RW&G

Supreme Court Confirms Prevailing Wage Laws Are Not Mandatory For Charter Cities

July 2 2012

The California Supreme Court has ruled that charter cities (unlike general law cities) are not mandated to require the payment of prevailing wages to workers in public works projects.  The Court's decision in State Building and Construction Trades Council v. City of Vista ends many years of uncertainty on this issue.

Under the California Constitution, the charter and ordinances of a charter city supersede State law with respect to "municipal affairs," but State law governs matters of "statewide concern." The City of Vista became a charter city in June 2007 and immediately adopted an ordinance providing that City contracts do not require payment of prevailing wages unless federal or State grants funding the contract required prevailing wages, the contract did not involve a municipal affair, or the City Council authorized prevailing wages by resolution. The State Building and Construction Trades Council of California, AFL-CIO (Council) sued the City, the Mayor, and the City Manager over the ordinance, alleging that despite its status as a charter city, the City was required to comply with prevailing wage law because these wages are a matter of "statewide concern."

The California Supreme Court held in favor of the City of Vista, holding that the wage levels of contract workers constructing locally funded public works projects are a "municipal affair," not a matter of "statewide concern."  The Court also emphasized that the issue is not whether the State government has an abstract interest in labor conditions and vocational training. Rather, the Court found that the relevant issue 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 Court decided that autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity and, therefore, determining what wages are required is a "municipal affair."


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