In 2013, the California Legislature enacted, and the governor signed, Senate Bill 54. SB 54 is widely viewed as part of a dispute between construction building trades unions and the industrial steel worker/petroleum industry unions that currently do much of the work in California refineries. Many of those refineries date from a time when their primary refining work was heavy crude. However, with the substantial expansion of light shale and fracked oil, those refineries will need to be rebuilt.
SB 54 is of national significance because it is not a traditional minimum wage or prevailing wage statute. In fact, the legislation expressly states the covered refinery work is not a public work under California law. Instead, SB 54 relies on federal and state environmental laws as a basis for setting wages in the private sector. At press time, it requires refineries who must file risk management plans (RMPs) under the federal and state environmental protection and air quality acts to comply with modified prevailing wage, apprenticeship and journeyperson qualifications and training requirements on private refinery construction.
According to Robert Fried, a partner with Atkinson, Andelson, Loya, Ruud & Romo (AALRR), a law firm representing both private and public sector clients in California, SB 54 is one of the many ways in which legislation has become part of the labor toolkit to recapture lost market share.
As of Jan. 1, SB 54 applies to workers engaged in construction, demolition and maintenance work performed at “chemical manufacturing and processing facilities that generate, store, treat, handle, refine, process and transport hazardous materials.” This means refinery locations that are required to file RMPs with state and federal governments.
“SB 54 requires payment of prevailing wages for private work,” Fried said. “It discriminates against out-of-state workers who do not have access to the California apprenticeship programs. Its enforcement mechanism is unprecedented. For the first time, environmental law is being used to regulate private industry by requiring certain wages be paid to its workers.”
According to Fried, there are a few limited exemptions to SB 54. This includes oil and gas extraction operations and certain “on-site work” such as catalyst handling and loading, chemical cleaning, or inspection and testing that was not within the scope of prevailing wage determination issued by the Department of Industrial Relations as of Jan. 1, 2013.
Fried said the apprentice requirements also vary from what public works contractors are familiar with. The law requires the use of apprentices and that journeymen be graduates of state-approved apprentice programs on a phased-in basis over several years. There is a limited exception in shutdown or emergency situations where sufficient qualified workers are not available.
The ABC Northern California Chapter (ABC NorCal) has been busy helping affected contractors and providing information concerning the new law. Although Anne Quick, vice president of education and outreach of ABC NorCal, said figuring out how to comply with SB 54 can be very confusing and the state isn’t helping to clarify. “Contractors and companies from in-state and other chapters of ABC are calling us asking for clarification and expressing their concerns about this law,” Quick said. “Many are asking questions such as ‘If we want to bid on a California project can our workers work on it?’ ‘What are the rules we need to follow on training now?’ There is a lot of confusion and nervousness and the companies that want to comply are not sure how to and they are not getting answers. With the apprenticeship programs, we don’t want to see people have to jump through hoops and test through an apprenticeship program just to comply with this law.”
At press time, Illinois’ SB 2918, similar to California’s SB 54, is making its way through the Illinois General Assembly. Although SB 2918 focuses on approved safety training for workers at high-hazard facilities, it does not require prevailing hourly wages.
To contact ABC NorCal, visit www.abcnorcal.org or call (800) 748-6742.
To read more about new laws affecting the industry and today’s work force, visit BICMagazine.com.
