Prevailing wage: per diem wages.

Plain English Breakdown

The official source material does not specify an exact effective date for the changes made by AB-889.

Prevailing Wage: Per Diem Wages

This law changes how employers can get credit for payments made to workers on public projects, removing exceptions that allow annualized calculations and allowing full credit for certain pension plan contributions.

What This Bill Does

• Removes the exception that allows employers to avoid calculating credits based on an annual basis when their payments are higher for public works than private construction.
• Revokes any exemptions from this rule given by the director before January 1, 2026.
• Allows employers to get full credit for contributions made to pension plans where workers can join and earn benefits right away, even if these contributions are lower or not made at all in private projects.
• Requires employers to show that their calculations for getting credit from payments are correct.
• Gives the Labor Commissioner the power to deny credit if an employer cannot provide proof of payment records.

Who It Names or Affects

• Employers who work on public construction projects
• Workers employed on public works

Terms To Know

Prevailing wage

The standard rate of pay for workers in a specific job and area.

Per diem wages

Daily rates paid to workers, including benefits like pension contributions.

Limits and Unknowns

• Does not specify the exact date when changes will take effect.
• The impact on specific employers and projects is unclear until more details are provided by the Labor Commissioner.

Official Summary Text

AB 889, Hadwick.
Prevailing wage: per diem wages.
Existing law requires workers employed on public works to be paid not less than the general prevailing rate of per diem wages for work of a similar character in the locality that the public work is performed, as prescribed, unless an exception applies. Existing law requires the Director of the Department of Industrial Relations to determine the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is to be performed.
Under existing law, per diem wages include certain employer payments made pursuant to a collective bargaining agreement or for a program or committee established under the federal Labor Management Cooperation Act of 1978, as specified. Existing law provides that these payments are a credit against the obligation to pay the general prevailing rate of per diem wages.
Existing law requires the credit for employer payments to be computed on an annualized basis where the employer seeks credit for employer payments that are higher for public works projects than for private construction performed by the same employer, except under certain circumstances, including a determination by the director that annualization would not serve the purposes of the provisions relating to public works projects.
This bill would remove that exception and revoke annualization exemptions authorized by the director prior to January 1, 2026. The bill would authorize an employer to take full credit for the hourly amounts contributed to defined contribution pension plans that provide for both immediate participation and essentially immediate vesting even if the employer contributes at a lower rate or does not make
contributions to private construction. The bill would require the employer to prove that the credit for employer payments was calculated properly. The bill would authorize the Labor Commissioner to deny the employer credit for employment payments if the employer does not produce payment records.
The bill would make related findings and declarations.

Current Bill Text

Download Bill PDF