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In prevailing wage suit, California high court asked if offsite equipment mobilization is part of ‘public work’

By Lorene D. Park, J.D.

In a suit claiming a government contractor employer failed to pay prevailing wages required by state law, the Ninth Circuit certified to the California Supreme Court the question of whether operating engineers’ offsite “mobilization work”—including the transport of roadwork grinding equipment to and from a public works site—was performed “in the execution of [a] contract for public work,” such that it entitled the workers to “not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed” under the California Labor Code (Mendoza v. Fonseca McDlroy Grinding Co., Inc., January 15, 2019, per curiam).

Mobilization work. The employees were operating engineers and union members who worked on grinding crews, using milling equipment to break up and crush asphalt roadbeds so new roads could be constructed. Their duties included what they called “mobilization” work, which entailed loading milling machines, stored offsite at the employer’s permanent yard, onto a lowbed trailer; securing the heavy equipment; performing a light, brake, and fluid checks on the transport truck; and then transporting the machines to a construction site and later back to the permanent yard.

Prevailing wage not paid for mobilization. The employer paid the prevailing wage for work performed at the worksite, but under an agreement with the union, it did not pay the prevailing wage for mobilization work done offsite. The employees sued for FLSA overtime violations and failure to pay the prevailing wage required by the California Labor Code.

District court proceedings. Granting summary judgment for the employer, the federal district court explained that the California Labor Code requires public works contractors to pay the prevailing wage in the execution of the contract, but the employees’ mobilization work, which was all done offsite, was not done in the execution of the employer’s public works contract.

The district court found some guidance from Williams v. SnSands Corp., in which a state appeals court addressed whether a material subcontractor’s truck drivers who hauled materials away from a public works site were employed “in the execution of” a public works contract or, like bona fide material suppliers, were exempt from the prevailing wage requirement. It crafted a test that considered: (1) “whether the transport was required to carry out a term of the public works contract”; (2) “whether the work was performed on the project site or another site integrally connected to the project site”; and (3) “whether work that was performed off the actual construction site was nevertheless necessary to accomplish or fulfill the contract.” The district court also pointed to Sheet Metal Workers Int’l Ass’n, Local 104 v. Duncan, in which a state appeals court held that the prevailing wage does not cover fabrication at a permanent offsite manufacturing site, one that exists independently of any public works project.

Ultimately, the court here found that the mobilization work was all done offsite at the employer’s permanent yard that didn’t depend on public works projects for its existence (the employer also used it for private projects), so it was not in the execution of the public works contract and not subject to the local prevailing wage.

Certified question. On appeal, the Ninth Circuit found no controlling precedent on the prevailing wage issue before it. Because the scope of the prevailing wage law significantly impacts California workers, it requested that the California Supreme Court answer this question:

Is operating engineers’ offsite “mobilization work”—including the transportation to and from a public works site of roadwork grinding equipment—performed “in the execution of [a] contract for public work,” Cal. Lab. Code § 1772, such that it entitles workers to “not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed” pursuant to section 1771 of the California Labor Code?

Possible guidance. Like the lower court, the Ninth Circuit noted California courts have not yet addressed the applicability of the prevailing wage statute to offsite mobilization work by workers on public works projects, but the analytical framework developed in Williams and Sheet Metal Workers’ might provide guidance. Though neither case was directly on point, they might be sufficiently analogous that similar reasoning should be brought to bear.

In the court’s view, while the three Williams factors suggested the plaintiffs did not perform the offsite mobilization work in the execution of a public works contract, other factors suggested the opposite. Unlike the workers in the other two cases, the plaintiffs here performed work on the public works site that undisputedly qualified for prevailing wage, leaving the question of whether work done in connection with those efforts should be similarly compensated even if done offsite. And unlike the Sheet Metal Workers’ case, the mobilization and transportation work was geographically confined to areas in reasonable proximity to the public works site.

Additionally, the employees relied on the DIR’s interpretations of its Public Works Manual and prevailing wage determinations, which, they contend, “show that mobilization is part and parcel of a contractor’s prevailing wage obligations.” Though not precedential, this administrative interpretation was entitled to “considerable deference.”