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California Supreme Court Decision Changes Prevailing Wage Requirements In Special Districts

July 20, 2021

The California Supreme Court (Court) recently issued a decision that may expand the prevailing wage law. Traditionally the prevailing wage law has been interpreted to apply to construction-related work only. In Kaanaana v. Barrett Business Systems, the Court sustained a Court of Appeal decision that does not limit its application when the work is for public utility, reclamation, and other special districts. Thus, based on the Court’s interpretation, work for such public entities must be paid at prevailing wages.

Under the existing law, prevailing wage rates must be paid to all workers employed on “public works” projects that exceed $1,000.  Customarily, “public works” is understood to only apply to activities that are characterized as construction, including demolition, installation, repairs, and certain maintenance activities. But the Court reexamined this assumption and concluded that specific types of special districts are independent of traditional limitations to infrastructure-related work. Therefore potentially extending the prevailing wage law to any manual or non-manual work done under a contract with a special district worth more than $1,000.

Currently, the state Labor Commissioner prescribes prevailing wage rates for construction and maintenance-related workers. However, now the Commissioner may need to make such a wage determination applicable to other types of contract work included within prevailing wage requirements.