There are 116 charter cities in California identified by the League of California Cities. The state constitution allows these cities to establish their own policies regarding purely municipal affairs, thus freeing themselves from the rules and mandates of the state government.

Since 1931, when California’s prevailing wage law was first established, charter cities have been able to establish their own prevailing wage policies for purely municipal public works construction or any private construction that gets government financial assistance solely from a municipal funding source. But the California Supreme Court will soon hear oral arguments in a lawsuit filed by the State Building and Construction Trades Council of California, AFL-CIO, to prevent the City of Vista and other charter cities from establishing their own prevailing wage policies.

This umbrella group for the state’s construction unions contends that prevailing wage is a “matter of statewide concern” rather than a “municipal affair,” and therefore charter cities must comply with state prevailing wage mandates for purely municipal public works construction. The unions lost their argument in state superior court and in a state appellate court opinion. Now the California Supreme Court is hearing the unions’ appeal.

Associated Builders and Contractors of California and the League of California Cities filed amicus curiae briefs with the California Supreme Court in support of the City of Vista. The following organizations submitted amicus briefs in support of the State Building and Construction Trades Council of California: the Construction Employers’ Association, the Southern California Labor-Management Operating Engineers Contract Compliance Committee, a coalition of several unionized contractor associations, the Northern California Basic Crafts Alliance, and Attorney General (and candidate for Governor) Jerry Brown.

To track the outcome of this case, go to the docket (register of actions) for State Building & Construction Trades Council v. City of Vista (Case No. S173586) at California Courts – Appellate Court Case Information and go to the bottom of the page to request automatic email notifications of new developments.

According to a report published by the Associated Builders and Contractors, California Cooperation Committee (ABC-CCC), there are currently 35 charter cities that exempt all purely municipal public works construction from state prevailing wage mandates. Other charter cities exercise their power over prevailing wage policies in diverse and creative ways.

Just in the area of determining prevailing wages, charter cities conduct their own prevailing wage surveys (Town of Truckee), allow their city managers to recommend city prevailing wage rates (City of Fortuna, City of Fresno, City of Glendale, and City of San Jose), and allow a city commission to recommend city prevailing wage rates (City of San Francisco).

Two charter cities allow their city councils to alter prevailing wage coverage criteria with a supermajority vote (City of El Centro and City of Santee). Three charter cities adopt minimum project cost thresholds that are higher than the threshold of $1000 in Labor Code Section 1771 (City of Fortuna, City of Oroville, and City of Sacramento). The City of Fresno exempts non-profits from prevailing wage mandates. There are two charter cities that exempt private contractors from prevailing wage except for specific projects (City of Irvine and City of San Diego).

One charter city gives itself specific authority to set prevailing wage requirements that exceed the state prevailing wage rates. The City of San Francisco can set a prevailing wage rate that is “the highest general prevailing rate of wages,” as opposed to Labor Code Section 1770 that sets “the general prevailing rate of per diem wages.”

Indeed, there are numerous theoretical prevailing wage policies that a charter city could adopt for private contractors or workers. For example, if the California State Legislature or governor allows Labor Code Section 1720.4 to expire on January 1, 2012, ABC of California expects that numerous charter cities will enact charter amendments, ordinances, resolutions, or policies that exempt “work performed by a volunteer” from prevailing wage coverage.

The outcome of State Building & Construction Trades Council v. City of Vista will either embolden more charter cities to adopt their own prevailing wage policies, or it will eliminate the practice altogether.  It’s a case that all public works contractors should monitor.