Prevailing wage: per diem wages.

Led by Assembly Members Hadwick, Chen, and Flora with coauthors Gallagher and Rubio, the measure overhauls California’s prevailing-wage framework by tightening how fringe-benefit credits are annualized and by extending a targeted credit for certain pension contributions on public works. The central objective is to standardize the treatment of employer fringe benefits across public and private projects while recognizing modern pension structures through a new, rapid-vesting credit.

The bill revises what counts as per diem wages and which employer payments qualify for credit. It enumerates specific categories—health and welfare, pension, vacation, travel, subsistence, apprenticeship or training programs linked to state law, worker-protection and monitoring activities under federal law, industry advancement and certain administrative fees under a collective bargaining agreement (CBA), and other similar payments if tied to a CBA. Employer payments include irrevocable contributions to plans, reasonably anticipated costs to provide benefits under a written commitment, and payments to the California Apprenticeship Council. Credits remain subject to exclusions (e.g., benefits required by other law or payments not made under a qualifying program) and may not reduce the base hourly wage below the prevailing rate, unless conditions for enhanced contributions are met. An important enhancement allows full credit for hourly amounts contributed to defined-contribution pension plans that provide immediate participation and essentially immediate vesting, defined as vesting within 500 hours, even if such contributions are lower for private construction.

The framework shifts risk and accountability to employers, requiring them to prove that credits were calculated properly and to produce records of hours and employer payments on private projects when requested by the Labor Commissioner, who may deny credits for nonproduction of records. A new, more formalized process requires fully executed collective bargaining agreements (or the final draft with a sworn-effective-date statement) to be filed with the Department of Industrial Relations at least 30 days before bid calls, with modifications affecting per diem wages or holidays also to be filed as they occur; failure to file does not automatically invalidate determinations if the underlying information is correct. The bill revokes director-issued exemptions to annualization issued before January 1, 2026, signaling a shift toward uniform application of annualization rules, while findings emphasize alignment with federal annualization principles under the Davis-Bacon Act and a goal to update California practice accordingly. The measure imposes new administrative requirements and carries no direct appropriation, with fiscal considerations referring to potential increases in regulatory oversight and related costs for both the state and industry participants.