California Supreme Court Expands Definition of Prevailing Wages for Special Districts
The California Supreme Court recently ruled March 29, 2021 that prevailing wages are not limited to just construction related projects when it comes to public utility, reclamation and other special districts. Kaanaana v. Barrett Business Systems. The Court essentially ruled that any contracts Special Districts entered into must be paid at prevailing wages.
The court reasoned that the language in Labor Code Section 177(a)(2) specifically referencing special districts was different than the language relating to other agencies engaged in “public works”. For the last 90 years prevailing wage or public works projects have been limited to construction or construction related projects, including construction, repair, remodeling, alternation, maintenance, emergency work and warranty work. Even though the California Department of Industrial Relations has continued to define the work performed under Labor Code Section 1720 et seq as restricted to construction related work, the court ruled, Section 1720(a)(2) provides that prevailing wage includes “work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type.” The court stated because this particular section of the code did not specifically call out construction and related work, that the interpretation was to expand the definition relating to Special Districts to include ALL work awarded by a public agency and paid for in whole or in part from public funds.
That means that contracts with a Special District will require prevailing wage for sorting recycling, computer consulting, computer technician work, janitorial services and more. This is a big financial hit for Special Districts.
So, what is the solution? ACWA, CASA and CSDA are working on a legislative correction. In the meantime, there is a provision in the California Labor Code and regulations that allow an Awarding Agency to request a wage classification and wage rates from the Director. The provision requires providing the DIR with 45 days notice before the Bid Date. If you need more information on this topic, please contact CCMI. firstname.lastname@example.org