Friday, May 28, 2010

Court of Appeal Decision Reiterates That Class Certification Is Appropriate Only When The Claims Asserted Are Susceptible To Common Proof

Claims asserting violations of California's wage and hour laws are frequently if not predominantly brought as class actions.  One of the most hotly litigated issues in such cases is the issue of whether the case should or should not be certified as a class, which nearly always turns on whether common issues of law and fact predominate over individual issues.  Two recent Court of Appeal decisions emphasizing that plaintiffs seeking class certification carry the burden of showing that liability can be established based on common proof (i.e., proof applicable to all of the class members) may be helpful to employers opposing class certification.  

As we previously reported here, in Arenas v. El Torito Restaurants, et al., the Court of Appeal affirmedThe court stated: "Based on the record presented, the plaintiffs have not demonstrated that resolution of the common issues of act and law will be accomplished by common proof that can be extrapolated to all class members. Instead, the plaintiffs have demonstrated that the case is replete with individual factual issues." the trial court's denial of class certification based on the trial court's finding that plaintiffs failed to meet their burden of showing that common issues of law and fact predominate over individual issues. 

On May 26, 2010, in Bomersheim v. Los Angeles Gay and Lesbian Center, the Court of Appeal reversed the trial court's denial of class certification based on the Court of Appeal's holding the claims were susceptible of susceptible to common proof.  The Court of Appeal held that based on the unique facts of that case the issue of whether the defendant's alleged negligent medical treatment of patients who presented with a confirmed syphilis infection or reported sexual contact with persons known or suspected to be infected with syphilis proximately caused injury or other damages was susceptible to common proof.  The Court reasoned that whether the Centers patients underwent retesting and retreatment as a result of having been allegedly mistreated or for other reasons was susceptible to common proof because the Center's own records would tend to show the reason why a particular patient underwent retesting and retreatment. 

We think various wage and hour claims frequently are not susceptible to common proof.  For example, we think an individual employee's reasons for not taking a rest period or a meal period will seldom be reflected by an employer's records or by other evidence applicable to all of the class members and for that reason would not be susceptible to common proof.  

Thursday, May 27, 2010

Regulations Clarify Extension of Dependent Coverage Rule Under Affordable Care Act

By Paul Fleck, Amber Solano, and Jonathan Judge

On May 11, 2010, the Internal Revenue Service, Department of Labor, and Department of Health and Human Services issued interim final rules regarding the extension of health coverage for adult dependent children until the age of 26. The rules provide guidance on how the Affordable Care Act provision regarding extended coverage to adult dependents affects health insurance plans and employers.

Click here to download and to read the full alert.

Court of Appeal Decision Underscores Importance Of Promptly Invoking Arbitration Rights Lest They Be Waived

By Christopher S. Andre

On May 26, 2010, in Adolph v. Coastal Auto Sales, Inc., the California Court of Appeal affirmed the trial court's decision to deny the petition of a car dealer to compel arbitration in accordance with the terms of an arbitration agreement contained in a purchase agreement. The Court Appeal held that the trial court correctly denied the petition on the ground the car dealer waived its right to arbitrate by failing to promptly invoke its right to arbitration and by raising the arbitration agreement only after suffering a litigation setback in the pending litigation.

Although this decision does not involve an arbitration agreement between an employer and a current or former employee, we think the bases for the court's decision are equally applicable to employers and to employment arbitration agreements.

Therefore, when a dispute giving rise to a lawsuit against an employer is subject to an arbitration agreement, the employer should consider at the outset of the lawsuit whether to invoke an applicable arbitration agreement and, if so, consider promptly invoking the arbitration agreement. Unreasonable delay or engaging in conduct in the litigation inconsistent with enforcing one's right to arbitrate may well result in a waiver of that right.

Click here to download and to read a copy of the decision.

Wednesday, May 26, 2010

Federal Crackdown Targets Employers That Employ Undocumented Workers

By Christopher S. Andre

The Los Angeles Times reports here that the Immigration and Customs Enforcement ("ICE") agency, the largest investigative agency in the Department of Homeland Security ("DHS") is conducting a crackdown on employers that knowingly hire or retain undocumented workers. Alleged violators are being prosecuted in Federal court by the United States Attorney.

A press release issued by the Office of the United States Attorney for the Southern District of California announced an indictment against a San Diego French gourmet restaurant and bakery, its owner, and manager. The indictment alleges a variety of misdemeanor and felony charges against the restaurant, its owner, and a manager. In addition to the criminal charges, which carry maximum term of five years in prison per count and a fine of $250,000 per count, the government is also seeking to seize the restaurant and the property on which it is located.

