Yesterday, we looked at a recent case addressing the question of whether wage rates on public works projects are considered a “municipal affair” and not subject to California’s prevailing wage law. Today, the California Supreme Court’s ruling on the issue—plus a newly updated wage/hour resource specifically for California employers.
Attorney Jim Brown of Sedgwick, LLP, in San Francisco explains the case.
For the facts of the case presented yesterday, click here.
Supreme Court Reaffirms Charter City ‘Municipal Affairs’ Rights
The California Supreme Court started its review by reaffirming the provision in the California Constitution allowing all charter cities in the state to “make and enforce all ordinances and regulations in respect to municipal affairs.”
It recognized the long-standing historical rationale for this provision—namely, that a municipality is in a better position than the state to determine what is best for the municipality on purely local issues. The court also set forth a four-factor test from earlier decisions to be used in deciding whether a state law should apply to the municipality:
- Does the city ordinance regulate an activity that qualifies as a “municipal affair”?
- Is there an actual conflict between the local ordinance and state law?
- Does the state law address an issue that is a “statewide concern”?
- Is the state law “reasonably related” to the statewide concern, and is it narrowly tailored to avoid interference with local governance?
The court easily determined that the construction of fire stations by a city using only city funds is a “municipal affair.” This type of contract fits squarely within the constitutional provision allowing the charter city to regulate its own affairs. However, the court also recognized that California’s prevailing wage law doesn’t exempt charter cities, so there plainly is a conflict between the prevailing wage law and the charter city law.
The tougher question was whether there is a sufficient basis to determine that local construction projects, such as the ones undertaken by Vista, are really of “general state concern” and therefore justify requiring application of the state prevailing wage law.
How to Comply with California Wage & Hour Law—update for 2013 ships next week. Pre-order your copy now and save!
Because of historical court decisions upholding the local rights of charter cities in this arena, the union had to come up with new reasons for the Supreme Court to revisit its determinations.
The union pointed out that since 1976, prevailing wages have been set by the California Department of Industrial Relations on a regional (not local) basis. The construction industry is part of an integrated state economy, which is different from 1932, when the court originally addressed the issue, with workers often driving long distances for jobs and with unions establishing multiemployer agreements on a regional basis.
Likewise, the prevailing wage law requires the use of state-approved apprenticeship programs to train new workers and ensure the continued growth and success of the construction industry, which is a statewide concern.
Local Independent Governmental Entities Can Determine Whether Prevailing Wage Law Will Be Used
The California Supreme Court determined that the concerns raised by the union were only general concerns that could be considered “statewide” only when reviewed in the abstract. The import of those concerns was too indirect to justify affecting the purely municipal issue of how a city’s tax dollars are to be spent.
In short, the court reaffirmed the constitutional right of a local independent governmental entity to determine whether the prevailing wage law will be used.
State Building and Construction Trades Council of California, AFL-CIO v. City of Vista (Supreme Court of California, 7/2/12).
Bottom Line
California has more than 480 cities. Of those, more than 100 are charter cities. This decision is a reaffirmation for at least 50 of those charter cities that have expressly adopted ordinances restricting the payment of prevailing wages on local contracts.
Although many of the major jurisdictions (such as San Francisco and Los Angeles) have adopted their own prevailing wage requirements, the difficult financial times faced by municipalities might dictate an increase in both the number of charter cities and their acceptance of additional restrictions on the payment of prevailing wages.
Don’t Become the Next Court Case
Whenever you’re dealing with issues relating to payment of wages and wage/hour generally, your best defense is a strong offense.
We think the best weapon out there for California employers is the our newly updated 2013 edition of our HR Management & Compliance Report How To Comply with California Wage & Hour Law.
This information-packed guide, written by an experienced California employment lawyer, features in-depth coverage of all the topics you need to know about in an easy-read, quick-reference style:
- The California Labor Code vs. the federal Fair Labor Standards Act (FLSA)
- Who the California wage/hour laws apply to
- The Wage Orders that cover your organization
- Hours of work—including travel time, make-up time, meal and rest periods, and the definition of “hours worked”
- The rules for hourly, salary, and piece-rate pay
- Bonuses, profit-sharing plans, and tips
- Overtime and double-time wages
- Alternative workweeks
- Tools and equipment, uniforms, and work-related expenses and losses
- Paid time off—vacation, PTO, holidays, and sick leave
- Unpaid time off
- When and how employees must be paid
- Payment of final wages upon termination
- Deductions from pay
- Recordkeeping requirements
- Pay-related discrimination
- A new appendix of key cases you need to know about
- And much more!
Order your copy now and try it out risk-free for 30 days. If you’re dissatisfied in any way, just return it within 30 days for a full refund.
Now’s the perfect time to get yourself prepared for 2013. Order your copy of the new edition of How To Comply with California Wage & Hour Law today.
Download your free copy of Who’s Entitled To Overtime: How To Avoid Mistakes When Classifying California Employees today!