State Legislation: SB 418 (Hernandez) Public works: public subsidies

Updated July 27, 2017

This bill seeks to codify a definition of the term 'de minimis' to determine what level of public subsidy triggers prevailing wage requirements on an otherwise private project.

Existing law requires that, except as specified, not less than the general prevailing rate of per diem wages, determined by the Director of Industrial Relations, be paid to workers employed on public works projects. Existing law defines “public works” to include, among other things, construction, alteration, demolition, installation, or repair work done under contract and paid for, in whole or in part, out of public funds, but exempts from that definition, among other projects, an otherwise private development project if the state or political subdivision provides, directly or indirectly, a public subsidy to the private development project that is de minimis in the context of the project.  

This bill would provide that a public subsidy is de minimis if it is both less than $275,000, and less than 2% of the total project cost.

Longstanding practice has been to view the subsidy in context of the project and use 2% as a general threshold for determinations. There has been no showing that the current practice is unreasonable.

Codifying de minimis would be too restrictive and may have unintended consequences as expressed by Governor Brown in his AB 251 (Levine) 2015 veto message.

POSITION: OPPOSED

STATUS: Passed Assembly. In Senate Appropriations.

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Questions? Please contact Victor Cuauhtémoc Gomez, Sr. Director of Public Policy at victorg@thesvo.com

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