Tuesday, December 21, 2004
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Supreme Court Declines to Apply Prevailing Wage Law To Privately Funded Project on Public Land
By KENNETH OFGANG, Staff Writer/Appellate Courts
State law requiring that prevailing wages be paid on public works projects does not apply where the project was built by a private entity with private funds and the work was performed prior to a statutory change in the definition of “public works,” the California Supreme Court ruled yesterday.
In a 6-1 decision, with Justice Ming Chin writing for the majority, the court ruled in favor of the City of Long Beach in its dispute with the Department of Industrial Relations. The city sought writ relief after the DIR ruled that the construction of the city’s new animal shelter was subject to Labor Code Sec. 1771.
The statute requires that all persons employed on public works be paid at least “the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed.”
Los Angeles Superior Court Judge David Yaffe granted the writ on two grounds—that the shelter is not a public work because it was built by the Los Angeles Society for the Prevention of Cruelty to Animals, even though the city leases the land an contributed towards related costs, and that the project is a “municipal affair” of a charter city and thus exempt from general state laws.
Div. Seven of this district’s Court of Appeal had sided with the department, saying Yaffe was wrong on both issues. But the high court agreed with the trial judge on the first issue and found it unnecessary to consider the second.
The shelter, Chin explained, was built pursuant to a 1998 contract between the city and the SPCA.
The society agreed to build the shelter on land it leased from the city for $120 a year and the city agreed to contribute $1.5 million toward the development and preconstruction planning. The city agreed to pay the society $60 a year in rent for space occupied by its animal control department.
The project was completed in 2001 at a total cost of $10 million.
At the time the contract was signed, the prevailing wage law defined “public works” as including “construction, alteration, demolition, or repair work done under contract and paid for in whole or in part out of public funds.” A 2000 amendment declared that “construction” includes “the design and preconstruction phases of construction,” including “inspection and land surveying works.”
The city argued that the amendment was a prospective change in the law, while the DIR contended it merely clarified existing law. The city’s position “makes more sense,” Chin said, because it is truer to the commonly understood definition of the word and the legislative history of the amendment.
The justice cited a letter from then-Sen. John Burton, the amendment’s sponsor, assuring interested parties that it was ““intended only to operate prospectively and therefore will only apply to contracts for public works entered into on and after the effective date of the legislation which will be January 1, 2001.”
The letter is entitled to substantial weight, Chin wrote, because it was printed in the Senate journal pursuant to a vote of the chamber, and because it is consistent with the traditional rule that legislation is not applied retroactively unless the Legislature clearly intends that result.
Chief Justice Ronald M. George and Justices Marvin Baxter, Kathryn M. Werdegar, Janice Rogers Brown, and Carlos Moreno concurred in the opinion.
Justice Joyce L. Kennard dissented, arguing that “construction,” even in the absence of the statutory amendment, should be defined more broadly in accordance with “California’s long-standing policy that prevailing wage laws are to be liberally construed in favor of the worker” and out of deference to the DIR as the agency charged with enforcing the statute.
The case was argued in the high court by Staff Counsel Anthony Mischel for the DIR, Scott A. Kronland of Altshuler, Berzon, Nussbaum, Rubin & Demain for The State Building and Construction Trades Council as amicus supporting the department, City Attorney Robert E. Shannon for Long Beach, and M. Katherine Jenson of Rutan & Tucker for 44 cities and the League of California Cities as amici supporting Long Beach.
The case is City of Long Beach v. Department of Industrial Relations, 04 S.O.S. 6605.
Copyright 2004, Metropolitan News Company