Wage Law

On January 13, 2005, the Third District Court of Appeal issued its published opinion in the case of Reclamation District No. 684 v. State Dept. of Industrial Relations (Foundation for Fair Contracting) upholding the right of workers on public levee maintenance projects to be paid prevailing wages.

Reclamation District No. 684 had hired a manufacturing firm, Holt Repair and Manufacturing, Inc., to place fill on a levee adjacent to a road as a flood control effort. After the work was completed, the Foundation for Fair Contracting ("FFC") sought a determination from the California Department of Industrial Relations ("DIR") as to whether the project was a public work subject to prevailing wage laws. The DIR Director is authorized to determine, pursuant to a request by an interested party, whether a "specific project or type of work to be performed" is covered under the prevailing wage laws as a public work. (Cal. Code Regs., tit. 8, §§ 16001-16002.5)

The DIR Director determined that it was a public work. The District appealed, and after the DIR denied the appeal, the District petitioned for writ of mandate. The trial court denied the petition and the court of appeal upheld the denial.

Two statutes applied: Labor Code § 1771 sets forth the basic rule regarding the payment of prevailing wages on public works. It states, with certain exceptions, that "not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, and not less than the general prevailing rate of per diem wages for holiday and overtime work fixed as provided in this chapter, shall be paid to all workers employed on public works." It expressly provides that "[t]his section is applicable to contracts let for maintenance work." And Labor Code § 1720 generally defines "public works" as "[c]onstruction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds . . . ." (§ 1720, subd. (a)(1).) 6 It includes work done for reclamation districts, but does not include "the operation of the irrigation or drainage system of any irrigation or reclamation district . . . ." (§ 1720, subd. (a)(2).)

The court of appeal applied these statutes to the District's contract and held that a reclamation district was a public entity subject to the prevailing wage laws, and that work to maintain the levee qualified as a public work. In so ruling, the court distinguished such work from routine operation of the irrigation or drainage system of a reclamation district. Here, the purpose of the work done was to maintain a levee to protect an area from flooding. This was a work of improvement because it involved maintenance, rather than the day-to-day business of running the system, by doing such things as the turning of valves that permit an irrigation or drainage system to function. Thus, workers employed on such works must be paid no less than the general prevailing rate of per diem wages.

The published portion of the opinion also included a good discussion of the application of the Administrative Procedure Act and its relation to the quasi-legislative powers granted to the DIR Director for the determination of prevailing wage obligations on a project-by-project basis.