Based on the press release, one of the bases for the charges is the restaurant, its owner, and a manager allegedly continued to employ some allegedly undocumented workers after receiving "no-match" letters from the Social Security Administration ("SSA") and paid those employees in cash after receiving those "no-match" letters.

The Los Angeles Times notes that the Obama administration's new "strategy contrast sharply with that of the Bush administration," which focused on arresting and deporting illegal workers and prosecuted few employers. The Times reports that "Obama called those raids ineffective and criticized them for dividing families and not holding employers accountable for creating a magnet for illegal crossers."

In light of the above, employers should take seriously "no-match" letters they might receive from SSA. An employer that receives a "no-match" letter and continues to employ the subject employee without taking further appropriate action appears to be at risk of being charged by the government with knowingly employing an undocumented employee.

Employers seeking to reduce the likelihood of unknowingly hiring undocumented workers can also enroll in the DHS' E-Verify program, "an Internet-based system that allows an employer, using information reported on an employee's Form I-9, Employment Eligibility Verification, to determine the eligibility of that employee to work in the United States." The DHS notes that the E-Verify is for most employers "voluntary and limited to determining the employment eligibility of new hires only. There is no charge to employers to use E-Verify."

Click here to read the Los Angeles Times article.

Tuesday, May 25, 2010

Court Holds Recently Promoted Probation Officer Who Did Not Pass Probabation Was Not Entitled To An Administrative Appeal

By Irma Rodriquez Moisa and Jay Trinnaman

On May 17, 2010, in Guinn v. County of San Bernardino, the California Court of Appeal held that a a county probation officer who did not pass his probationary period after being promoted to a supervisory position was not entitled under the the Public Safety Officers Procedural Bill of Rights Act to an administrative appeal of the County's decision to return him to his prior position.

Click here to read the entire alert.

Friday, May 21, 2010

Effective June 21, 2010, Federal Contractors Are Required To Post Notices Informing Employees Of National Labor Relations Act Rights

By Jonathan Judge

On May 20, 2010, the Department of Labor ("DOL") issued a final rule requiring federal contractors with prime contracts over $100,000 and federal subcontractors with subcontracts over $10,000 to post notices informing employees of certain rights under the National Labor Relations Act ("NLRA"). This new requirement takes effect June 21, 2010.

The required notice identifies employees' rights under the NLRA to form a union, to join a union, to support a union; provides examples of conduct by employers and conduct by unions that interferes with those rights; and states how employees can contact the National Labor Relations Board to ask questions or to file complaints.

Contractors and subcontractors subject to the new rule must post the required notice in the workplace so that it is prominent and can be readily seen by employees. Specifically, the required notice must be posted where other similar required notices are posted.

Although electronic posting cannot be used in place of physical posting, contractors and subcontractors that customarily also post electronically required employee notices must also post electronically the NLRA rights notice via a link to the Office of Labor-Management Standards ("OLMS") website. The link to the OLMS website must state: "Important Notice about Employee Rights to Organize and Bargain Collectively with Their Employers." Employers that post the notice electronically, must place the required link to the notice where the employer customarily places similar required notices, and the link to the OLMS website must be no less prominent than other notices.

Posters can be downloaded in two formats: (1) a 11x17-in one-page poster or (2) a 11x8.5-inch two-page poster.

If a significant portion of an employer's workforce is not proficient in the English language, the employer must post the required notice in the language or languages the employees speak. The OLMS states it will provide translations of the required notice.

Employers who violate the posting regulations will be subject to sanctions for non-compliance. The potential sanctions include: suspension or cancellation of an existing contract, debarment from future Federal contracts or subcontracts, and placement on a list of contractors and subcontractors declared ineligible for future contracts. The Director of the OLMS will distribute that list to all Federal executive agencies.

This new rule implements Executive Order 13496 President Obama signed on January 28, 2009, and represents a 180 degree departure from Executive Order 13201 President Bush signed on February 21, 2001. Executive Order 13201 issued by President Bush required providers of goods or services to the executive branch to post a Beck notice informing employees of their rights to not join a union and their right to not pay agency fees associated with the political and other non-representation activities of a union. Executive Order 13496 issued by President Obama revoked Executive Order 13201 issued by President Bush, and employers are no longer required to post a Beck notice.

