Metropolitan News-Enterprise


Tuesday, July 3, 2012


Page 1


Charter Cities Exempt From Prevailing Wage Law, S.C. Rules




Charter cities do not have to comply with the state law requiring that prevailing wages be paid on public works projects, the California Supreme Court ruled yesterday.

In a 5-2 decision, the court held that wages paid for work on construction of public buildings is not a matter of statewide concern, so charter cities may exempt themselves from general state law requiring 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.”

A dissenting justice called the result “neither reasonable nor fair.”

At issue are several public works projects—including two fire stations, a sports park, and a civic center—approved by voters in the City of Vista in 2006, funded by a local sales tax hike. In 2007, the city attorney proposed that Vista, then a general law city, take steps toward becoming a charter city.

The city attorney explained that under the home rule provisions of the state Constitution, the adoption of a charter could free the city from the prevailing wage law, saving millions of dollars. Sixty-seven percent of the voters approved the proposed charter in June 2007, following which the city approved an ordinance declaring that payment of prevailing wages was not required except when compelled by the terms of a state or a federal grant, when the contract in question does not involve a municipal affair, or when payment of the prevailing wage is separately authorized by the city council.

Unions Sue

When the council subsequently approved an ordinance authorizing the fire stations to be built, and did not include a prevailing wage requirement in the ordinance, building trades unions filed suit. A San Diego Superior Court judge ruled for the city, citing Vial v. City of San Diego (1981) 122 Cal.App.3d 346, which held that payment of wages on public works projects was a matter of local concern, allowing a charter city to opt out of complying with the state requirement.

The Court of Appeal affirmed, in a 2-1 decision largely centered on whether payment of prevailing wages was needed to protect local labor markets, which would make the issue one of more than local concern.

But Justice Joyce L. Kennard, writing for the Supreme Court, said it was unnecessary to engage in such a fact-specific inquiry. She cited City of Pasadena v. Charle­ville (1932) 215 Cal. 384, which held that the prevailing wage law could not be applied to a charter city in connection with the construction of a fence around the city’s reservoir.

‘Municipal Affairs’

The home-rule provisions, Kennard explained, allow charter cities to override state law with respect to “municipal affairs” that are not matters of “statewide concern.” In order to determine which side of the divide an issue falls on, she said, courts employ a four-part analysis—whether the issue actually is a municipal affair, whether it actually conflicts with state law, whether the matter is of statewide concern, and whether the state law is “reasonably related to...resolution” of that concern and “narrowly tailored” to avoid unnecessary interference in local governance.

Charleville, the justice said, expressly stated that payment of wages on municipal projects is a municipal affair, and that the state’s then-recent prevailing wage law conflicted with the city’s ordinance on the subject. Like the reservoir in that case, she said, “the wage levels of contract workers designing and constructing two city-operated fire houses do not appear to be a matter of ‘general state concern.’”

She rejected the argument that structural changes in the California economy since the 1930s require a different result, noting that since the 1970s, prevailing wage levels are determined by the Department of Industrial Relations and are required to reflect regional, and not purely local, economies.

The argument misses the point, Kennard said, writing:

“[T]he question presented is whether the state can require a charter city to exercise its purchasing power in the construction market in a way that supports regional wages and subsidizes vocational training, while increasing the charter city’s costs. No one would doubt that the state could use its own resources to support the state’s construction industry, but can the state achieve these ends by interfering in the fiscal policies of charter cities? Autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.”

Kennard was joined by Chief Justice Tani Cantil-Sakauye and Justices Marvin Baxter, Ming Chin, and Carol Corrigan.

Justice Kathryn M. Werdegar dissented.

“The majority’s approach to this case is neither fair nor reasonable,” she wrote, saying her colleagues had made “a series of analytical missteps.” The decision “places unjustified weight on Vista’s fiscal interest in saving money on the construction of public buildings,” she said, “and relies on an outmoded Depression Era decision that interpreted a different law.”

The prevailing wage law, she declared, “supports the statewide economy” and should take precedence over local laws.

Justice Goodwin J. Liu joined Werdegar, and also wrote separately to argue that the decision “casts restraint aside and arbitrarily curtails the Legislature’s power” with respect to “legitimate policy goals,” and opens the door to future challenges to general laws, “no matter how strong the state’s interest or how slight the intrusion into the charter city’s treasury.”

The case is State Building and Construction Trades Council of California, AFL-CIO v. City of Vista, 12 S.O.S. 3253.


Copyright 2012, Metropolitan News Company