Charter Cities Not Governed By Prevailing Wage Law

In State Building and Construction Trades Council v. City of Vista (here), a divided Court of Appeal has held that a state law requiring the payment of prevailing wages on public works projects does not apply to public works contracts that are financed solely from city revenues. The court based its decision on Article XI, Section 5, which gives charter cities power over "municipal affairs." However, this power does not extend to matters of "statewide concern." If a state statute addresses a matter of statewide concern, it will supersede contrary charter city laws if the state law is "both reasonably related to resolution of that concern, and narrowly tailored to limit incursion into legitimate municipal interests."

In holding that the prevailing wage law did not cover charter cities, the court majority focused on its limited scope--it does not apply to private projects and not even to all public ones--and on the cases holding that the salaries of a charter city's own employees are a municipal affair, not a matter of statewide concern. Consequently, the majority found that "the wages paid on local public works projects are not matters of sufficient extramural dimension to support legislative intervention." How a city spends its money is generally of only local concern and neither the Legislature nor the plaintiff had shown that the level of public works wages had a significant extra-territorial effect. Nor, given the number of exceptions to the prevailing wage statute, could the Legislature rely on an interest in statewide uniformity to support the statute. Finally, the plaintiff's showing that construction markets are regional was held by the majority not to support the statute in the absence of evidence that the prevailing wage law affected those markets.

Needless to say, the dissent saw the applicable legal standard and the evidence quite differently. Doctrinally, the dissent saw the statewide concern issue as focusing on the Legislature's purpose in enacting a statute, rather than the statute's effectiveness. There were three such purposes, each reflecting a statewide concern: upholding prevailing wage rates in the construction industry, ensuring quality work on public projects and promoting a quality apprenticeship program. The dissent also rejected the majority's reliance on the cases upholding a charter city's power to control the salaries of its own employees. Finally, the dissent found that the prevailing wage law was reasonably related to these purposes and did not unduly trench on local interests.

Given the importance of this issue, and the divided vote in the Court of Appeal, this case seems like a very good bet for Supreme Court review.