Mcle Self-study: Origins and Development of California's Prevailing Wage Requirements and Enforcement Mechanisms*
| Jurisdiction | California,United States |
| Author | By John Cumming |
| Publication year | 2014 |
| Citation | Vol. 28 No. 3 |
By John Cumming
John Cumming currently serves as a Special Counsel to the Director of the Department of Industrial Relations and is a member of the Editorial Board of the Law Review. He is a past member of the Executive Committee of the Labor and Employment Law Section and the Board of Governors of the State Bar of California.
Prevailing wage requirements, which govern pay standards and other working conditions on public works construction projects, are a subspecies of wage and hour law. Prevailing wage statutes are essentially minimum wage laws,1 albeit far more elaborate and arcane than the minimum wage requirements that govern most other employments. Prevailing wage laws also serve a broader range of objectives than general minimum wage requirements.
The overall purpose of the prevailing wage law . . . is to benefit and protect employees on public works projects. This general objective subsumes within it a number of specific goals: to protect employees from substandard wages that might be paid if contractors could recruit labor from distant cheap-labor areas; to permit union contractors to compete with nonunion contractors; to benefit the public through the superior efficiency of well-paid employees; and to compensate nonpublic employees with higher wages for the absence of job security and employment benefits enjoyed by public employees.2
Worker protection laws in the United States date back to the nineteenth century, with the regulation of hours and wages on public works predating the establishment of general wage and hour standards in the private sector. Laws with specific health and safety purposes, including the protection of women and children, were able to pass muster. However, the predominant legal view prior to the New Deal was that wage and hour restrictions on private sector employment were an unconstitutional infringement on the freedom of contract included within the due process guarantees of the Fifth and Fourteenth Amendments.3
This view did not extend to the regulation of public employment, including employment on public works. Instead, the state, as a contracting party, was regarded as having the right to prescribe the terms under which it would permit public works to be performed, with contractors in turn having the right to decide whether or not to accept work under such conditions.4
California's own regulation of employment on public works dates back to an 1868 statute. It provided that "[e]ight hours labor shall constitute a legal day's work" when performed under the authority of state law or under the direction of a public official. It also required that a stipulation to that effect be placed in any contract to which the state, county, or municipality was a party.5 This principle subsequently was incorporated into the Constitution of 1879, in art. XX, § 17, which stated simply that "[e]ight hours shall constitute a legal day's work on all public work."6
In 1902, this constitutional provision was expanded, but then shortened again in 1970 to read: "Worktime of mechanics or workmen on public works may not exceed eight hours a day except in wartime or extraordinary emergencies that endanger life or property." In 1976, this language was moved to its current location in art. XIV, § 2, and there have been no further modifications to the text through the present.
Early legislation also addressed other aspects of public works employment. An 1870 law required that "all labor employed on [public] buildings be employed by the day" and that none of this "be done by contract."7 Another 1872 statute made it a felony for anyone who employed laborers upon public works to retain any part of a laborer's wages, i.e. to take "kickbacks."8
In 1897, the Legislature adopted the first minimum wage statute for public works, requiring an across-the-board flat rate of two dollars per day. 9 It made an exception for persons regularly employed by the public entity, i.e. the "own forces" exception to prevailing wages that remains in current law at Cal. Lab. Code § 1771. Another 1897 statute required public works contractors to be bonded and provided for the filing of claims with the contracting agency by any materialman or laborer whom the contractor did not pay.10 An 1899 statute restated and expanded the eight-hour-day requirement by including the emergency exception language that later went into the 1902 amendment to art. XX, § 17 of the state Constitution.11 This statute also required incorporation of the eight-hour limitation into every public works contract, together with a prescribed penalty of ten dollars per worker per day for each violation.12 In addition, contract inspectors were required to report violations so that penalties could be withheld from moneys due under the contract; any public official who failed to fulfill these requirements was subject to criminal sanctions.13 The 1899 statute's requirements were readopted in substantially the same form in 1903 Cal. Stat. 107, albeit with a specific directive to the public agency's contracting agent "to take cognizance of all violations" and report the same to the person responsible for paying the contractor.14
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Legislation in 1905 further revised and codified the 1903 statute as Cal. Penal Code § 653c, and also revised and codified the 1872 anti-kickback statute as Cal. Penal Code § 653d.15 In 1919, the legislature adopted a more extensive set of bonding requirements and claim procedures to replace the ones adopted in 1897.16 Then, in 1927, Cal. Penal Code § 653c was amended through the addition of language that: (1) required contractors to document any emergency that required exceeding the eight-hour-day limit, and (2) extended the criminal sanctions to any contractor or subcontractor who violated § 653c.17 The statute was further amended in 1929 to include the first payroll recordkeeping requirement and the first mention of the Department of Industrial Relations (DIR) as a separate monitoring agency.18
Two years later, the legislature repealed the 1897 minimum wage statute and replaced it with California's first general prevailing wage law.19 The Public Wage Rate Act of 1931 required awarding bodies to ascertain and require payment of the "general prevailing rate of per diem wages in the locality in which the work is to be performed, for each craft or type of workman or mechanic needed to execute the contract[.]" It prescribed a ten-dollar-per-worker-per-day penalty for underpayments. It also included the "take cognizance," forfeiture, and withholding requirements from prior statutes. It added a further proviso that, with the exception of the final contract payment, no sums should be withheld, retained, or forfeited without a full investigation by either the awarding body or DIR. The statute also authorized contractor withholding for penalty assessments caused by subcontractors; included the same recordkeeping requirements and criminal sanctions found in Cal. Penal Code § 653c; and defined "public works," "locality," and "general prevailing rate of per diem wages." Regulation of hours remained in Cal. Penal Code § 653c, which was further revised by 1931 Cal. Stats. ch. 1144, to add the investigation proviso and authorization for contractor withholding from subcontractors that were included in the new prevailing wage law.
The refusal of a local water district to carry out its responsibilities under the new Public Wage Rate Act led to a broad-based constitutional challenge against the Act in Metropolitan Water District of Southern California v. Whitsett.20 The three principal contentions the district raised were that: (1) the Act was void for uncertainty; (2) the attendant increased costs for public works construction amounted to the imposition of a tax on local government in violation of Cal. Const. art. XI, § 12; and (3) the Act made an invalid delegation of legislative power [through the regulatory role assigned to awarding bodies].21 The court rejected all three arguments and upheld the Act as constitutional. The court first noted that district officials would be subject to criminal violations for violating or failing to comply with their duties under the Act.22 It then held that terms such as "general prevailing rate of per diem wages," "work of a similar character," and "locality in which the work is performed" were not unconstitutionally vague.23 The court stated that there was no uncertainty about required contractual provisions or the district's investigation and enforcement responsibilities in light of a variety of state and federal cases that had considered similar challenges.24 With respect to the second argument, the court found that the Act was a minimum wage statute rather than a tax, and that it was well within the Legislature's constitutional authority to impose such a condition on subordinate governmental entities.25 Finally, the court rejected the third argument by equating the delegated authority to determine local prevailing wage rates with the authority given to local districts to determine the pay and working conditions of their own employees.26
The Public Wage Act was amended once by the addition of a § 4a, which specified that the Act's penalties and remedies were the sole and exclusive penalties and remedies for any violation by a contractor or subcontractor.27 Two years later, in 1937, all the statutes discussed above were repealed and replaced by a number of provisions in the newly adopted Labor Code. The duty of awarding bodies to take cognizance of violations and withhold payments were moved into §§ 1726 and 1727; the penalty provisions were moved into § 1775; the recordkeeping requirements were moved into § 1776...
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