'96-97 Budget Contains Changes for DIR

In particular, $94 million would go to administration of the workers' compensation program, $60 million to the occupational safety and health program, $27 million to the labor standards enforcement program, and $12 million to other programs, boards and commissions in DIR. The budget also provides $23.6 million for Uninsured Employers Fund claims.

The Governor's proposed budget contains changes in DIR programs that reflect the administration's policy objectives of prevailing wage reform, daily overtime reform, and increased labor law enforcement in the garment manufacturing and agriculture industries. Main changes encompass:

• Division of Labor Statistics and Research. The Governor's budget proposes an additional $1.266 million and 20 positions in DLSR to implement prevailing wage reforms. DIR is in the process of rule making on new regulations to change the methodology used to determine prevailing wage rates in California. Public hearings are completed and the public comment period closed.

  At the direction of Governor Wilson, DIR proposed dropping the modal method and shifting to the 50 percent or weighted average method used nationally under the federal Davis-Bacon Act.

  Used only by Minnesota, Wisconsin and California, the modal method requires that the most frequently occurring wage rate in a county for a job classification be considered the prevailing wage. This method skews prevailing wage rates to the collective bargaining scale, which often does not reflect wages paid in the marketplace. While the modal method results in union-scale wages in 92 percent of the determinations, only approximately 25 percent of California's construction workers are union and actually earning wages at such rates.

  DIR estimates that the change in methodology could save state and local taxpayers $160-$200 million annually.

  The additional resources in DLSR will be used to survey the wage rates paid by 80,000 employers in 4,000 job classifications in all 58 counties.

• Industrial Welfare Commission. The budget proposes an additional $274,000 and 3.5 positions for the IWC. The commission is considering whether to convene formal wage boards to review daily overtime requirements in 14 of its 15 wage orders. The review would require 14 separate wage boards to examine the issue in individual industries/occupational groups.

  At the same time, the Assembly has approved AB 398 (Aguiar) to repeal all daily overtime requirements in IWC orders. DIR sponsored this legislation.

• Targeted Industries Partnership Program. Governor Wilson proposed an additional $671,000 in the current fiscal year and $1.737 million in 1996-97 to expand TIPP's enforcement and education activities. This funding would add 24 positions to the program. The Joint Legislative Budget Committee denied the Governor's proposed increase for the current fiscal year; however, at a recent Senate budget hearing the committee agreed unanimously to increase the Governor's proposal for next year by an additional $500,000 and six positions.

  TIPP is a multi-agency education and enforcement program created by Governor Wilson in 1992 to target labor law abuses in the garment manufacturing and agriculture industries. Last year the Labor Commissioner closed the notorious garment manufacturing slavery ring in El Monte and freed several dozen captive workers. With the additional funding, TIPP anticipates conducting 1,000 inspections of garment manufacturing facilities in the coming year.

• Division of Workers' Compensation. The budget includes $5.050 million for DWC to restore $4.050 million of the $4.5 million in baseline funding cut last year by the Legislature. It also proposes $1 million for unfunded increases in operating expenses and equipment in DWC.