Charter Cities Are Not Required to Pay Prevailing Wages on Local Public Works Projects

by Sheppard Mullin Richter & Hampton LLP
Contact

[author: James Higgins]

Labor unions have long been at odds with California charter cities over whether such cities must pay prevailing wages on public works projects. While many charter cities have either not exempted themselves from state prevailing wage laws, or have passed their own prevailing wage laws, other charter cities have no prevailing wage laws for public works projects whatsoever. The building trades have challenged those charter cities which have no such laws. However, the California Supreme Court recently sided with the charter cities on this issue. In State Building and Construction Trades Council of California AFL-CIO v. City of Vista (July 2, 2012, S173586) ___ Cal.4th ___. Relying on 80 years of precedent, the Court held that contract worker wages of locally funded public works are municipal affairs, not of statewide concern, and are exempt from state prevailing wage laws (see City of Pasadena v. Charleville (1932) 215 Cal. 384, 389).

A prevailing wages dispute arose recently when the City of Vista in San Diego County passed a ballot measure to become a charter city. Indeed, the City’s stated intent behind the measure was to save millions of dollars by not paying prevailing wages on public works projects. The City also adopted a resolution that it did not have to pay prevailing wages absent limited circumstances such as when the project had state or federal funding. Thereafter, the City contracted to build two fire stations, and the contracts did not require compliance with the state’s prevailing wage laws. The State Building and Construction Trade Council of California, AFL-CIO (the Union) sued, arguing that prevailing wage laws addressed important statewide concerns and thus applied to charter cities. The City countered that these wage issues were municipal local affairs protected from state legislative intrusion under the California Constitution. The trial court and Court of Appeal agreed with the City.

On appeal the Supreme Court first traced the roots of California’s prevailing wage law to Depression-era legislation that required contractors on public works projects to pay the general prevailing rate of local labor market conditions. The intent behind prevailing wage laws was to prevent government contractors from importing cheap labor from other areas. On the other hand, the California Constitution gives cities the power to become charter cities and control their own “municipal affairs” free from state legislative intrusion. The constitutional roots of charter cities trace back more than 100 years, based on the principle that municipalities know how to govern themselves better than the state at large. Los Angeles, San Francisco, San Diego, and San Jose are included among the 120 charter cities in California. In contrast, if a city ordinance involves a manner of “statewide concern” and conflicts with state law, the latter supersedes the local ordinance.

The Court next analyzed whether the “Home Rule Doctrine” applied. Under this four-part test, a court first determines whether the city ordinance regulates an activity that can be characterized as a municipal affair. Second, a court considers whether the case presents an actual conflict between state and local law. Third, a court must decide whether the state law addresses a matter of statewide concern. And lastly, a court determines whether the law is reasonably related to resolution of that statewide concern and narrowly tailored to avoid unnecessary interference in local government. Where a court finds that state statute is one of statewide concern and not unduly broad, then a charter city measure ceases to be a municipal affair and the state statute controls.

Applying the four-part test, the Court found that the construction of a city-operated facility (here, two fire stations) for the benefit of city’s inhabitants was “quintessentially” a municipal affair. Next, the Court agreed that there was an actual conflict between state law and the City’s ordinance precluding payment of prevailing wages on public works contracts. In perhaps the most interesting portion of the Court’s opinion, the Court found that wage levels of locally funded public works were not of statewide concern. Here, the Court dismissed the Union’s evidence that state prevailing wage laws impacted the state in positive ways. Instead, the Court sided with the City based on the Court’s own precedent that municipalities should be able to govern their finances.

Comment: The City of Vista case has been closely followed by cities, labor unions, and builder interest groups for several years. One could argue that the Supreme Court’s decision gave deference to local municipalities managing their own affairs. However the case dealt with an ordinance that exempted state and federally funded projects from its scope. Therefor the Court’s holding does not bar the requirement of prevailing wages on such projects.

James Higgins is an associate in Sheppard Mullin’s San Francisco office and member of the Firm's Construction Industry Team.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sheppard Mullin Richter & Hampton LLP | Attorney Advertising

Written by:

Sheppard Mullin Richter & Hampton LLP
Contact
more
less

Sheppard Mullin Richter & Hampton LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!