Prevailing Wage Requirement Does Not Violate Federal Law

June 28, 2006 - The State Court of Appeal in Los Angeles ruled this week that government agencies in California can require the payment of prevailing wages on private projects but that the California Public Utilities Commission (CPUC) did not give utilities sufficient time to comment on a prevailing wage proposal.

The decision was issued in a case brought by Southern California Edison against the CPUC. In 2004, the CPUC voted to require the gas and electric industries to require the payment of prevailing wages when they award contracts for utility construction work. After the CPUC's vote, Southern California Edison challenged the prevailing wage requirement on two grounds: 1) that it was preempted by the National Labor Relations Act (NLRA) and 2) that the decision was issued without giving the utilities sufficient time to comment on the proposal.

The State Court of Appeal ruled that the prevailing wage requirement was not preempted by the NLRA. The State Court of Appeal concluded that a case in which the federal appeals court in San Francisco struck down a prevailing wage requirement for private projects in Contra Costa County is no longer good law. This is a significant legal decision because it allows public agencies in California to require the payment of prevailing wages on private construction projects within their jurisdictions.

The State Court of Appeal also ruled, however, that the CPUC did not give the utilities enough time to comment on the prevailing wage proposal, so it vacated the CPUC's requirement and sent the matter back to the CPUC. The CPUC must now give interested parties sufficient time to comment before reconsidering the proposal.

 

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