Henson v. C. Overaa & Company: Court Issues Decision Regarding Apprentices under Prevailing Wage Law

A quick one for the prevailing wage folks out there.

In Henson v. C. Overaa & Company (6/29/15) --- Cal.App.4th, the plaintiffs filed a class action, alleging that the defendant violated California's prevailing wage law by hiring construction craft laborer (laborer) apprentices instead of pipefitter apprentices to work on public works projects. The plaintiffs alleged that they lost wages and training as a result of this practice. The trial court granted summary judgment for the defendant, finding that the journeymen on the relevant projects were classified as laborers, and the law merely requires employers to hire apprentices who are in the same occupation as the journeymen on their projects. The plaintiffs asserted that the law requires contractors to select apprentices based not on their job title or union affiliation but the work processes on which they have been approved to train. The Court rejected this argument and affirmed the judgment for the employer.

The opinion is available here.

Sheet Metal Workers’ Int'l Assn., Local 104 v. Duncan: Offsite Material Fabricators Not Subject to Prevailing Wage Law

A very quick note on this case.

In Sheet Metal Workers’ International Association, Local 104 v. Duncan (Russ Will Mechanical, Inc.) (8/27/14) --- Cal.App.4th ---, the Court of Appeal held that the prevailing wage law does not apply to an employee of a subcontractor who conducts offsite material fabrication if the work "takes place at a permanent, offsite manufacturing facility and the location and existence of that facility is determined wholly without regard to the particular public works project." Slip op. at 24.

The opinion is available here. 

Ogundare v. DIR: Court Addresses Debarment of Contractor From Public Works Projects for Violation of Prevailing Wage Requirements

Ogundare v. Department of Industrial Relations, Division of Labor Standards Enforcement (2/27/13) --- Cal. App.4th --- deals with the DLSE and its enforcement of the state's prevailing wage requirements for public works projects. As stated in the opinion: 

Ayodeji A. Ogundare, individually and doing business as Pacific Engineering Company (together Pacific), filed a petition for writ of administrative mandate asking the trial court to set aside a “debarment” decision adopted by the State of California, Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) that would have precluded Pacific from bidding or working on public works construction projects for one year. The trial court reviewed the administrative record and concluded there was no credible evidence to support a finding that Pacific violated prevailing wage laws with intent to defraud, which finding was necessary in this case for debarment to be imposed under Labor Code section 1777.1.2 Accordingly, the trial court granted Pacific's petition. DLSE appeals, arguing that (i) the trial court failed to apply the correct standard of review (i.e., the substantial evidence test) and (ii) there was substantial evidence in the record to support the administrative finding of intent to defraud. We agree on both points and will reverse.  

Slip op. at 2. 

The case makes two important points:  

1. The decision to prohibit a contractor from working on public works projects does not affect a "a fundamental vested right" of the contractor, and the reviewing court does not "conduct an independent review of the entire record to determine whether the weight of the evidence supports the administrative findings."  Instead, its review is limited to "determining whether the administrative findings are supported by substantial evidence."  Slip op. at 6-9. 

2. Substantial evidence supported the DLSE's finding of the contractor's "intent to defraud" where an employee testified, and his paycheck showed, that he worked 61 hours at $15 per hour (less than the prevailing wage rate), while the contractor submitted certified payroll records to the DLSE showing that the employee worked only 25 hours at the correct prevailing wage rate of $36.10 per hour.  Slip op. at 9-12.  

The opinion is available here.

State Bldg. and Trades Council v. Vista: Supreme Court Holds that State's Prevailing Wage Law Does Not Apply to Charter Cities

The California Supreme Court today issued its decision in State Building and Construction Trades Council of California, AFL-CIO v. City of Vista (7/2/12) --- Cal.4th ---. The Court affirmed the lower court's holding that a charter city need not comply with the State's prevailing wage law. Here is the opinion's introductory section, which states the issue and the holding pretty clearly:

A charter city entered into certain contracts for the construction of public buildings. A federation of labor unions then petitioned the superior court for a peremptory writ of mandate, asserting that the city must comply with California's prevailing wage law notwithstanding local ordinances stating otherwise. The prevailing wage law requires that certain minimum wage levels be paid to contract workers constructing public works. 

