California Supreme Court Holds That California Prevailing Wage Law Must Yield to Constitutional...

07.02.2012

PLEASANTON, Calif.—Rejecting a challenge from the State Building and Construction Trades Council, the California Supreme Court held today that cities have a constitutional right to control their own affairs when it comes to their construction projects, including setting public and private employee wages. In SBCTC v. City of Vista the court stated that “We reaffirm our view … 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).”

The decision allows municipalities to view their construction decisions on the basis of the project being built and the manner in which it is funded. The court observed that “the construction of a city-operated facility for the benefit of a city’s inhabitants is quintessentially a municipal affair, as is the control over the expenditure of a city’s own funds. Here, the two fire stations in the City of Vista… are facilities operated by the city for the benefit of the city’s inhabitants, and they are financed from the city’s own funds. We conclude therefore that the matter at issue here involves a 'municipal affair.'”

The court rejected the SBCTC's argument that California’s prevailing wage and apprenticeship law should be viewed as a controlling state interest that limits local control. To the contrary, the court clearly stated that, “the question presented here is not whether the state government has an abstract interest in labor conditions and vocational training. Rather, the question presented is whether the state can require a charter city to exercise its purchasing power in the construction market in a way that supports regional wages and subsidizes vocational training, while increasing the charter city’s costs.”

The opinion holds that the state cannot “achieve these ends by interfering in the fiscal policies of charter cities” and notes that “autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity. [W]e can think of nothing that is of greater municipal concern than how a city’s tax dollars will be spent; nor anything which could be of less interest to taxpayers of other jurisdictions.”

Associated Builders and Contractors of California filed an amicus curie brief in support of the City of Vista and other public entities seeking to establish and clarify their power to make their own construction decisions. Robert Fried of Atkinson, Andelson, Loya, Ruud & Romo represents the amicus and participated in the litigation of the case from its inception, supporting Jim Lough and Darold Pieper, who represented the City of Vista. Robert had been counsel for amici curiae in previous California Supreme Court decisions concerning the development of California prevailing wage law. (Department of Industrial Relations v. Long Beach) He views the court’s decision today as “a major step forward in clarifying the rights of municipal government that should play a pivotal role in revitalizing the struggling construction marketplace. He can be reached in the firm’s Pleasanton, California office at tel:925 251-8515-251-8515 or at rfried@aalrr.com.

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