Thursday, May 20, 2010

California Supreme Court Clarifies Who Can Be Liable For Alleged Wage And Hour Violations

By Christopher S. Andre and Scott K. Dauscher

Today, by a unanimous decision in Martinez v. Corky N. Combs, the California Supreme Court clarified the standard courts must use to determine who is liable as an "employer" for violations of wage and hour laws embodied in Industrial Welfare Commission ("IWC") Wage Orders, including claims for unpaid or underpaid wages.

We think the decision is generally favorable for employers because the Supreme Court expressly rejected on the facts before it a number of theories of liability plaintiffs sometimes assert when attempting to hold liable for wage and hour claims persons or entities other than the obvious "employer."

Miguel Martinez and others were employed by Isidro Munoz, Sr., who did business as Munoz & Sons ("Munoz"), as seasonal agricultural workers who picked and sometimes packed strawberries. After Munoz failed to pay the employees' wages for a period of weeks, the employees submitted claims to the Division of Labor Standards Enforcement and later filed suit against Munoz and against two businesses that regularly purchased strawberries from Munoz and against certain employees of those businesses. The employees alleged the defendants were all liable for unpaid minimum wages (Labor Code section 1194), for liquidated damages for unpaid minimum wages (section 1194.2), for unpaid contract wages (section 216) for waiting time penalties (section 203), for breach of contract, and derrivative claims under California's Unfair Competition Law (Business and Professions Code section 17200, et seq.).

The trial court and the Court of Appeal determined that neither the other businesses that did business with Munoz nor the employees of those businesses were liable to the employees for their claims. The employees then petitioned the California Supreme Court to review the Court of Appeal's decision affirming the trial court's decision.

In a lengthy 56-page opinion, the Supreme Court revisited its decision in Reynolds v. Bement (2005) 36 Cal.4th 1075 holding that a corporation's officers and directors are not personally liable for unpaid overtime compensation and concluded that it "spoke too broadly in concluding that the common law defines the employment relationship in actions under [Labor Code] section 1194. The Supreme Court now states "an examination of section 1194 in its full historical and statutory context shows unmistakably that the Legislature intended to defer to the IWC's definition of the employment relationship in actions under [section 1194]." The Supreme Court explained, nevertheless, that its holding that a corporation's officers and directors are not personally liable for wage and hour violations when acting within the scope of their employment remains in tact because that opinion "properly holds that the IWC's definition of 'employer' does not impose liability on individual corporate agents acting within the scope of their agency."

The Supreme Court went on to hold that the IWC's definition of "employer" does not incorporate federal law. Similarly, and potentially significantly, the Supreme Court noted also that the IWC's broader definition of the term "hours worked" was in response to enactment of the Federal Portal-to-Portal Act, "which relieved employers of the obligation to compensate employees for time spent traveling to the work site, even in an employer's vehicle, and for time spent in activities 'preliminary and postliminary' to work," and intended by the IWC to provide California employees with greater protection than Federal law provides.

Turning to the IWC' s definition of the employment relationship in the wage orders, the Supreme Court now states that under the IWC's definition, to "employ" means "(a) to exercise control over the wages, hours or working conditions, or (b) to suffer or permit to work, or (c) to engage [a person to work], thereby creating a common law employment relationship. "

Applying the above test to the facts of the case in the record before it, the Supreme Court further held:

1. Neither of the businesses that did business with Munoz had a business relationship with Munoz that allowed those businesses to "exercise control over Munoz's employees' wages and hours."

2. Neither of the businesses that did business with Munoz "suffered or permitted plaintiffs to work because neither had the power to prevent the plaintiffs employees from working." Rather, Munoz and his foreman had exclusive power to do that.

3. Neither of the businesses that did business with Munoz had a business relationship with Munoz that allowed either of them to directly or indirectly "exercise control over Munoz's employees' wages and hours." Rather, "Munoz alone, with the assistance of his foremen, hired and fired plaintiffs, trained and supervised them, determined their rate and manner of pay . . ., and set their hours, telling them when and where to report to work and when to take breaks."

4. Neither of the businesses that did business with Munoz nor the employees of one of those businesses who encouraged Munoz' employees to continue working to help Munoz and who told Munoz' employees that they would be paid once Munoz received additional payments from one of the business did not "engage to work" the employees of Munoz because the facts and circumstances made it clear that no offer of employment was being made.