Under the state Constitution, the ordinances of charter cities supersede state law with respect to “municipal affairs” (Cal. Const., art. XI, § 5), but state law is supreme with respect to matters of “statewide concern” (California Fed. Savings & Loan Assn. v. City of Los Angeles (1991) 54 Cal.3d 1, 17. Here, petitioner contends that the subject matter of the state's prevailing wage law is a “statewide concern” over which the state has primary legislative authority. (Ibid.) The city responds that the matter is a municipal affair and therefore governed by its local ordinances. We agree with the city. 

The opinion was written by Justice Kennard and joined by Chief Justice Cantil-Sakauye and Justices Baxter, Chin, and Corrigan. Justice Werdegar wrote a dissent in which Justice Lui joined, and Justice Lui wrote a dissent in which Justice Werdegar joined. The dissents are interesting.  Here is the introductory section from Justice Werdegar's:  

This case requires that we resolve a dispute between the Legislature and a charter city, two entities granted specific lawmaking authority by our state Constitution. On the one hand, “[t]he legislative power of this State is vested in the California Legislature which consists of the Senate and Assembly....” (Cal. Const., art. IV, § 1.) The state Legislature wields “the entire law-making authority of the state, except the people's right of initiative and referendum” and “may exercise any and all legislative powers which are not expressly or by necessary implication denied to it by the Constitution.” On the other hand, under what is alternately called the “municipal home rule” or “municipal affairs” doctrine, charter cities are empowered to “make and enforce all ordinances and regulations in respect to municipal affairs,” and such ordinances “shall supersede all laws inconsistent therewith.” (Cal. Const., art. XI, § 5, subd. (a).)  

In this case, the Legislature exercised its lawmaking powers to enact sections 1720 to 1861 of the Labor Code, commonly referred to as the prevailing wage law, which generally requires payment of the prevailing wage to workers on publicly funded construction projects. By contrast, defendant City of Vista (Vista), a charter city, exercised its lawmaking powers to enact an ordinance that (in most instances) prohibits city contracts from requiring the payment of the prevailing wage. In this area of overlapping lawmaking authority, a constitutional tension exists. 

This court is the final arbiter of the meaning of the California Constitution. Unlike when we interpret state statutory law or federal constitutional law, where our decisions can be overturned by, respectively, the Legislature or the United States Supreme Court, we are the last word on the meaning of the state Constitution. If we err, our decision can be corrected only by an amendment to that Constitution. Accordingly, when approaching a dispute between the Legislature and a charter city under the municipal affairs doctrine, we are charged with a solemn and delicate obligation to fairly balance conflicting interests and reasonably resolve the tension inherent in such disputes. 

The majority's approach to this case is neither fair nor reasonable. Instead, the majority goes astray by making a series of analytical missteps. First, in concluding Vista's ordinance comes within the protected zone of municipal affairs, the majority places unjustified weight on Vista's fiscal interest in saving money on the construction of public buildings, and relies on an outmoded Depression Era decision that interpreted a different law (maj. opn., ante, at pp. 11–12) long ago eclipsed by more modern economic ideas. 

Second, by failing to appreciate the full impact of the prevailing wage law, the majority significantly undervalues the statewide economic concerns the law addresses, and fails to accord appropriate weight to the Legislature's express findings and declarations that the prevailing wage law should apply to charter cities and that it addresses a matter of statewide concern. Finally, the majority fails to recognize the difference—critical in the context of municipal governance and independence—between state regulations affecting public employees and those affecting private employees who contract with the city.

The dissent brings to mind Justice Werdegar's concurring opinion in Brinker v. Superior Court, in which only Justice Liu joined.  It appears that we are starting to see coalition lines being drawn on this new Court.  It will be interesting to see how these lines develop in the coming years.  

The opinion is available here.  

