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Reversal of Fortune: AB 219 is Back!

My partner, Jon Welner, is a leading practitioner of prevailing wage law in California and is the Chair of JMBM’s Prevailing Wage Group. He is also a member of JMBM’s Natural Resources and Mining Group and advises and defends the construction materials industry on prevailing wage matters including recent California legislation to expand prevailing wage law to cover the delivery of concrete to public work sites (AB 219).

— Kerry Shapiro

Reversal of Fortune: AB 219 is Back!

By Jon Welner

 

PREVAILING WAGE LAW is California’s “other” minimum wage. It requires workers to be paid union wages on publicly funded construction projects. But in recent years, the law in California has EXPANDED well beyond its initial purpose. 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.

U.S. Court of Appeals Reinstates Law That Makes Deliveries of Concrete Subject to California Prevailing Wage (AB 219)

In 2015 the California Legislature adopted AB 219, a ground-breaking law that extended prevailing wage requirements to material suppliers for the first time. Specifically, the law made deliveries of ready-mix concrete to public works subject to prevailing wage. (See prior post on AB 219 for more info.)

On June 30, 2016–the day before AB 219 took effect–eight ready-mix companies filed a lawsuit in federal court challenging the Constitutionality of the new statute on Equal Protection grounds. In essence, they argued it was unfair to single out ready-mix concrete companies for special treatment, leaving all other material suppliers unaffected.

In a dramatic move, on October 18, 2016, the federal court issued a preliminary injunction suspending enforcement of AB 219 by the Department of Industrial Relations, the primary state agency responsible for enforcing prevailing wage rules. (See prior post on the PI for more info.)

Now–in an even more dramatic twist–the U.S. Court of Appeals has weighed in, striking down the lower court’s preliminary injunction! (Technically, the Court of Appeals granted a motion to stay the preliminary injunction, suspending it until the Court of Appeals has a chance to rule on whether to uphold or overturn it. See Order.)

This means that AB 219 is once again in full effect and DIR is free to enforce compliance by ready-mix companies.

Whew! Can’t wait to see what happens next!

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Jon Welner is a leading practitioner of prevailing wage law in California. He is a Partner at Jeffer Mangels Butler & Mitchell LLP (JMBM) and Chair of JMBM’s Prevailing Wage Group. Contact him at JWelner@jmbm.com.

JMBM’s Prevailing Wage Group advises and defends developers, contractors, and manufacturers on the most challenging and complex prevailing wage matters in California.