5. Although employees of the businesses that did business with Munoz frequently spoke in the filed with Munoz' employees about how the strawberries were to be packed, they nevertheless did not exercise sufficient control over how services are performed and hence the working conditions of Munoz' employees because no evidence in the record showed that any of Munoz' employees thought they must obey anyone other than Munoz or Munoz' foremen.

6. The Supreme Court rejected also the plaintiffs' contention that they were entitled to recover their unpaid wages as third party beneficiaries of a contract between Munoz and one of the businesses that did business with Munoz. Because the contract at issue required Munoz to comply with all applicable laws, including "labor," the plaintiff employees argued that the business was liable to them for their claims. The Supreme Court rejected that argument, stating, "[t]he plain import of these contractual provisions is that Munoz agreed to pay his employees the wages required by law, assuming sole responsibility in the matter. . . ."

Click here to download and to read a copy of the decision.

Congress Votes To Extend To Year End Unemployment Benefits And COBRA Subsidies

By Christopher S. Andre

The Associated Press reports that this morning, House and Senate leaders announced that the Congress has approved legislation that would extend until year end unemployment benefits and COBRA subsidies. The cost to taxpayers is estimated to be $ 47 Billion. We anticipate President Obama will the sign the bill. Click here to read more.

Wednesday, May 19, 2010

California Department of Industrial Relations Announces Public Works Enforcement Task Force

By Scott K. Dauscher and Christopher S. Andre

On May 18, 2010, the California Department of Industrial Relations issued a press release announcing it filed this week proposed regulations to establish a "Compliance Monitoring Unit" or "CMU," the stated purpose of which is "ensuring compliance with the State's prevailing wage laws on public works projects in California." According to the the press release, "[t]he CMU will review certified payroll records, verify that workers on the projects are paid the correct rate of pay for the work performed, and will enforce compliance with pay, overtime, record keeping and hours limitation requirements." The press release states the CMU is expected to be operational this August after the proposed regulations are approved.

In light of this development, employers working on construction projects funded in whole or in part by public funds should consider taking steps to ensure they are complying with applicable public works law and regulations. Penalties for non-compliance can be substantial and can include a contractor being barred from working on public works projects in the future.

For more information, click here.

California Supreme Court Schedules Oral Arguments In Cases Of Potential Interest To Employers

By Christopher S. Andre

The California Supreme Court has scheduled for oral argument two cases of potential interest to employers:

On May 25, 2010, the Court will hear oral arguments in Lu v. Hawaiian Gardens Casino. The issue to be decided in that case is whether "Labor Code section 351, which prohibits employers from taking 'any gratuity or part thereof that is paid, given to, or left for an employee by a patron,' create a private right of action for employees?" In other words, the Court will decide whether a current or former employee can personally sue his or her current or former employer for alleged violation of Labor Code section 351.

On June 2, 2010, the Court will hear oral arguments in Clark v. Superior Court. Although the issue to be decided is whether statutory penalties for violations of California's elder abuse laws are recoverable as restitution under California's Unfair Competition Law ("UCL") codified at California Business and Professions Code section 17200, et seq., the case is potentially of interest to California employers because the California Labor Code provides for a variety of penalties, and it is currently understood that such penalties are not recoverable as "restitution" under the UCL. If the Court holds that statutory penalties for violations of California's elder abuse laws are recoverable as restitution under the UCL, that might pave the way for plaintiff current or former employees to argue that Labor Code penalties are likewise recoverable under the UCL.

We will report on any further significant developments in these cases as information becomes available.

Tuesday, May 18, 2010

California Supreme Court Decision Might Result In More Advertising By Attorneys Seeking Plaintiffs To Participate In Class Action Lawsuits

By Christopher S. Andre

On May 17, 2010, in Simpson Strong Tie Co., Inc. v. Pierce Gore, the California Supreme Court held that a manufacturer could not maintain a lawsuit against an attorney based on allegedly defamatory advertisements by the attorney seeking plaintiffs to participate in a potential class action lawsuit against the manufacturer on the ground that those advertisements were protected by California's anti-SLAPP statute.

After learning that some metal fasteners used in wood frame construction can be susceptible to corrosion and a shortened life when used with pressure treated lumber, containing certain chemicals, an attorney published in two newspapers an advertisement stating as follows:



If your deck was built after January 1, 2004 with galvanized screws manufactured by Phillips Fastener Products, Simpson Strong-Tie or Grip-Rite, you may have certain legal rights and be entitled to monetary compensation, and repair or replacement of your deck.