Housing Partners v. Duncan: Court of Appeal Declines to Combine Statutory Exemptions to Prevailing Wage Requirement

A quick note on this case for those of you who deal with prevailing wage law. In Housing Partners I, Inc. v. Duncan (6/15/12), a developer appealed from a judgment denying its petition for writ of mandate against respondent John C. Duncan, the Director of Industrial Relations for the State of California (Director). The Director had determined that a low-income housing project developed by HPI was a “public work” within the meaning of Labor Code section 1720 and was not subject to a statutory exception to the requirement that it pay prevailing wages.

The developer had argued that the Director should combine two statutory exemptions to find the project was exempt from the prevailing wage requirement:

One exception, section 1720, subdivision (c)(4), applies to affordable housing projects that receive money from a redevelopment agency's low and moderate income housing fund. Another exemption, section 1720, subdivision (c)(6)(E), applies to residential projects that receive below-market interest rate loans if the project dedicates a percentage of its units to low income occupants. Because a combination of three kinds of funding sources was used for the subject project, the Director concluded that neither exemption under section 1720, subdivision (c)(4) or subdivision (c)(6)(E) could be satisfied.

Slip op. at 3.

The trial court (San Bernardino Superior, Judge W. Robert Fawke) denied the developer's petition, and the developer appealed. The Court of Appeal affirmed, holding that the project did not qualify for either of the claimed exemptions.  

Section 1720, subdivision (c)(4) applies to a project receiving money solely from a qualified housing fund or from a combination of housing funds and private funds.  In contrast, subdivision (c)(6)(E) applies to a project receiving below-market interest rate public funding.  The exceptions operate independently, neither expressly including nor excluding one another.  Had the Legislature intended for the two exceptions to operate together, it would have been simple to draft the statute that way.  As the statute currently exists, however, the two exceptions are distinct and operate separately. 

Slip op. at 11. 

The opinion is available here.

State Building & Construction Trades Council v. City of Vista: Supreme Court to Hear Prevailing Wage Case on April 4

On April 4, 2012, the California Supreme Court will hear oral argument in Los Angeles in State Building & Construction Trades Council v. City of Vista, in which the Court will decide whether California's prevailing wage law (Lab. Code 1720 et seq.) applies to a charter city when it contracts to construct public works projects with municipal funds. As discussed here, both the trial court and the Court of Appeal held that the city need not comply with the prevailing wage law.

The Court's docket is here.  

Hensel Phelps Construction Co: Project on Public Land Subsidized by Rent Credits is Subject to Prevailing Wage Law

Interesting prevailing wage case: Hensel Phelps Construction Company v. San Diego Unified Port District (7/26/11) 197 Cal.App.4th 1020.

The Department of Industrial Relations (DIR) determined that a hotel construction project on public land leased from a government entity was covered by the Prevailing Wage Law (PWL). The developer and general contractor petitioned for writ of mandate, and a trade union intervened. The trial court (San Diego Superior, Judge William R. Nevitt) granted the developer's petition, and the trade union appealed.

The Court of Appeal reversed, holding that the construction project qualified as a public work where the lease required the lessor to build a hotel on the property, according to the government entity's specifications, and provided a rent credit to subsidize the project. A public agency may pay for construction out of public funds either by reducing rent or by charging rent at less than fair market value, and the rent credit constituted a reduction and waiver of rent for purposes of Labor Code Sec. 1720(b)(4). Because the project was paid for out of public funds, the PWL applied.

The opinion is available here.

Monterey Building and Construction Trades Council: Court of Appeal Issues Wide-Ranging Prevailing Wage Decision

This is an interesting case, as long as you find prevailing wage issues interesting: Monterey/Santa Cruz County Bldg. and Const. Trades Council v. Cypress Marina (1/10/11, pub. 1/24/11) --- Cal.App.4th ----, 2011 WL 63101.

