The California Supreme Court may be about to issue its decision in State Building and Construction Trades Council of California, AFL-CIO v. City of Vista. If you want electronic notification from the California Supreme Court when it publishes the decision, go to this web site and fill out the form.
This case will decide whether or not California charter cities (there are 121 of them – with El Cajon becoming the latest on June 5) have the authority to establish their own policies concerning government-mandated construction wage rates (also known as “prevailing wage” rates) on purely municipal projects.
The court is supposed to issue its decision within 90 days after oral arguments, which it heard on April 4, 2012. Scott A. Kronland of the law firm of Altshuler Berzon LLP argued before the court for the State Building & Construction Trades Council of California, along with Douglas J. Woods from the Office of the California Attorney General; James P. Lough of Lounsbery Ferguson Altona & Peak, LLP argued for the City of Vista.
The City of Vista won this case in the lower courts. (Yes, this case has been working its way through the courts for five years.) Here are the decisions:
Article XI of the California Constitution allows cities to operate with their own constitutions (charters) under a concept the League of California Cities sometimes describes as Home Rule. There are currently 121 charter cities in California, and many of them chose to claim authority over setting wage rates for construction on projects that receive city funds but do not receive state or federal funds.
Here is a report (published in January 2011) produced by Associated Builders and Contractors – California Cooperation Committee (ABC-CCC) on the status of prevailing wage policies in the state’s charter cities. This report, Are Charter Cities Taking Advantage of Prevailing Wage Exemptions, remains the authoritative guide to prevailing wage policies at California local governments. Note its most recent edition does not include a few of the more recent developments, such as voter approval of a charter in the City of El Cajon on June 5, 2011 and a union-driven rollback of local authority over prevailing wage rates on a 3-2 city council vote in the City of Irvine on April 26, 2011:
For a creative and edgy perspective on the right of charter cities to set their own policies concerning government-mandated construction wage rates, see the amicus brief filed with the California Supreme Court in January 2010 by Robert Fried of Atkinson, Andelson, Loya, Ruud & Romo on behalf of Associated Builders and Contractors of California:
Construction unions argue that “prevailing wage” is a matter of statewide concern, and therefore charter cities must abide by the wage requirements set in the California Labor Code by the California legislature and regulated and administered by the California Division of Labor Statistics and Research (DLSR), part of the California Department of Industrial Relations.
Why are existing charter cities interested in setting their own policies for construction wage rates? Except in very rare circumstances, the state sets prevailing wage rates by obtaining the relevant union collective bargaining agreement for a construction trade in the geographic jurisdiction of each local union. The state identifies all of the employer payments in the collective bargaining agreement (including payments unrelated to employee compensation) and adds them up to determine the wage rate. No surveys are conducted and no statistics are gathered.
As a result, state-mandated construction wage rates are often higher than the actual prevailing wage rates in a local market, especially in rural areas. A general rule of thumb: the farther away the location from Department of Industrial Relations headquarters in San Francisco, the greater the disparity between the government-set wage and the actual market wage. State wage rates become particularly absurd when individual collective bargaining agreements apply to a union jurisdiction that covers the entire state or half of the state. San Francisco rates = Alturas rates in Modoc County, and Beverly Hills rates = El Centro rates in Imperial County.
Of course, this allows workers in some trades to travel from the expensive Bay Area to the inexpensive Central Valley for work without having to account for differences in the cost of living. In fact, the opening brief submitted to the California Supreme Court by the State Building and Construction Trades Council of California acknowledges that “construction workers today routinely commute to projects outside the cities in which they happen to live” and “it is not uncommon for today’s construction workers to commute more than 100 miles to work at a job site.” (So much for “local hire.”) This happens because construction trade unions have geographical jurisdictions that often encompass large regions and because they use a “traveler” classification so out-of-area union workers have access to jobs.
It also means that while workers may enjoy a government-fixed higher wage than what the market will bear, the amount of actual cumulative available work is reduced. School districts modernize four schools instead of five schools. Workers chose to work seasonally or are forced to work seasonally because of reduced potential work. There is a price to be paid in economic growth and job creation when the government sets wages, and that price is not limited to the (often forgotten) taxpayers.
Here are key documents submitted to the California Supreme Court in this case:
S173586 – STATE BUILDING & CONSTRUCTION TRADES COUNCIL v. CITY OF VISTA
- Appellant’s Petition for Review Filed on June 8, 2009
- Respondents’ Answer to Petition for Review Filed on June 26, 2009
- Appellant’s Reply to Answer to Petition for Review Filed on July 6, 2009
- Appellant’s Opening Brief on the Merits Filed on October 1, 2009
- Respondents’ Answer Brief on the Merits Filed on December 2, 2009
- Respondents’ Request for Judicial Notice Filed on December 3, 2009
- Appellant’s Reply Brief on the Merits Filed on December 22, 2009
Amicus Briefs in Support of City of Vista:
For the response, see State Building Trades Council Reply to ABC of CA and League of CA Cities Briefs
- Operating Engineers Southern California LMCC
- Construction Employers’ Association
- Northern California Basic Crafts Alliance
- Six Unionized Construction Trade Associations
- California Attorney General
For the response, see City of Vista Reply to Union-Oriented and Attorney General Briefs