California Supreme Court Holds that Prevailing Wages are Not Required for Mobilization Work, for Now

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In the midst of the Great Depression the federal government enacted the Davis-Bacon Act (40 U.S.C. section 32141 et seq.) to help workers on federal construction projects. Under the Davis-Bacon Act, minimum wages must be paid to workers on federal public works projects based on local “prevailing” wages. At the time, the goal of the law was to help curb the displacement of families by employers who were recruiting lower-wage workers from outside local areas. A darker history suggests that it was also intended to discourage minority workers from competing with unionized white workers.

Fast forward to today. Many states, including California, adopted “Little Davis-Bacon” laws applying similar requirements on state and local public works projects. California’s prevailing wage law (Labor Code section 1720 et seq.) requires contractors on state and local public works projects pay their workers the general prevailing rate of per diem wages based on the classification or type of work performed by the employee in the locality where the project is located.

Over the years, labor unions have sought to expand the definition of what constitutes a “public works project” from private residential developments receiving public funding (generally, prevailing wages required) to off-site fabrication of materials at permanent facility for a public works project (no prevailing wages required) to enforcement mechanisms such as making a general contractor liable for prevailing wage violations of its subcontractors (yes, indeedy, see Labor Code section 1775).

In Mendoza v. Fonseca McElroy Grinding Co., Inc., Case No. S253574 (August 16, 2021) the California Supreme Court weighed in on whether prevailing wages must be paid on mobilization work involving transporting heavy machinery to and from a public works project.

The Mendoza Case

Fonseca McElroy Grinding Co., Inc. is a roadway construction company that performs work on both public and private projects. Part of its work involves using milling equipment to break up existing roadbeds so that new roads can be built. Sometimes the milling equipment is kept offsite and loaded onto trailers and brought to the job site (i.e., mobilization).

A master agreement between Fonseca and the union established wage rates for onsite construction. A separate memorandum of agreement set a lower wage rate for mobilization. When working on a public works project, Fonseca paid according to the master agreement memorandum of agreement, paying its workers a higher rate for on-site work and lower rate for mobilization work.

Plaintiff, one of the unionized engineers, sued in federal court alleging that mobilization required the payment of prevailing wages. On cross-motions for summary judgment, the trial court ruled in favor of Fonseca. The case was then appealed to the 9th Circuit Court of Appeals who requested an opinion from the California Supreme Court.

The California Supreme Court Decision

Labor Code section 1771, explained the California Supreme Court, provides that:

Except for public works projects of one thousand dollars ($1,000) or less, 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. This section is applicable only to work performed under contract, and is not applicable to work carried out by a public agency with its own forces. This section is applicable to contracts let for maintenance work.

Section 1771, explained the Supreme Court, addresses the types of work (i.e., “public works projects”) in which prevailing wages must be paid. Labor Code section 1772 in turn, explained the Supreme Court, sets forth the types of labor in which prevailing wages must be paid, and provides that “[w]orkers employed by contractors or subcontractors in the execution of any contract for public work are deemed to be employed upon public work.”

Focusing on Mendoza’s argument that the phrase “in the execution of” broadly means “carrying out and completion of all provisions of the contract, regardless [of] whether the work would constitute a public work[ ] it were viewed independently,” and that the term “deemed” means that “even if work being performed under contract is not a ‘public work” when considered in isolation, it could still be ‘deemed’ a public works,” the Supreme Court held that Mendoza’s argument took too broad of view that was never intended by the State Legislature:

Over the decades the Legislature has revisited and refined the scope of public works definitions. . . . Plaintiff’s proposed interpretation would render these distinctions meaningless if section 1772 extends the prevailing wage law to any work required to fulfill a public works contract. There is little reason to believe the Legislature would take great pains to specify what constitutes “public works” in article 1 while broadening the scope of coverage through section 1772 to encompass activities not expressly falling within those carefully crafted definitions. Plaintiffs provide no limiting principle to their proposed expansion. Nor does the plain language of section 1772 furnish any limitation on plaintiffs’ proposed understanding. . . The Legislature has taken great care over decades to precisely categorize, in article 1, just what kinds of labor constitute public works. Yet plaintiffs’ approach would throw aside that careful drafting by allowing a different result under an interpretation of an imprecise statute that has gone largely unchanged for over 90 years. If the Legislature so intends, it is, of course, empowered to take that action. We will not divine such an intention on its behalf.

In short, explained the California Supreme Court, “the answer to the Ninth Circuit’s certified question is simple. The statute does not expand coverage to labor not otherwise defined as public work. Unless mobilization qualifies as public work, an employer has no obligation to pay the prevailing wage to those who perform it.”

However, the Supreme Court did leave open the door a crack and was careful to note that its decision “does not rule out the possibility that prevailing wages must be paid for mobilization work under some other theory,” noting that the term “construction” used in the prevailing wage law also includes “preconstruction” and “postconstruction” phases of construction work.

Conclusion

So there you have it, kind of. Prevailing wages are not required to be paid for mobilization work unless a creative plaintiff can show that mobilization falls within the definition of “preconstruction” or “postconstruction” work.

Also, an interesting tidbit: The iconic photo above taken by Lewis W. Hine of Empire State Building workers on break, was taken in 1931, the same year that the Davis-Bacon Act was signed into law by Herbert Hoover on March 3, 1931. Another interesting tidbit: The Senators who sponsored the Davis-Bacon Act were Senators James J. Davis of Pennsylvania and Senator Robert L. Bacon of, you guessed it, New York.

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