By Jon Welner
PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose. It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars–and can be brought years after construction is complete.
The Number of Charter Cities Exempt from Prevailing Wage Has Dropped from 52 to Almost None in Less Than Two Years
A charter city is a city that governs itself by adopting a “charter”–sort of a municipal constitution–rather than by complying with general state laws. California has 121 charter cities (out of a total of 482 cities).
In California, charter cities have supreme control over their own “municipal affairs.” This means that charter city ordinances and regulations supersede all state laws with regard to local matters. State Building & Construction Trades Council of California v. City of Vista (2012) 54 Cal. 4th 547, 555-556 (“City of Vista”).
This power also applies to prevailing wage. In City of Vista, the California Supreme Court held that charter cities are free to decide whether or not they want to apply State Prevailing Wage Law to locally funded public works:
Charter cities are specifically authorized by our state Constitution to govern themselves, free of state legislative intrusion, as to those matters deemed municipal affairs…. Here, we reaffirm our view–first expressed 80 years ago–that the wage levels of contract workers constructing locally funded public works are a municipal affair (that is, exempt from state regulation), and that these wage levels are not a statewide concern (that is, subject to state legislative control)..
In the years preceding the City of Vista decision, the unions tried repeatedly to overturn the rule that charter cities were exempt from State Prevailing Wage Law. But City of Vista settled the issue once and for all, and the unions lost.
So the unions changed their strategy, and moved from the courts to the Legislature. The year after City of Vista was decided, the Governor signed SB 7 into law.
SB 7 stripped all State funding for construction from any charter city that did not comply with the State Prevailing Wage Law. As a result, charter cities were left with little choice–even though the State Constitution exempts them from complying with the State Prevailing Wage Law, they quickly adopted provisions implementing the Law in order to preserve their ability to receive State funding.
In 2014, the number of charter cities that had exempted themselves from State Prevailing Wage Law had reached a high-water mark of 52 cities. Today, there are only three left: Exeter, Loma Linda, and Pacific Grove. The unions thus achieved through the Legislature what they could not achieve in the courts.
Jon Welner is a leading practitioner of prevailing wage law in California. He is a Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM) and Chair of JMBM’s Prevailing Wage Group. Contact him at JWelner@jmbm.com.
JMBM’s Prevailing Wage Group advises and defends developers, contractors, and manufacturers on the most challenging and complex prevailing wage matters in California.