CA Supreme Court Broadens Scope of Prevailing Wage for Some Special Districts

By Vanessa Gonzales posted 04-05-2021 03:52 PM


Last week, the California Supreme Court issued a decision that may portend the expansion of prevailing wage law to include routine activities within "work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type" in the operation of their existing facilities. In Kaanaana v. Barrett Business Services, Inc., a unanimous opinion held that contract workers who act as belt sorters for a county sanitation district (Plaintiffs) are engaged in "work" that falls within the definition of "public works" in Labor Code section 1720(a)(2). Therefore, the private company providing employees to sort recyclables at recycling facilities owned by a sanitation district was required to pay the company's employees prevailing wage. 

In 2019, CSDA joined a coalition amicus brief to the California Supreme Court, urging the Court not to adopt an expansive interpretation of "work" as used in Labor Code section 1720(a)(2). Unfortunately, the decision could substantially expand the categories of work for which contract workers at local public agencies must be paid prevailing wages. Although the decision declined to "specify the precise outer boundaries" of which contract workers would now be subject to receiving prevailing wage, it noted that "the prevailing wage law is designed to protect laborers, workers, and mechanics employed on public works (see §§ 1771, 1723) and that plaintiffs fall squarely within that class."  

Under current law, when a public works project exceeds $1,000 prevailing wage rates must be paid to all workers employed on "public works" when the work is performed under contract and not carried out by a public agency with its own forces. Traditionally, the definition of "public works" has been limited to "construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds…" This decision changes that understanding for irrigation, utility, reclamation, and improvement districts, and other districts of this type. 

Notably, in a concurring opinion joined by two colleagues, Justice Kruger adeptly addresses some of the questions that remain unanswered following the decision, namely: "Why, precisely, did the Legislature choose to treat work for utility and other covered districts so differently from work for other public agencies? Whatever reasons the Legislature may once have had, they have been lost in the mists of time. Now, more than 80 years after the statute was first enacted, the Legislature may wish to revisit the issue." 

You can read the full decision HERE. For questions about this decision, contact CSDA Deputy General Counsel Mustafa Hessabi at CSDA will continue to monitor the impacts of this decision and work with coalition partners to determine what appropriate legislative action should result from it.