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Employees of subcontractors on public works projects may not be entitled to prevailing wages

SAMSON ELSBERND BIO BIG By Samson R. Elsbernd

Public works projects are publicly financed construction projects done under contract. California law generally requires contractors and subcontractors who are working on public works projects to pay their employees the rates of wages (“prevailing wages”) set by the Director of the Department of Industrial Relations (“DIR”) in the location where the work will be performed. However, a recent court of appeal decision determined that employees of a subcontractor on a public works project who fabricated materials from a permanent, offsite facility were not¬†entitled to prevailing wages.

In Sheet Metal Workers’ International Association, Local 104 v. Duncan (Cal. Ct. App., Aug. 27, 2014) 14 Cal. Daily Op. Serv. 10205, the employee of a subcontractor for a public works project filed a complaint with the DIR alleging non-payment of prevailing wages for materials he fabricated for a public works project. The employee fabricated custom sheet metal materials away from the project site. The Court of Appeal determined that the employee’s work was not work done in the execution of a public works contract. Neither the custom-nature of the materials nor the fact that the subcontractor did not sell fabricated materials to the general public were determinative. What was determinative was that the work was done at a permanent, offsite facility, and the location and existence of that facility was established independent of the public works project.

Previously, a materials supplier exemption for “on-hauling” materials onto public works sites was recognized for contractors who sold their supplies to the general public. This case now recognizes another exemption for contractors who do not sell their fabricated materials to the general public. Contractors and subcontractors should ensure they meet the exemption. In other words, verify that their facility is truly a permanent, offsite facility, as opposed to an off-site, temporary facility established specifically for the public works project. Subcontractors, in particular, will also want to review their contracts to ensure that the contracts do not obligate them to pay prevailing wages whether or not prevailing wage law applies.

DID YOU KNOW…

The Equal Employment Opportunity Commission (EEOC) recently released guidance concerning its enforcement of the Pregnancy Discrimination Act and the Americans with Disabilities Act. This is the first time in 23 years that the EEOC updated its guidance on these laws governing pregnant employees. The guidance may be accessed at: http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm