Wage Law

Employers engaged on public works projects must pay prevailing wages to their workers if the project is “paid for in whole or in part out of public funds.” Until now, it was unclear whether tax credits provided by the state to facilitate construction of low-income housing comes within this definition. In State Bldg. & Const. Trades Council v. Duncan (2008) __ Cal.App.4th __, the trial court determined that it does. The Court of Appeal reversed.

we conclude otherwise—that however worthy the policy goals of encouraging the construction of low-cost housing and ensuring compliance with the prevailing wage requirements, the statutory language in its present form cannot be construed to command that result. Tax credits are, at best, intangible inducements offered from government, but they are not actual or de facto expenditures by government. As such, they do not qualify as either the “payment of . . . the equivalent of money by the state” (subd. (b)(1), or as a “transfer by the state . . . of an asset for less than fair market price” (subd. (b)(3)), the portions of the definition of “paid for in whole or in part out of public funds” considered here. We thus reverse.

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