Minnesota Chapter of Associated Builders and Contractors, Inc. v. Minnesota Dept. of Labor and Industry

• Citation: 47 F.3d 975
• Decision Date: 03 April 1995
• Docket Number: No. 93-4032,AFL-CI,A,93-4032
• Parties: , 129 Lab.Cas. P 57,837, 19 Employee Benefits Cas. 1111, 2 Wage & Hour Cas.2d (BNA) 1003, Pens. Plan Guide P 23906K MINNESOTA CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS, INC., a Minnesota corporation; Winkelman Building Corporation, a Minnesota corporation; Javens Mechanical Contracting Co., a Minnesota corporation; Willmar Electric Service, Inc., a Minnesota corporation; Duininck Bros., Inc., a Minnesota corporation, Plaintiffs-Appellants, v. MINNESOTA DEPARTMENT OF LABOR AND INDUSTRY; John Lennes, Commissioner of the Minnesota Department of Labor and Industry; Minnesota Department of Transportation; James Denn, Commissioner of the Minnesota Department of Transportation, Defendants-Appellees, Building and Construction Trades Department,micus Curiae.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 975

47 F.3d 975

63 USLW 2524, 129 Lab.Cas. P 57,837,

19 Employee Benefits Cas. 1111,

2 Wage & Hour Cas.2d (BNA) 1003,

Pens. Plan Guide P 23906K

MINNESOTA CHAPTER OF ASSOCIATED BUILDERS AND CONTRACTORS,

INC., a Minnesota corporation; Winkelman Building

Corporation, a Minnesota corporation; Javens Mechanical

Contracting Co., a Minnesota corporation; Willmar Electric

Service, Inc., a Minnesota corporation; Duininck Bros., Inc., a Minnesota corporation, Plaintiffs-Appellants, v. MINNESOTA DEPARTMENT OF LABOR AND INDUSTRY; John Lennes,

Commissioner of the Minnesota Department of Labor and

Industry; Minnesota Department of Transportation; James

Denn, Commissioner of the Minnesota Department of

Transportation, Defendants-Appellees,

Building and Construction Trades Department, AFL-CIO, Amicus Curiae.

No. 93-4032.

United States Court of Appeals,

Eighth Circuit.

Submitted Oct. 13, 1994.

Decided Feb. 16, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied April

3, 1995. ^*

Douglas P. Seaton, Minneapolis, MN, argued, for appellant.

Nancy J. Leppink, Asst. Atty. Gen., St. Paul, MN, argued, for appellee.

Before WOLLMAN, Circuit Judge, JOHN R. GIBSON, Senior Circuit Judge, and HANSEN, Circuit Judge.

JOHN R. GIBSON, Senior Circuit Judge.

The Minnesota Chapter of Associated Builders and Contractors and four of its members ¹ appeal from the district court's ² ruling that the Employee Retirement Income Security Act of 1974, 29 U.S.C. Secs. 1001-1461 (1988 & Supp. V 1993), did not preempt the Minnesota Prevailing Wage Law. ³ Minn.Stat. Secs. 177.41-44 (1992); Minn.R. 5200.1000-1120 (1993 & Supp. I 1994). On appeal, Minnesota Chapter argues that ERISA preempts the Minnesota Prevailing Wage Law because: (1) provisions of the Prevailing Wage Law specifically refer to ERISA employee welfare benefit plans in defining the prevailing wage rate and "relate to" ERISA plans; and (2) the apprenticeship exemption to the Prevailing Wage Law is not saved from preemption by 29 U.S.C. Sec. 1144(d). We affirm the judgment of the district court.

Minnesota Chapter is a trade association representing approximately two hundred construction contractors that frequently bid and perform state-funded construction and maintenance. Generally, the Minnesota Prevailing Wage Law requires contractors to pay workers on state projects at least "the prevailing wage rate in the same or most similar trade or occupation in the area." Minn.Stat. Secs. 177.43, subd. 1(2) and 177.44, subd. 1; but see Minn.Stat. Sec. 177.43, subds. 2 and 7, Minn.Stat. Sec. 177.44, subd. 2. "Area" is defined as "the county or other locality from which labor for any project is normally secured." Minn.Stat. Sec. 177.42, subd. 3. The statute defines the prevailing wage rate as:

[T]he hourly basic rate of pay plus the contribution for health and welfare benefits, vacation benefits, pension benefits, and any other economic benefit paid to the largest number of workers engaged in the same class of labor within the area and includes, for the purposes of section 177.44, rental rates for truck hire paid to those who own and operate the truck. The prevailing wage rate may not be less than a reasonable and living wage.

Minn.Stat. Sec. 177.42, subd. 6. An employer can divide the amount between wages and benefits as it chooses, so long as the combined total meets or exceeds the prevailing wage rate.

Employers are not required to pay the prevailing wage rate to apprentices who are "employed and registered in a bona fide apprenticeship program registered with the U.S. Department of Labor or with a state apprenticeship agency." Minn.R. 5200.1070, subp. 2. The Minnesota Department of Labor and Industry (DOLI) is a federally-approved State Apprenticeship Council under 29 C.F.R. Sec. 29.12 (1994) with authority to register and approve all local apprenticeship training programs.

