California Code of Regulations
Title 2 - Administration
Division 1 - Administrative Personnel
Chapter 1 - State Personnel Board
Subchapter 1.5 - Personal Services Contracts
Article 6 - Procedures that Apply to Contracts Under Government Code Section 19130(a)
Section 547.72 - Undercut of State's Wage in Cost-Savings Based Contracts

Universal Citation: 2 CA Code of Regs 547.72

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

When a Personal Services Contract is based on cost savings, a contractor's wages shall be at or above the industry's level and shall not undercut the State's pay rate for comparable work by more than 15%, except that if in a nonmetropolitan area of the State the contractor's rate of pay is more than 15% below the state rate, the contract may be approved if the contractors rate of pay is closer to the State rate than it is to the comparable industry rate in the local area. In no case shall a contractor's wages be more than 25% below the State's pay rate. Comparison of wages for this purpose shall not include the cost of benefits.

(a) Comparison of the contractor's and State's hourly rates will be made as follows:

(1) For contracts of one year or less duration, comparison shall be to the first step of the salary range of the class designated as the type of work performed by the Personal Services Contract except for classes with a special in-grade salary adjustment (SISA). In this case, comparison shall be made to the midpoint between the first and second steps.

(2) For contracts with durations of over one year up to two years, comparison shall be to the midpoint between the first and second steps of the salary range of the class designated as the type of work performed by Personal Services Contract except for classes with a SISA. Comparison in this case shall be made to the second step.

(3) For contracts with durations of over two years, comparison shall be to the second step of the salary range of the class designated as the type of work performed by Personal Services Contract.

(b) Cost-savings based Personal Services Contracts with duration of more than one year shall contain a clause indicating that in the event of an increase in the State's pay rates, the contractor's wage rate will be reviewed and adjusted in subsequent years of the contract so as not to exceed the relationship with State and industry rates identified in the first paragraph of this section.

(c) The term "industry rate" as used in this section means the prevailing hourly rate of pay for the type of work in question in the local area where the contract would be let, as measured by reliable and statistically representative wage surveys such as those conducted by the Bureau of Labor Statistics or the Department of Industrial Relations. In the event that the most recent relevant wage survey data published by the Department of Industrial Relations differs from the wage survey data published by the Bureau of Labor Statistics, the board shall rely upon the wage survey data published by the Department of Industrial Relations, unless the wage survey data published by the Bureau of Labor Statistics is based on more recent information.

1. Renumbering of former section 547.69 to section 547.72, including amendment of subsection (c) and NOTE, filed 1-3-2008; operative 2-2-2008 (Register 2008, No. 1).

Note: Authority cited: Sections 18211, 18216 and 18701, Government Code. Reference: Section 19130(a)(2), Government Code.

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