Plaintiffs, who are labor organizations, an association of contractors, and two City of Marina taxpayers, prevailed in their action for declaratory and injunctive relief against Cypress Marina Heights LP (CMH). CMH had acquired Fort Ord land from the City of Marina's Redevelopment Agency (MRDA) for the development of CMH's Marina Heights project. MRDA had acquired that land from the Fort Ord Reuse Authority (FORA). Deed covenants in the FORA/MRDA deeds required payment of the prevailing wage to workers on all development of the land. CMH refused to commit to pay the prevailing wage to workers on the Marina Heights project. It claimed that its purchase agreement with MRDA did not require payment of the prevailing wage. The trial court granted plaintiffs' summary adjudication motion and found that it was undisputed that CMH was required to pay the prevailing wage on the Marina Heights project. The court thereafter entered judgment for plaintiffs and awarded plaintiffs their attorney's fees under Code of Civil Procedure section 1021.5.
CMH appeals. It claims that triable issues of fact precluded summary adjudication of the prevailing wage issue. CMH also contends that the trial court abused its discretion in awarding plaintiffs their attorney's fees and awarded plaintiffs an excessive amount of fees. We find no error or abuse of discretion in the trial court's rulings and affirm the judgment.

Slip op. at 1.

The Court held that the redevelopment agency's "Master Resolution," which required all developers of Fort Ord land to "pay or cause to be paid" prevailing wages "to all workers employed in connection with the development of such property," unambiguously established prevailing wage requirement as to all development of the property, not only as to public works contracts. Slip. op at 6-9.

The agreement to transfer the land from the redevelopment agency to the city required the city to “use or transfer” the land in compliance with the Master Resolution and specific deed restrictions, including a requirement that any development of the land be done in accordance with the Master Resolution. The Court held that these deed restrictions ran with the land and unambiguously obligated the developer to pay prevailing wages on all development projects. Slip op. at 9-12.

The Court next held that the plaintiffs had standing to assert the prevailing wage issues:

Here, the individual contractors represented by plaintiffs were “interested under a written instrument” in the enforcement of the prevailing wage covenant. There was an “actual controversy” about this issue because CMH insisted that the covenant did not apply to its Marina Heights project. A declaratory relief action was authorized even though CMH had yet to breach the covenant. The interests that plaintiffs sought to protect were germane to the purposes of their associations, and the participation of individuals members was not necessary. Consequently, the unions and associations had standing to litigate this action on their members' behalf.

Slip op. at 14.

Finally, the Court upheld the award of attorney fees to the prevailing plaintiffs under Code of Civil Procedure section 1021.5. Slip op. at 15.

The opinion is available here.

Azusa Land v. DIR: "Public Work" in Prevailing Wage Action Includes Public Infrastructure Constructed at Private Expense

In Azusa Land Partners v. Department of Industrial Relations (12/21/2010) 191 Cal.App.4th 1, the Court of Appeal held that where a developer contracts with a governmental entity to construct a master planned community, including public infrastructure and improvement work, and the public infrastructure and improvement work is to be funded at least in part with Mello-Roos tax bonds as a condition of regulatory approval for the project, then all construction of required public improvements is "public work" under Labor Code section 1720, and all such construction, including those portions of the public infrastructure constructed at private expense, is subject to prevailing wage requirements. The opinion is available here.

Supreme Court To Decide Whether Charter City Must Follow Prevailing Wage Law

The Supreme Court has granted review in State Bldg. and Const. Trades Council of California, AFL-CIO v. City of Vista (2009) 93 Cal.Rptr.3d 95. The case addresses an interesting issue: Whether a charter city must follow the prevailing wage law with respect to public works contracts that are financed solely from city revenues. The City of Vista decided not to follow the prevailing wage law in its construction contracts, and the AFL-CIO filed suit. Both the trial court and the Court of Appeal held that the city need not comply with the prevailing wage law. As stated by the Court of Appeal:

We conclude the PWL does not address matters of statewide concern and therefore Vista, as a charter city, is not required to comply with the PWL with respect to public works contracts which are financed solely from city revenues. Rather, such contracts are municipal affairs over which Vista has paramount power under article XI, section 5, subdivision (a) of the California Constitution.

Amazingly, the Court of Appeal did not mention a long line of cases holding that the prevailing wage law is a minimum wage law that guarantees a minimum cash wage for employees on public works contracts and that serves the important public policy goals of protecting employees on public works projects, competing union contractors, and the public. See cases cited in Road Sprinkler Fitters Local Union No. 669, v. G & G Fire Sprinklers, Inc. (2002) 102 Cal. App. 4th 765, 778-779.

It will be interesting to see where the Court comes down on this one. The Court's docket is here.