Navigating the complex world of state and federal prevailing wage laws on behalf of our clients
JMBM's Prevailing Wage Group advises and defends developers, contractors, and manufacturers on the most challenging and complex prevailing wage matters in California.
Every construction project in California is at risk for prevailing wage claims.
The California Prevailing Wage Law was passed in the 1930s as a way to ensure that workers on public projects were paid at prevailing market rates. But in recent years, the Prevailing Wage Law has been dramatically reshaped and expanded. It has become a tool for workers to demand union wages on virtually any construction project in California. These claims can increase the cost of a major construction project by millions of dollars—and can be brought years after construction is complete.
Our goals are:
- To enable clients to properly structure their projects and move forward with confidence, knowing that prevailing wage liability has been addressed and minimized before the first shovel hits dirt; and
- To vigorously defend clients against government enforcement actions and worker lawsuits demanding the retroactive payment of prevailing wages.
CALIFORNIA PREVAILING WAGE LAW
California Prevailing Wage Law requires workers on publicly-funded construction projects—called "public works"—to be paid union wages, as determined by the State. However, in recent years, the definition of public works has greatly expanded. Many projects that were previously considered private are now "public works" subject to prevailing wage requirements. The rules governing which projects are covered are complex, rapidly changing, and largely unwritten.
As a result, many clients—even sophisticated and experienced developers—find themselves in situations where projects they were certain did not require prevailing wages are suddenly deemed to be public works. This can mean millions of dollars in liability for unpaid wages, penalties, and plaintiffs' legal fees.
The JMBM Prevailing Wage Group has unrivaled expertise in identifying prevailing wage issues and minimizing the application of the Prevailing Wage Law to our clients' projects.
FEDERAL PREVAILING WAGE LAW (DAVIS-BACON)
The federal prevailing wage law—known as the Davis-Bacon Act—has also expanded rapidly in recent years. Davis-Bacon requirements have been added to numerous federal grant and loan programs, perhaps most notably the U.S. Department of Energy loan guarantee programs for renewable energy.
More than 60 federal statutes now require varying degrees of compliance with Davis-Bacon. Our experienced team can help identify and resolve any issues related to compliance with these requirements.
MAKING PROJECTS "BULLET-PROOF"
The best way to resolve prevailing wage disputes is to prevent them from occurring. Our team works closely with clients to identify prevailing wage issues at an early stage and structure projects to minimize prevailing wage liability at the outset.
DEFENDING AGAINST ENFORCEMENT ACTIONS
In 2013 the California Labor Commissioner brought more than 400 enforcement actions against developers and contractors, and collected a record-breaking $17.7 million in retroactive prevailing wage payments. Our team has broad and deep experience defending against such administrative actions and has built an excellent track record in obtaining positive results for our clients.
OBTAINING ADMINISTRATIVE RULINGS
In some cases, the best approach is to obtain an advance ruling from the State on whether a proposed project is subject to prevailing wage requirements. Such a ruling is known as a Public Works Coverage Determination. The JMBM team frequently obtains such rulings and assists the Department of Industrial Relations in determining whether proposed projects are public works subject to prevailing wage requirements.
DEFENDING AGAINST WORKER LAWSUITS
Even when the State determines that a project is not subject to prevailing wage, individual workers and labor groups can bring prevailing wage lawsuits up to four years after work on the project is complete. Our seasoned team aggressively defends clients against such lawsuits.
NEGOTIATING WITH LABOR UNIONS
Sometimes the best way to avoid a prevailing wage dispute is to negotiate an agreement in advance with the unions, known as a Project Labor Agreement. Our team has extensive experience negotiating such agreements. Our team members have both prevailing wage expertise and traditional labor experience—a rare combination. In addition, the team can draw on the broad experience of our attorneys in the Labor & Employment Group with regard to any union issues.
Public Works Coverage Determinations
- For the master developer of a former naval base in the San Francisco Bay Area: defended against claim by labor group that all work on the former base is subject to prevailing wage. Claim withdrawn.
- For the master developer of a billion-dollar mixed-use development in Los Angeles County: represented developer in landmark decision holding that a publicly-funded environmental cleanup did not trigger prevailing wages on the rest of the project.
- For a Fortune 100 technology company: obtained favorable determination holding that the installation of water conservation devices at retail establishments is not subject to prevailing wage.
- For a major regional movie theater company: defended company against claim by labor group that construction of theater was subject to prevailing wages. State did not enforce claim.
- For a major national developer: represented developer in landmark decision holding that an abandoned redevelopment project sold off by a city is not subject to prevailing wage.
Civil Wage and Penalty Assessments
- For a major California real estate investment and management company: successfully defended company against half-million dollar assessment. Assessment dismissed in its entirety.
- For a leading national solar installation company: successfully defended company against half-million dollar assessment. Assessment dismissed in its entirety.
- For a San Francisco Bay Area developer: successfully defended against worker claims related to tenant improvements in a shopping mall. Action dismissed with very favorable settlement.
- For a leading national solar installation company: defending company against half-million dollar claim.
- For a national real estate investment management firm: advised firm on strategy for minimizing potential prevailing wage litigation on mixed-use project in San Francisco Bay Area.
Federal Prevailing Wage Matters (Davis-Bacon)
- For a major manufacturer of electric automobiles: advised on complex compliance issues related to U.S. Department of Energy loan guarantees.
- For a national non-for-profit organization that improves the energy efficiency of low-income, multifamily buildings: advised on complex compliance issues related to the American Recovery and Reinvestment Act of 2009 ("ARRA").
- For a Fortune 500 science and engineering firm: advised firm on compliance with Davis-Bacon requirements for employee benefits.
- For the master developer of a former Air Force base in the Central Valley: renegotiated construction contract to ensure compliance with Davis-Bacon requirements.
Project Labor Agreements
- For a major national homebuilder, successfully defended homebuilder in dispute with unions over implementation of project labor agreement for one of the largest mixed-use development projects in the San Francisco Bay Area. Achieved very favorable settlement.
- For a California developer, negotiating project labor agreement for major mixed-use project in the San Francisco Bay Area.