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Senate Bill 27 – New Requirements For University Of California Vendors
Existing provisions of the California Constitution provide that the University of California constitutes a public trust and require the University of California to be administered by the Regents of the University of California (Regents), a corporation in the form of a board, with full powers of organization and government, subject to legislative control only for specified purposes, including any competitive bidding procedures as may be applicable to the University of California by statute for specified purposes, including the purchasing of materials, goods, and services. Existing law requires the Regents, except as provided, to let all contracts involving an expenditure of $100,000 or more annually for goods and materials or services, excepting personal or professional services, to the lowest responsible bidder meeting certain specifications, or to reject all bids. Existing policy of the Regents establishes a general prohibition on contracting out for services and functions that can be performed by University of California staff, with certain exceptions, establishes employment standards for contract employees, and provides for the conversion of contract employees to University of California employment under prescribed circumstances.
SB 27 provides new requirements for any contractor, person, employer, supplier of labor, staffing agency, temporary services employer, labor broker, management services provider, or other entity that contracts with the University of California to provide services or to supply the University of California with its own employees or those of a subcontractor to perform services (Vendor). SB 27 also provides the Vendor’s employees with remedies in the event the Vendor fails to meet these requirements.
SB 27 makes it unlawful for a Vendor to accept payment from the University of California for a contract if the Vendor’s employees are paid less than the higher of the total compensation rate specified in the Vendor’s contract with the University of California or as required by the University of California policy. SB 27 broadly defines employee to include any contract worker, or individual employed by the Vendor, or otherwise supplied to the University of California by the Vendor, to perform services for the University of California and any individual treated by either the Vendor, a subcontractor, or the University of California as an independent contractor (Vendor Employees). SB 27 does exclude specified individuals who are related to the Vendor and any individual with an ownership interest of 5 percent or more in the Vendor.
SB 27 requires Vendors to provide Vendor Employees with written notice relating to compensation. The compensation notice must include: (1) the total compensation rate specified in the Vendor’s contract with the University of California or required by University of California policy, whichever is higher; and (2) the employee’s hourly rate of pay and hourly value of employer-provided benefits. The compensation notices must be provided at three specified times: (1) the time each employee is assigned to perform services for the University of California; (2) each January; and (3) within seven days of a change to the employee’s hourly rate.
In January and July of each year, Vendors must provide basic payroll information to the University of California and members of any joint labor-management committee or similar meeting body or committee established jointly by the University of California and the exclusive representative of University of California employees who perform the same or similar services as the employees performing services for the University of California. The Vendor must also provide Vendor Employees with a written notices regarding the release of the basic payroll information to the University of California. The exact language required for the notice is outlined code.
SB 27 also requires Vendors to furnish the basic payroll information or make it available for inspection by the Vendor Employees or an authorized representative, upon request.
Any audit analyzing whether a Vendor has compensated employees at the appropriate rate pursuant to the Vendor’s contract or University of California policy must be provided to the University of California and members of any joint labor-management committee.
SB 27 authorizes an aggrieved employee to bring a civil action against a Vendor. An aggrieved employee includes a Vendor Employee against whom one or more alleged violations was committed or a University of California employee coworker of a Vendor Employee against whom one or more alleged violations was committed who performs services for the University of California at or for the same University of California location or department as the Vendor Employee.
Prior to filing the civil action, the aggrieved employee must provide the Vendor with written notice of an alleged violation and provide the Vendor the opportunity to correct and cure the violation. Upon receipt of the notice, the Vendor has 60 days to provide documentation that each employee identified in the notice has been made whole, has been provided with the required notices, and is receiving the appropriate compensation rate. If the Vendor does not provide the requisite documentation, the aggrieved employee may file civil action.
SB 27 requires a Vendor who receives written notice of alleged violations to provide a copy of that notice to the president of the University of California within five business days.
SB 27 establishes mandatory remedies for prevailing claimants, including penalties for initial and secondary violations for each employee per pay period and attorney fees. The remedies are in addition to any other remedies provided by law, except that an employee shall not also receive penalties provided for failure of an employer to permit an employee to inspect records (Labor Code Section 226(f)) or failure to pay minimum wage (Labor Code Section 1197.1).
The Vendor will also be required to return to the University of California the difference between the amount paid by the University of California for the Vendor’s services and the amount the Vendor actually paid the aggrieved employee for any payroll periods after January 1, 2024.
SB 27 requires the Vendor to notify the president of the University of California if it is defeated in court.
If any provision of SB 27 or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
(SB 27 adds Section 10527 to, and to add Article 2.7 (commencing with Section 10510.50) to Chapter 2.1 of Part 2 of Division 2 of, the Public Contract Code.)