In this litigation, Minnesota Chapter moved for summary judgment on the grounds that ERISA preempted the Minnesota Prevailing Wage Law. The district court denied the motion. Then the agencies moved for summary dismissal of Minnesota Chapter's ERISA preemption claim. The district court granted summary judgment for the agencies. On appeal, Minnesota Chapter essentially argues the same issues presented to the district court.

We review the district court's grant of summary judgment de novo, viewing all evidence in the light most favorable to the Minnesota Chapter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Boise Cascade Corp. v. Peterson, 939 F.2d 632, 636 (8th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 3014, 120 L.Ed.2d 887 (1992). Because the underlying facts are undisputed, the issue before us is purely one of law: whether the Minnesota Prevailing Wage Law is preempted by ERISA? See Boise Cascade, 939 F.2d at 636.

I.

ERISA preempts every state law which " 'relate[s] to' an employee benefit plan governed by ERISA." FMC Corp. v. Holliday, 498 U.S. 52, 58, 111 S.Ct. 403, 407, 112 L.Ed.2d 356 (1990) (quoting 29 U.S.C. Sec. 1144(a)). A state law "relates to" an employee benefit plan if it has "a connection with or reference to such a plan." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983).

In denying Minnesota Chapter's summary judgment motion, the district court stated that although ERISA preempts a state law which explicitly refers to a benefit plan regulated by ERISA, 29 U.S.C. Sec. 1144(a), this preemption applies only to references to benefit plans, and not references to benefits. ⁴ Minnesota Chapter of Associated Builders and Contractors, Inc. v. Minnesota Dep't of Labor and Indus., 866 F.Supp. 1244, 1246 (D.Minn.1993) (citing Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 8, 107 S.Ct. 2211, 2215, 96 L.Ed.2d 1 (1987)). The district court reasoned that the prevailing wage law undisputedly refers to benefits but not to any benefit plan and, therefore, is not expressly preempted. Id. The listing of an ERISA benefit as an example of benefits to be factored into the prevailing wage is in and of itself inconsequential. See Keystone Chapter, Associated Builders and Contractors, Inc. v. Foley, 37 F.3d 945, 957 n. 17 (3d Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1393, 131 L.Ed.2d 244 (1995). We are persuaded that the district court was correct in so holding.

II.

The district court also looked to the factors recognized in Arkansas Blue Cross & Blue Shield v. St. Mary's Hospital, Inc., 947 F.2d 1341, 1344 (8th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 2305, 119 L.Ed.2d 227 (1992), to determine whether the Prevailing Wage Law is preempted by implication because it "relates to" ERISA plans. Minnesota Chapter, 866 F.Supp. at 1246-48. These factors include whether the state law: (1) negates an ERISA plan provision; (2) affects relations between primary ERISA entities; (3) changes the structure of ERISA plans; (4) affects ERISA plan administration; (5) affects ERISA plans economically; (6) exercises traditional state power; and (7) may be preempted consistent with other ERISA provisions. Arkansas Blue Cross & Blue Shield, 947 F.2d at 1344-45 (citations omitted). These factors must be assessed in light of the "totality of the state statute's impact on the plan." Id. at 1345.

Minnesota Chapter does not argue that the Prevailing Wage Law negates an ERISA plan provision or is inconsistent with other ERISA provisions. Thus we confine our discussion to the other Arkansas Blue Cross factors.

The district court determined that the Prevailing Wage Law does not affect relations between ERISA entities or alter the structure of ERISA plans. Minnesota Chapter, 866 F.Supp. at 1247. We are convinced of the same. The Prevailing Wage Law does not require an employer to provide any level of benefits. It requires an employer to compensate employees at the prevailing wage rate. The employer can meet the prevailing wage rate by adjusting the amount of wages without affecting benefit levels. Any economic benefit provided by the employer is deducted from the prevailing wage rate. Further, any tax incentive to provide benefits rather than wages would exist regardless of the prevailing wage statute.

The district court held that the calculation of hourly benefits does not place an administrative burden on any ERISA plan. Id. at 1246-47. Calculating costs and keeping records may increase the cost of the benefit plans, but these costs need be calculated only if the employer seeks to include benefits as a portion of the prevailing wage. The other recordkeeping required by the statute, i.e. payroll data on public works projects, Minn.Stat. Secs. 177.43, subd. 6, 177.44, subd. 7, is general employment data which Minnesota would likely require even if it excluded benefits from the calculation altogether. Any wage regulation has the potential to increase costs to the employer. However, the incidental impact produced by Minnesota's Prevailing Wage Law is too "tenuous, remote [and] peripheral" to lead to preemption. Shaw, 463 U.S. at 100 n. 21, 103 S.Ct. at 2901 n. 21.

The regulation of labor on state-funded construction projects falls within the scope of the state's traditional police power which we must presume that Congress did not intend to preempt. See Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740, 105 S.Ct. 2380, 2389, 85 L.Ed.2d 728 (1985); Firestone Tire & Rubber Co. v. Neusser, 810 F.2d 550, 555 (6th Cir.1987). Here, the purpose of ERISA is not hindered by the Minnesota prevailing wage statute. The goal of ERISA preemption is "to ensure benefit plans will be governed by only a single set of regulations," FMC Corp., 498 U.S. at 60, 111 S.Ct. at 408, not to ensure employers uniform wage regulations across state or even county lines. The wage regulations of the Minnesota Prevailing Wage Law are simply a byproduct of our two-tiered federal system, which is not preempted by ERISA. See Keystone...