California: Supreme Court Expands Applicability of Prevailing Wages

In Kaanaana v. Barrett Business Services Inc., the California Supreme Court stated that work done for a “special district” can be considered a “public work” under specified labor codes and would therefore be subject to prevailing wages. This is a departure from the traditional industries considered to be covered under prevailing wages, such as construction, alteration, demolition, installation, or repair.

More specifically, in Kaanaana, the employer was a staffing agency that provided workers to the Los Angeles Sanitation District. These workers were engaged in sorting trash and recyclable materials.  A class action lawsuit brought against the staffing agency asserted the workers should have been paid prevailing wages, and the California Supreme Court agreed.

The Court looked at two provisions of the California Prevailing Wage (CPL) law, which references two Labor Code sections. Specifically, Labor Code Section 1720(a)(1) defines “public work” as “construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds…” The second provision, Labor Code Section 1720(a)(2), further defines public work as “work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type.”

The staffing agency workers were engaged in work done for a special district. The Court noted that a previous legislature specifically removed the word “construction” from a prior version of the law, and interpreted “public works” in section 1720(a)(2) to mean that all the trash sorters’ labor now qualified as public works. The Court indicated that the intention of the PWL is to protect workers engaged in service to public works, and that the trash sorters’ labor fell within that class.

As a result of Kaanaana, prevailing wages may be applicable for workers engaged in special districts, even if it is no longer affiliated with the traditional interpretation of public works related to construction, repairs, and so forth.

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