SBE News

GSBE Business and Employment Update 08/05/17

GSBE Golden State Builder Exchanges

Construction/Public Works Labor Law Updates

On the heels of last year’s cleanup to Skilled and Trained Workforce (SB 693), the State Building and Construction Trades Council is back with more changes. They introduced SB 418 (Hernandez D) earlier this year as part of their annual effort to change the definition of di minimis. Now the bill (in the Assembly) will change the graduation requirements for some (but not all) trades. Completely exempt from any graduation requirement under Skilled and Trained Workforce will be teamsters. Then, for acoustical installer, bricklayer, carpenter, cement mason, drywall installer or lather, marble mason, finisher or setter, modular furniture or systems installer, operating engineer, pile driver, plasterer, roofer or waterproofer, stone mason, surveyor, teamster, terrazzo worker or finisher, and tile layer, setter, or finisher, the graduation requirement is capped at 30% (never increasing to 60% as for the other trades). The bill is scheduled to be heard on July 5 in Assembly Labor.

The Committee passed AB 73 (Chiu D), Planning and Zoning: Housing Sustainability Districts. This bill allows a city or county to create a housing sustainability district to complete upfront zoning and environmental review to receive incentive payments for development projects that are consistent with the district’s ordinance. It includes a PW mandate (even with no public dollars), a bar to Labor Commissioner enforcement if a PLA is in place and a waiver of new penalties for failure to use a skilled and trained workforce if a PLA is in place.

Senate Labor passed AB 581 (McCarty D) that would debar apprenticeship programs for even inadvertent accounting errors on state grants. Even the Committee Chair opined that the penalty seemed draconian before joining his colleagues in voting for the bill.

The Senate Judiciary Committee passed (on a party-line vote) AB 618 (Low D) which permits community college districts to use job order contracting if the district adopts a 5-year PLA on all construction work.

Senate Business, Professions, and Economic Development Committee passed AB 1162 (Bocanegra D) that will require a C-10 electrical contractor to include an additional statement on the application for a local permit indicating that they are in compliance with the State’s electrician certification law. According to the author’s -prepared statement: “This bill strengthens existing law by creating an additional incentive for contractors to employ certified electricians and to comply with the state’s certification law.”

Senate Education passed AB 1424 (Levine D) that makes permanent the University of California’s Best Value Construction Contracting Program. The price for the extension? A mandate to use Skilled and Trained Workforce unless there is a PLA. The Committee Chair, Ben Allen, asked Levine and the UC if there shouldn’t be consistency on workforce requirements for public works construction.

Senate Labor passed AB 1701 (Thurmond D) the bill makes every GC jointly and severely liable for any failure of his/her sub to pay wages, fringes, and tax payments on private work.

AB 1250 Counties: contracts for personal services – Passed Assembly
Existing law authorizes the board of supervisors of a county to contract for special services on behalf of various public entities with persons who are specially trained, experienced, expert, and competent to perform the special services, as prescribed. These services include financial, economic, accounting, engineering, legal, and other specified services. This bill would establish specific standards for the use of personal services contracts by counties. Beginning January 1, 2018, the bill would allow a county or county agency to contract for personal services currently or customarily performed by employees, as applicable, when specified conditions are met. Among other things, the bill would require the county to clearly demonstrate that the proposed contract will result in actual overall costs savings to the county and also to show that the contract does not cause the displacement of county workers. The bill would require a contract entered into under these provisions to specify that it may be terminated upon material breach if notice is provided, as specified. Additionally, the bill would require the county to conduct an audit of contracts for personal services in excess of $100,000 annually to determine whether cost savings have been realized and would require the contractor to reimburse the county for the cost of the audit. The bill also would impose additional disclosure requirements for contracts exceeding $100,000 annually. The bill would exempt certain types of contracts from its provisions and would exempt a city and county from its provisions. By placing new duties on local government agencies, the bill would impose a state-mandated local program.

Employment Law

Senate Releases Draft Health Care Proposal; House Moves Forward with Phase Three of ACA Repeal and Replace Efforts
On June 26, the Senate released a draft health care bill, the Better Care Reconciliation Act (BCRA). The Senate bill is a substitute amendment to the House-passed H.R. 1628, the American Health Care Act, which was drafted under the budget reconciliation process and, therefore, amends mainly the tax provisions of the Affordable Care Act (ACA). The bill includes several provisions of interest to the HR profession and the workplace, including a reduction to the ACA’s employer mandate penalty and a delay of the 40 percent “Cadillac tax” on high-value employer-sponsored health benefits, among other provisions. This draft bill is expected to change further as negotiations continue to find a compromise that could garner at least 50 votes in the Senate when it takes up the measure after the July 4th recess.

While lawmakers left Washington, D.C., yesterday for the weeklong July 4th recess, Senate Majority Leader Mitch McConnell (R-KY) hopes to strike a new deal on the text by COB today. With this new timeline, when lawmakers return to Washington in mid-July, the Senate will have about two weeks to consider and ultimately vote on a health care bill before the August recess.

Meanwhile, other targeted health care reforms are underway in the U.S. House of Representatives. At the beginning of the year, House Speaker Paul Ryan outlined three steps Congress and the Trump administration will take to replace the ACA. One of the three steps included the consideration of stand-alone legislative proposals to address areas of the health care system that need reform.

On Wednesday, June 28, the House of Representatives passed by a vote of 218 to 210 H.R. 1215, the Protecting Access to Care Act, a medical liability bill. The proposal limits noneconomic damages to $250,000, and it will be applicable to malpractice suits in which the plaintiff received health care provided under Medicare, Medicaid or private plans subsidized by the ACA. The bill also would govern litigation involving services paid for by employer-sponsored health plans, because of the preferential tax treatment of such health plans.

The bill is designed to strike a balance between protecting patients harmed by medical malpractice and preventing unnecessary and costly litigation that contributes to rising health care costs.

Federal Court: Current Drug Use Not Protected Under Disabilities Act
A recent federal court decision is a good reminder that applicants or employees who currently use illegal drugs or marijuana or abuse alcohol are not protected under the Americans with Disabilities Act (ADA) or the Fair Employment and Housing Act (FEHA).

Conduct is key: The disease of addiction may be protected but misconduct is not (Scott v. Harrah’s LLC. (D. Nev. 2017)).
The case involved an employee of Harrah’s Hotel and Casino who had worked there about nine years. The employee informed management that he suffered from drug addiction and voluntarily sought treatment and rehab. Harrah’s accommodated his treatment program by adjusting his schedule.

Harrah’s suspected that the employee was under the influence of drugs on several occasions after going through rehab. In November 2015, the employee went back to rehab. The next month, Harrah’s drug tested him, and the results came back positive. The employee admitted that he used marijuana a couple of weeks before the test. Harrah’s allegedly informed the employee that he was not taking rehab seriously and fired him. The employee sued for disability discrimination.

The court dismissed the employee’s lawsuit on the ground that current users are not protected under the ADA. The employee claimed his disability was that he is a drug addict. However, the ADA protects only individuals with a record or history of drug addiction who are not currently using drugs and have been successfully rehabilitated. Employers can prohibit illegal drug and alcohol use in the workplace.
“Current use” is broader than just using drugs on the day of a drug test. Courts have held that using drugs in the weeks and months prior to discharge qualifies as current use.

The same rule applies under California state law: A disability under the FEHA does not include “psychoactive substance use disorders resulting from the current unlawful use of controlled substances or other drugs” (Government Code sec. 12926(j)).

Furthermore, employers may continue to prohibit marijuana use in the workplace, even though it is now legal for recreational and medicinal purposes since it is still illegal under federal law.