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Law Alert!

California Supreme Court Holds Charter Cities Not Bound by Prevailing Wage Law

(Posted August 9, 2012)

On July 2, 2012, the California Supreme Court held that California's prevailing wage law (Lab C §§1720-1861), as a matter of law and under the doctrine of municipal home rule, does not apply to a charter city. In State Bldg. & Constr. Trades Council of Cal., AFL-CIO v City of Vista (2012) 54 C4th 547, a general law city approved the renovation and construction of several city-operated facilities in 2006. By special election in June 2007, city voters passed a ballot measure by 67% to become a charter city to save "millions of dollars" on the approved projects by not paying the state-determined prevailing wage rate. A council of various unions challenged the city's position and sought a writ of mandate ordering the city to comply with the prevailing wage law (PWL). The trial court denied the writ and both the appellate court and the supreme court affirmed.

Citing legislative history and case law, the supreme court found that a charter city's construction of a city-operated facility, intended for the benefit of the city's population and solely using city funds, "is quintessentially a municipal affair." Although the city ordinance declining to apply the PWL in their public works contracts did conflict with the PWL, and despite a construction industry trend toward "economic regionalization" and laws encouraging apprentices' on-the-job vocational training, the statewide impact of the ordinance was indirect and abstract and did not convincingly justify state law intervention in the autonomy of the charter city. Cal Const art XI, §§1(b), 5, 11(a). Similarly undercutting the finding of a statewide concern is that the PWL has a narrow application and imposes substantive (not procedural) obligations on municipalities and other governmental entities. Even though the legislature has stated that the PWL should apply broadly, that expression was simply not determinative of the issue. The courts—not the legislature—hold the responsibility to construe constitutional language and obligations.

Justices Werdegar and Liu dissented. Justice Werdegar distinguished the cases cited by the majority, particularly City of Pasadena v Charleville (1932) 215 C 384. Charleville belongs to a line of cases that have been repudiated or overruled by the U.S. Supreme Court. Moreover, in contrast to this case (involving private employees), most of the cases interpreting the municipal home rule doctrine involved only salaries being paid by a charter city to its own employees. Justice Liu also found Charleville "discredited" and of "questionable precedent," opining that the "most serious error" in the majority opinion was its lack of judicial restraint in resolving doubts about state legislative power and its arbitrary reduction of the legislature's authority.

For detailed discussion of the prevailing wage law, see California Construction Contracts, Defects, and Litigation, ch 6 (Cal CEB 2008) and The California Municipal Law Handbook, ch 7 (Cal CEB Annual).

© The Regents of the University of California, 2013. Unauthorized use and/or duplication of this material without express and written permission is strictly prohibited.

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