14837.
As used in this chapter:(a) “Department” means the Department of General Services.
(b) “Director” means the Director of General Services.
(c) “Manufacturer” means a business that meets both of the following requirements:
(1) It is primarily engaged in the chemical or mechanical transformation of raw materials or processed substances into new products.
(2) It is classified between Codes 31 to 33, inclusive, of the North American Industry Classification System.
(d) (1) (A) “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 100 or fewer employees, and average annual gross receipts of fifteen million dollars
($15,000,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 100 or fewer employees.
(B) For the purposes of public works contracts, contracts awarded through competitive bids or otherwise for the erection, construction, alteration, repair, or improvement of any kind upon real property, “small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and which, together with affiliates, has 200 or fewer employees, and average annual gross receipts of twenty-five million dollars ($25,000,000) or less over the previous three years.
(2) “Microbusiness” is a small business which, together with affiliates, has average annual gross receipts of five million dollars ($5,000,000) or less over the previous three years, or is a manufacturer, as defined in subdivision (c), with 25 or fewer employees.
(3) “Employment social enterprise” means an entity that meets all of the following:
(A) Is organized as a social purpose corporation, a benefit corporation, or a nonprofit corporation.
(B) Is a California-based entity that meets one or more of the following:
(i) The entity has a principal office in California, and the officers are domiciled in California.
(ii) The entity has a major office or manufacturing facility located in California that has been licensed by the state on a continuous basis to conduct business within the state and has continuously employed California residents for work within the state during the prior three years.
(iii) The entity is a nonprofit organization incorporated in another state that has sponsored or co-sponsored substantive economic and workforce development activities within this state and has provided services to
individuals who face multiple barriers to employment in at least 20 of the prior 24 months.
(C) Earns 51 percent or more of its enterprise revenue from the production or assembly of goods or the provision of services, or a combination of both.
(D) Demonstrates evidence in its articles of incorporation, bylaws, or both, of the employment social enterprise’s mission to provide employment with on-the-job and life skills training to a direct labor force, not including supervisors and administration, that is comprised of at least 80 percent of enterprise participants who face multiple barriers to employment. To document on-the-job and life skills training, an employment social enterprise shall provide documentation, under penalty of perjury, that one or more of the following services is being offered to individuals who face
multiple barriers to employment:
(i) Basic skills and job readiness assessment.
(ii) Referral system to industry-recognized certificates and training.
(iii) Linkage to community colleges, adult schools, or other education institutions to gain an education diploma or certificate.
(iv) Partnership with local or regional workforce development boards.
(v) Job placement and retention services.
(E) (i) Has two or more enterprise
participants who face multiple barriers to employment.
(ii) “Enterprise participant who faces multiple barriers to employment” means an individual that meets two or more of the following:
(I) Is an individual with employment barriers, as defined in subdivision (j) of Section 14005 of the Unemployment Insurance Code.
(II) Is or has been homeless, as defined by the United States Department of Health and Human Services as of January 1, 2016.
(III) Is an out-of-school youth. “Out-of-school youth” means an individual who meets the definition in Section 3164(a)(1)(B) of Title 29 of the United States Code.
(4) The director shall conduct a biennial review of the average annual gross receipt levels specified in this subdivision for small business and microbusiness and shall adjust that level to reflect changes in the California Consumer Price Index for all items. To reflect unique variations or characteristics of different industries, the director may establish, to the extent necessary, either higher or lower qualifying standards than those specified in this subdivision, or alternative standards based on other applicable criteria.
(5) Standards applied under this subdivision shall be established by regulation, in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2, and shall preclude the qualification of a small business or microbusiness that is dominant in its industry. In addition, the standards shall provide that the certified small
business, microbusiness, or employment social enterprise shall provide goods or services that contribute to the fulfillment of the contract requirements by performing a commercially useful function, as defined below:
(A) A certified small business, microbusiness, or employment social enterprise is deemed to perform a commercially useful function if the business does all of the following:
(i) Is responsible for the execution of a distinct element of the work of the contract.
(ii) Carries out its obligation by actually performing, managing, or supervising the
work involved.
(iii) Performs work that is normal for its business services and functions.
(iv) Is responsible, with respect to products, inventories, materials, and supplies required for the contract, for negotiating price, determining quality and quantity, ordering, installing, if applicable, and making payment.
(v) Is not further subcontracting a portion of the work that is greater than that expected to be subcontracted by normal industry practices.
(B) A contractor, subcontractor, or supplier will not be considered to perform a commercially useful function if the contractor’s, subcontractor’s, or supplier’s role is limited to that of an extra participant in a transaction, contract, or project through which funds are passed in order to obtain the
appearance of small business, microbusiness, or employment social enterprise
participation.
(e) “Disabled veteran business enterprise” means an enterprise that has been certified as meeting the qualifications established by paragraph (7) of subdivision (b) of Section 999 of the Military and Veterans Code.
(f) The amendments made to this section by the act adding this subdivision shall become operative on October 1, 2018.