Under California’s Prevailing Wage Laws, employers working on “public works” must pay employees prevailing wage rates set by the State. What qualifies as a “public works” and which employees are entitled to prevailing wage is often difficult to determine and can result in expensive and protracted litigation. In Busker v. Wabtec Corp. and Mendoza v. Fonseca McElroy Grinding Co., Inc., the California Supreme Court issued opinions aiding in the understanding of which workers are entitled to be paid prevailing wage. These opinions rejected legal interpretations that would have increased uncertainty and litigation and, consequently, these opinions represent a significant victory for a common sensical application of the Prevailing Wage Law.
Prevailing Wage Laws
California’s Prevailing Wage Laws date back to 1931 and have been amended and recodified by the Legislature over the past century, but vestiges of the original laws remain. The primary definitions of what types of projects constitute a “public works” are contained in Labor Code sections 1720 to 1720.9, and section 1771 requires the payment of prevailing wage to “all workers employed on public works.” In both cases, the plaintiffs argued that section 1772, an enactment which remains unchanged from the 1931 law which states that “workers employed by contractors or subcontractors in the execution of any contract for public work are deemed to be employed upon public work,” did not merely define who was “employed on public works,” but instead expanded the scope of what constituted a “public works” and entitled them to the payment of prevailing wage.
Mendoza v. Fonseca McElroy Grinding Co., Inc.
In Mendoza, the court addressed the question of whether workers transporting heavy machinery to and from a public works jobsite are employed “in the execution of” the public works contract, and thus entitled to payment of prevailing wage under 1772, even if the work does not fall within the Legislature’s definitions of a “public works.” The court rejected the plaintiffs’ claim they were entitled to prevailing wage because their work was integral to other work that is itself a “public works.”
The court explained that while Labor Code sections 1720 to 1720.9 define the types of activities that constitute public works, and section 1771 obligates contractors to pay prevailing wages to workers employed on public works, section 1772 does not expand the definitions of what constitutes a “public works” requiring the payment of prevailing wage. Instead, “[s]ection 1772 describes a category of persons entitled to the prevailing wage based on the work they do.” Rather than expanding the definition of what constitutes a “public works” “section 1772 was enacted to ensure that nongovernmental laborers were entitled to the prevailing wage whether they worked under a contract directly with a government entity, or under an agreement with a contractor or subcontractor awarded a public works contract.”
While concluding that the “prevailing wage law as written and amended does not support an interpretation of section 1772 that expands the law’s scope beyond defined ‘public works,’” the court cautioned that its conclusion regarding section 1772 does not rule out the possibility that mobilization activities could be subject to prevailing wage under some other theory.
Busker v. Wabtec Corp.
In Busker, the court faced similar questions regarding whether publicly funded work on train cars constitutes a “public work” in spite of the lack of any connection to real property, and whether the work qualifies as a “public works” because it is integral to other public work in the rail yard. As with Mendoza, the court answered both questions in the negative.
Viewing the history and purpose of the law, the court rejected plaintiff’s argument that publicly funded work to install electrical components on train cars constituted “construction” or “installation” within the meaning of the prevailing wage law. The court reiterated that “the prevailing wage law has never been applied to all work financed by public funds,” concluding that the types of “construction” and “installation” work covered by prevailing wage “are generally restricted to activities associated with fixed work on land.”
The Busker plaintiff also raised arguments similar to those in Mendoza that the work must be subject to prevailing wage because it was important infrastructure work, and because the railcar components work with the towers and components built on land next to the tracks. The court rejected arguments that the importance of the work, or its operation in conjunction with components installed on the land meant the work was covered by prevailing wage, explaining that the plaintiff’s approach “has no discernible limiting principle” and could extend to workers who wrote the computer software or manufactured computer chips integral to the rail system.
The takeaway from both opinions is that the Court narrowed the application of the Prevailing Wage Law to “public works” as defined in Labor Code Sections 1720 to 1720.9 and rejected the proposition that other provisions expanded coverage to include activities that are not within these sections. Section 1772 does not support extending the Prevailing Wage Law to workers engaged in mobilization or other activities not defined by the Legislature as public works. But as both the Mendoza and Busker opinions concerned relatively narrow questions about whether the workers were employed “in the execution of” the public works contracts under section 1772 and entitled to prevailing wage, public works contractors must consider whether the specific work activities of their employees are “public works” under other statutory language.