UPDATE: Since this was originally posted, AB 219 (the legislation identified in this post) has been blocked by one court, then another court came in to overturn that court. The current state of AB 219 is that it is in effect for the time being, but that may not be for much longer – we’ll keep you posted.
In California, the benefits of a public contract became more plentiful this summer for those laborers supplying ready-mixed concrete to public projects. Following the institution of California Labor Code Section 1720.9, those supplying ready-mixed concrete are entitled to the local prevailing wage. For purposes of prevailing wage law, California concrete suppliers on public projects will be considered subcontractors. For all other purposes, ready-mixed concrete suppliers are NOT considered subcontractors.
Which California concrete suppliers qualify?
Those supplying ready-mixed concrete to public projects. The statute defines ready-mixed concrete as “concrete that is manufactured in a factory or batching plant, according to a set recipe, and then delivered in a liquefied state by mixer truck for immediate incorporation into a project.” Essentially, this will only effect the drivers. Those drivers involved in the hauling and delivery of ready-mixed concrete from a commercial plant to the project site, as well as return trips to the plant, must be paid prevailing wages.
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Prevailing wage rates will be determined by the geographic area where the concrete factory or batching plant is located. Before providing concrete to a public works project, California concrete suppliers will have to enter into written agreements with contractors. The written agreement must comply with the new prevailing wage requirements. For the sole purpose of the new prevailing wage requirement, ready-mix concrete suppliers will be considered subcontractors. For lien and bond laws, prompt payment laws, or any other reasons, California concrete suppliers will not be affected. The entity that was contracted to supply the concrete must provide payroll records in compliance with the new regulations to the general contractor as well as the party contracting the supplier (if that is a different entity) within three working days after the employee delivering the concrete has been paid. This must be accompanied by a time record that has been certified by the employee.
For a breakdown of AB 219, the California Construction and Industrial Materials Association (CalCIMA) has provided a helpful fact sheet. If you have questions about California prevailing wage, here is the state’s Prevailing Wage FAQ.
Effect and Takeaway
While this is great news for those California concrete suppliers that are hauling and delivering to public projects, there will be negative side effects. Most obviously, this will seriously impact the price of public projects. According to the Associated General Contractors of California, the cost of concrete for public projects could increase 30-40%. Such a large increase will certainly be felt by taxpayers through increased project price. General contractors will also be affected, as rising contract prices ultimately result in larger surety bonds. Lastly, how long will it be until other material suppliers fight to be covered under prevailing wage laws? Should all material suppliers be entitled to the prevailing wage in their area, prices for public projects could skyrocket. While a big win for California concrete suppliers, the cost may outweigh the rewards.