Law Office Management
Aug. 2, 2010
Wage Wars
Inside the niche practice of determining and enforcing pay scales in public works projects.
San Francisco attorney Jon Welner first realized that there was a bright future in the niche of prevailing wage law in 2002, when a battle erupted over worker pay in the midst of the redevelopment of a former Bay Area military base. Millions in federal grants were being used to pay for the toxic cleanup, and a labor advocacy group insisted that because the developer was using government funds, the construction should be considered a public works project and the workers should earn "prevailing wages," or the equivalent of a union salary. "Suddenly, millions of dollars were at risk," recalls Welner, who represented a developer at the time and now is a partner with Downey Brand. (The request for prevailing wages was eventually withdrawn.) The billions in federal stimulus spending currently making its way to construction projects across the country will likely send additional work to attorneys like Welner, who seek either to influence whether a project qualifies for prevailing wages or to help workers enforce the higher pay scale. Construction or development companies that accept federal grants or loan guarantees, for example, may become subject to prevailing wage requirements on projects using government funds. But it's a small cadre of attorneys who handle these matters in California. "It's so specialized that probably 50 attorneys do the bulk of the work in the state," says John S. "Rocky" Miller Jr., a Los Angeles partner with Cox Castle & Nicholson. "It can be ambiguous and political." The U.S. Department of Labor makes prevailing wage determinations at the federal level, but in California the state Department of Industrial Relations is generally responsible for deciding whether state-funded construction workers should be paid at the higher rate. In practice, however, individual local agencies, such as school districts, often make the initial determination. Attorneys typically get involved when developers seek counsel on wages. Lawyers for both developers and workers may file briefs during informal determination proceedings to influence whether a project is paid under the higher wage standard. The financial stakes can be high - prevailing wages can increase con- struction costs by 20 to 40 percent. "A contractor could be a dollar under the prevailing wage per hour but it could cost the contractor $5 an hour under the penalties" if it's determined that the higher pay scale applies, says Richard M. Freeman, a San Diego?based partner at Sheppard Mullin Richter & Hampton. "That's why you keep the Bible - [the state] Labor Code chapter beginning with section 1720 - by your bedside at all times." To complicate things further, construction projects often are completed before the governing agency makes a decision on wages. Then, the developers leave the state and "no one is left to pay the workers' prevailing wage," says Ray Van der Nat, a Los Angelesbased sole practitioner who represents workers and unions. But attorneys on the enforcement side of prevailing wage matters do have legal remedies. They can complain to the Department of Industrial Relations or sue under common law and unfair competition clauses. Some suits become class actions, the specialty of Tustin attorney Richard E. Donahoo, who says he has recovered wages for "hundreds of workers on a project." Dennis B. Cook, a partner at Sacramento's Cook Brown who represents employers, says the recent proliferation of the practice makes sense, considering the origins of the federal law. The Davis-Bacon Act was passed in the 1930s to set a minimum wage for public works programs that were located in vastly different labor markets across the nation. "Back then, we were deep in a depression," notes Cook. "Now, we have a full-fledged depression within the construction industry and a stimulus bill, so it's no surprise that prevailing wage compliance and enforcement are coming back to full fruition again."
Kari Santos
For reprint rights or to order a copy of your photo:
Email
Jeremy_Ellis@dailyjournal.com
for prices.
Direct dial: 213-229-5424
Send a letter to the editor:
Email: letters@dailyjournal.com