Budget Committee report concluded that the statistical measure used by the department in setting the prevailing wage is both appropriate and in compliance with legislative intent, but that improvements are needed in the department's overall process in order to ensure full compliance with statutory direction.

SUMMARY:

The prevailing wage statute shall only apply to projects estimated to cost more than $100,000, and only to on-site employees of contractors or subcontractors.  On projects subject to both federal and state prevailing wage laws, the federal wage rate applies.

"Prevailing wage" is defined as the average wage and benefits paid for a particular occupation in the county where the work is performed.  It shall be based on annual surveys of registered contractors regarding wages and benefits paid on nonpublic projects.

A contracting agency shall state the applicable prevailing wage rates in the contract specifications, and upon request, shall provide individual contractors with written notice of the prevailing wages for a particular project, or be subject to compensatory penalties.

In determining compliance with prevailing wage requirements, employer contributions for equivalent or alternative employee benefits can be deducted from the usual benefit amount.

A contractor is not prohibited by the statute from assigning any worker to any construction activity provided the worker is paid the prevailing wage for the activity being performed.  The contractor shall record the hours worked by each worker at each activity. 

The Department of Labor and Industries is to report to the Legislature by December 1, 1989 on its efforts to improve data collection and the timely processing of prevailing wage complaints.

EFFECT OF PROPOSED SUBSTITUTE:

Various technical amendments are made to clarify the intent of the bill.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: ECONOMIC DEVELOPMENT & LABOR:  Robert Dilger, Washington State Building and Trades Council (con); Noel McMurtray, Washington District Council of Laborers (con); Frank Forrest, New/Hi Building Trades Council (con); Cindy Zehnder, Teamsters (con); Ted Carlson, IVOE (con); Jack Doran; Dennis Otterstetter, Port Angeles Central Labor Committee (con); Jack Gilchrist, LADS, Local 7144 (con); Brian Garvey, Mechanical Contractors Association (con); Gordan Howins, IVOE, Local 612 (con); Fred Hill, Fred Hill Materials (pro); John Osborne, ABC (pro); DeWayne Gellenbeck, PDCA (pro); Larry Heiberg, Heiberg Enterprises (pro); Phillip Schmuck, Brothers Painting (pro); Jim Reinbold, City of Cheney (pro); John Blincoe, Ledeor Construction (pro); Richard Price, Stevens County PUD (pro); Judith Jewall, Olympian Precast, Inc. (pro); Dobbs Spasojevich, WSECA (pro); Robert Olsen, painting contractor (pro); James Retman, Long Star Supplier (pro)

Senate Committee - Testified: WAYS & MEANS:  PRO:  Judith Jewall, Olympian Precast, Inc.; Cliff Finch, Association of Washington Business; Gary Smith, Independent Business Association; CON:  Robert Dilger, Washington State Building and Trades Council; Larry Kenney, Washington State Labor Council, AFL-CIO; Brian Garvey, Mechanical Contractors Association; Noel McMurtray, Washington District Council of Laborers; Leo Sweeney, Trustee, Teamsters Joint Council No. 28; James Kerlee, Washington State Council of Carpenters