Please call if you would like an attorney to investigate whether you have a potential claim:
After conducting a survey showing that shoppers who read the advertisement were significantly more likely to believe Simpson's galvanized screws were defective or of low quality and were significantly less likely to purchase galvanized screws manufactured by Simpson, Simpson filed suit alleging, among other things, that the advertisement falsely implied that Simpson's products were defective and that the attorney used "'the false and misleading Advertisement to recruit potential plaintiffs to participate in an unjustified class action lawsuit against Simpson.'"

The attorney defended the lawsuit by invoking California's anti-SLAPP (Strategic Lawsuit Against Public Participation) statute. That statute requires courts to dismiss a lawsuit if: (1) the defendant (i.e., the speaker or advertiser) shows that the "'cause of action . . . aris[es] from' an act by the defendant 'in furtherance of the [defendant's] right of petition or free speech . . . in connection with a public issue'" and (2) the plaintiff (i.e., the complaining party) does not "establish 'a probability that the plaintiff will prevail on the claim.'"

The trial court and the court of appeal both concluded that the attorney met his burden of showing the advertisement was an act in furtherance of his right of free speech about a public issue, and Simpson did not meet its burden of establishing a probability of prevailing on its claims based on the advertisement.

The issue decided by the California Supreme Court was whether the narrow exception to the anti-SLAPP statute for "commercial speech" applied. The Court held that Simpson failed to meet its burden of showing the exemption applied to defeat the attorney's anti-SLAPP defense. Construing the "commercial speech" exemption narrowly, the Court held that even if the advertisement did imply that Simpson's galvanized screws are defective, the "commercial speech" exception to the anti-SLAPP statute did not apply because the advertisement was not about the attorney's business or about a competitor's 'business operations, goods, or services.'"

We believe this decision may result in more frequent and perhaps bolder advertising by plaintiff's attorneys hoping to recruit plaintiffs for potential class action lawsuits against manufacturers, retailers, home builders, and other businesses, including class action wage and hour lawsuits.

Click here to download and to read a copy of the decision.

Wednesday, May 12, 2010

California Supreme Court Denies Review Of Court Of Appeal Decision That Might Make Class Certification Easier In Wage And Hour Cases

By Christopher S. Andre and Scott K. Dauscher

As we previously reported here, in Jaimez v. DAIOHS USA, Inc., a decision we think is wrongly decided in many ways, the California Court of Appeal might have made it significantly easier for plaintiffs to obtain class certification in wage and hour cases.

Alex Jaimez was employed by DAIOHS USA, Inc., as a Sales Route Representative, and filed suit alleging he was misclassified as an exempt employee during part of his employment, that he was not paid for all hours worked, that the did not receive all required meal and rest periods, and that his wage statements were not accurate.

The trial court denied Jaimez' motion for class certification, finding, among other things, that common issues of law and fact did not predominate and that Jaimez was not an adequate class representative.

In a wide-ranging opinion, the Court of Appeal reversed the trial court's decision to deny class certification. According to this Court of Appeal, the trial court erred when it found based on the evidence submitted in support of and in opposition to the motion for class certification that individual issues would predominate over common questions of law and fact. According to this Court of Appeal, in determining whether common issues of law and fact predominate, the inquiry is whether the plaintiff's "theory of recovery" is likely to prove amenable to class treatment.

The court's opinion might be read by some to mean that a trial court cannot consider the merits of evidence offered to rebut a plaintiff's "theory of recovery" (i.e., the plaintiff's allegations of wrongdoing) when ruling on a motion for class certification.

The court's opinion contains also statements that might be read by some to mean that meal periods cannot be waived, that employers must ensure that employees take their meal periods, and that an employee who alleges he or she received inaccurate wage statements meets the requirement of showing actual injury if the statements are inaccurate and if he or she was confused about whether he or she was compensated for all hours worked.

In one bright spot for employers, the court affirmed the trial court's finding that plaintiff Jaimez was not an adequate class representative because, among other things, Jaimez lied on his employment application about his felony conviction and admitted in deposition his view that it is acceptable to lie in order to obtain or maintain employment

The Court of Appeal initially did not certify the opinion for publication. However, in response to requests by a number of plaintiffs' attorneys and associations of plaintiffs' attorneys, the Court of Appeal certified the opinion for publication on February 8, 2010.

As we previously reported here, on March 8, 2010, we filed with the California Supreme Court a request that the Court of Appeal's decision be depublished, and on March 15, 2010, DAIOHS USA, filed with the California Supreme Court a petition for review of the Court of Appeal's decision.

