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AB-396 Public contracts: bid preferences: employee health care expenditures.(2007-2008)

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AB396:v93#DOCUMENT

Amended  IN  Senate  August 04, 2008
Amended  IN  Senate  June 19, 2008
Amended  IN  Senate  April 16, 2008
Amended  IN  Senate  March 27, 2008
Amended  IN  Assembly  June 01, 2007
Amended  IN  Assembly  April 10, 2007

CALIFORNIA LEGISLATURE— 2007–2008 REGULAR SESSION

Assembly Bill
No. 396


Introduced  by  Assembly Member Hernandez

February 15, 2007


An act to add Chapter 2.3 (commencing with Section 2030) to Part 1 of Division 2 of the Public Contract Code, relating to public contracts.


LEGISLATIVE COUNSEL'S DIGEST


AB 396, as amended, Hernandez. Public contracts: bid preferences: employee health care expenditures.
Existing law imposes various requirements with respect to contracting by public entities.
This bill would require a public entity awarding a public works contract to provide a 2.5% bid preference to a bidder whose employee health care expenditures, and those of its subcontractors, are at least 6.5% of the aggregate Social Security wages paid to its employees in California. This bill would require a bidder and its subcontractors to submit statements certifying that they qualify for the bid preference, and impose a civil penalty in connection thereto, as provided. This bill would become operative on January 1, 2010.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Chapter 2.3 (commencing with Section 2030) is added to Part 1 of Division 2 of the Public Contract Code, to read:
CHAPTER  2.3. Employee Health Care Expenditure Bid Preference

2030.
 The California Legislature finds and declares that the state and the state’s political subdivisions incur substantial direct and indirect expenses when employers do not pay for employee health care expenses. Accordingly, it makes economic sense for the public entities to offer a bid preference to contractors that pay for employee health care expenses for employees in California.

2031.
 Whenever a statute requires a public entity to award a public works contract to the lowest bidder or lowest responsible bidder, the public entity shall provide a 2.5-percent bid preference to a bidder that qualifies for the employee health care expenditure bid preference. This preference shall be calculated by reducing the bid by 2.5 percent of the amount of the bid for purposes of comparing the bid with competing bids.

2032.
 A bidder shall be entitled to claim the employee health care expenditure bid preference only if the bidder and all of the bidder’s listed subcontractors each qualify for the bid preference.

2033.
 A bidder, or a subcontractor, qualifies for the employee health care expenditure bid preference if, during the 12-month period immediately preceding submission of the bid, the bidder’s or subcontractor’s aggregate California employee health care expenditures were at least equal to 6.5 percent of the bidder’s or subcontractor’s aggregate California Social Security wages. A bidder, or a subcontractor, that employed employees in California for more than three months but fewer than 12 months immediately preceding submission of the bid, qualifies for the employee health care expenditure bid preference if, during that period of time, the bidder’s or subcontractor’s aggregate California employee health care expenditures were at least equal to 6.5 percent of the bidder’s or subcontractor’s aggregate California Social Security wages.

2034.
 A bidder may claim an employee health care expenditure bid preference by submitting separate statements from the bidder and all the bidder’s listed subcontractors, each certifying that it qualifies for the bid preference. Public entities shall supply bidders with forms to be used for this purpose, and a bidder and all the bidder’s listed subcontractors shall use the form supplied by the public entity. A person or entity that knowingly provides false information in the certification required by this section shall be subject to a civil penalty for each violation in the minimum amount of two thousand five hundred dollars ($2,500) and the maximum amount of twenty-five thousand dollars ($25,000). An action for a civil penalty under this section may be brought by any public prosecutor in the name of the people of the State of California.

2035.
 If the winning bidder has claimed an employee health care expenditure bid preference, at the request of the public entity, the bidder and the bidder’s listed subcontractors shall supply to the public entity records sufficient to show that the bidder is entitled to the preference. The failure to supply the records within a reasonable time shall result in denial of the bid preference.

2036.
 For purposes of this chapter:
(a) “Aggregate California employee health care expenditures” means all amounts paid by the bidder, or a subcontractor, to the bidder’s or subcontractor’s employees in California or to a third party on behalf of the bidder’s or subcontractor’s employees in California, for the purpose of providing health care services to the employees or reimbursing the cost of those services for the employees, including, but not limited to, all of the following:
(1) Contributions on behalf of employees to a health savings account as defined under Section 223 of the Internal Revenue Code or to any other account having substantially the same purpose or effect without regard to whether the contributions qualify for a tax deduction or are excludable from employee income.
(2) Reimbursement to employees for expenses incurred in the purchase of health care services.
(3) Payments to a third party for the purpose of providing health care services for employees.
(4) Payments pursuant to a collective bargaining agreement for the purpose of providing health care services for employees.
(5) Costs incurred in the direct delivery of health care services to employees.
(b) “Aggregate California Social Security wages” means the aggregate amount of wages paid to all of the bidder’s or subcontractor’s employees in California not including any wages that are above the federal Social Security contribution and benefit base, sometimes referred to as the Social Security wage base, for the year in which they are paid.
(c) “Health care services” means medical care, services, or goods that may qualify as tax deductible medical care expenses under Section 213 of the Internal Revenue Code, or medical care, services, or goods having substantially the same purpose or effect as those deductible expenses.

2037.
 This chapter shall become operative on January 1, 2010.