Today, the California Supreme Court denied both DAIOHS USA's petition for review of the Court of Appeal's decision and our separate request that the Court of Appeal's decision be depublished. Had either the petition for review or the depublication request been granted, the Court of Appeal's decision would no longer have been citeable as precedent.

With this latest action by the California Supreme Court, the unfortunate trend of California appellate court decisions generally favoring employees over employers continues.

Click here to download and to read a copy of the Court of Appeal's decision.

Friday, May 7, 2010

Department of Labor Administrative Interpretation States Duties Of Mortgage Loan Officers Do Not Qualify As Exempt Duties

By Ronald W. Novotny

As we previously reported here, On March 24, 2010, the United States Department of Labor ("DOL") Wage and Hour Division made a significant change in its compliance assistance by moving from its longstanding practice of issuing fact specific opinion letters to issuing more general, across-the-board Administrator's Interpretations. The change is significant because it likely signals the DOL's intention to more aggressively establish its own interpretation of federal wage and hour laws.

In the first such Administrator's Interpretation, the DOL revisited the seemingly settled issue of whether mortgage loan officers qualify as exempt employees under the Fair Labor Standards Act ("FLSA"). Reversing two prior determinations that mortgage loan officers ordinarily qualify as exempt employees and therefore not entitled to be paid premium pay when they work overtime, the DOL now takes the position that the routine duties of such employees do not qualify as exempt duties.

The DOL defined the position as persons employed by financial institutions as mortgage loan officers, representatives, consultants, or originators. The typical duties include receiving internal leads, contacting potential customers, collecting required information from customers and entering that information into a computer, assessing and recommending loan products, and compiling customer documents for handling by underwriters or loan processors.

The DOL revisited the issue of whether such duties should be characterized as "non-manual work directly related to the management or general business operations of the employer or its customers" and therefore within the scope of the "administrative employee" exemption from the premium pay requirements of the FLSA.

The DOL now concludes that loan officers do not qualify as exempt employees because the work they perform is predominantly "production work" and not "administrative work." Likening mortgage loan officers to inside salespersons, the DOL now characterizes loan officers' duties as the "production work of an employer engaged in selling or brokering mortgage loan products" and not related to internal management of the business. The DOL now takes the position also that loan officers' duties do not relate to the "general business operations" of the employer's customers (who are typically individual consumers).

As part of its interpretation, the DOL withdrew a 2001 opinion letter and a 2006 opinion letter stating mortgage loan officers can qualify as exempt employees.

We think this new administrative interpretation signals a willingness on the part of the Obama Administration to reverse prior administrative interpretations interpreting FLSA exemptions more broadly.

Although this more recent administrative interpretation is not binding on the courts, current or former employees asserting they are or were misclassified as exempt employees can cite to this new administrative interpretation as persuasive authority from the administrative agency charged with enforcement of the FLSA.

In light of this new interpretation, financial institutions should consider consulting with experienced counsel to determine whether employees previously thought to be exempt would still be considered exempt employees.

Click here to download and to read a copy of the administrative interpretation.

Thursday, May 6, 2010

DIR Director Reverses Original Decision: Now Prevailing Wages Are NOT Required for Certain Off-Site Fabrication

By Robert Fried

California contractors were stunned in November 2008 when the Director of the California Department of Industrial Relations ("DIR") issued a determination that a specific contractor, Russ Will Mechanical, should have paid prevailing wages to its workers who fabricated HVAC parts in the company’s permanent off-site fabrication shop for a specific public works project. Russ Will Mechanical filed an administrative appeal of the determination.

Now, the DIR has granted the appeal and reversed the 2008 determination. Russ Will Mechanical did not have to pay prevailing wage to its workers in this specific case. This is excellent news for California contractors concerned about the cost and ambiguities of the original determination. Click here to download and read the DIR Decision on Administrative Appeal - Russ Will Mechanical.

In his May 3, 2010 decision, the DIR Director responded favorably to the argument that the DIR should interpret California prevailing wage law consistently with the federal prevailing wage law, known as the Davis-Bacon Act. According to the decision, California courts have relied on federal cases interpreting the Davis-Bacon Act when they have interpreted California prevailing wage law. As a result, interpretations of the state prevailing wage law are “in harmony” with federal prevailing wage law. When this approach is taken to the Russ Will Mechanical case, the conclusion is that the specific case of off-site fabrication at issue was not done in the execution of public works construction as defined under California law.

Editor's note: Robert served as interested party counsel in this case.