Ca Div. Labor Standards v. Dillingham Constr.

• Citation: 117 S.Ct. 832,519 U.S. 316,136 L.Ed.2d 791
• Decision Date: 18 February 1997
• Docket Number: 95789
• Parties: CALIFORNIA DIVISION OF LABOR STANDARDS ENFORCEMENT, et al., Petitioners, v. DILLINGHAM CONSTRUCTION, N.A., INC., and Manuel J. Arceo, dba Sound Systems Media
• Court: United States Supreme Court

519 U.S. 316

117 S.Ct. 832

136 L.Ed.2d 791

CALIFORNIA DIVISION OF LABOR STANDARDS ENFORCEMENT, et al., Petitioners,

v DILLINGHAM CONSTRUCTION, N.A., INC., and Manuel J. Arceo, dba Sound Systems Media.

No. 95-789.

Supreme Court of the United States

Argued Nov. 5, 1996.

Decided Feb. 18, 1997.

Syllabus ^*

California requires a public works project contractor to pay its workers the prevailing wage in the project's locale, but allows payment of a lower wage to participants in a state-approved apprenticeship program. After respondent Dillingham Construction subcontracted some of the work on its state contract to respondent Arceo, doing business as Sound Systems Media, the latter entered a collective bargaining agreement that included an apprenticeship wage scale and provided for affiliation with an apprenticeship committee that ran an unapproved program. Sound Systems Media thereafter relied on that committee for its apprentices, to whom it paid the apprentice wage. Petitioner California Division of Apprenticeship Standards issued a notice of noncompliance to both Dillingham and Sound Systems Media, charging that paying the apprentice wage, rather than the prevailing journeyman wage, to apprentices from an unapproved program violated the state prevailing wage law. Respondents sued to prevent petitioners from interfering with payment under the subcontract, alleging, inter alia, that §514(a) of the Employee Retirement Income Security Act of 1974 (ERISA) pre-empted enforcement of the state law. The District Court granted petitioners summary judgment, but the Ninth Circuit reversed, holding that the apprenticeship program was an "employee welfare benefit plan'' under ERISA §3(1), and that the state law "relate[d] to'' the plan and was therefore superseded under §514(a).

Held: California's prevailing wage law does not "relate to'' employee benefit plans, and thus is not pre-empted by ERISA. Pp. ___-___.

(a) A state law "relate[s] to'' a covered employee benefit plan for §514(a) purposes if it (1) has a "connection with'' or (2) "reference to'' such a plan. E.g., District of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 129, 113 S.Ct. 580, 583, 121 L.Ed.2d 513. A law has the forbidden reference where it acts immediately and exclusively upon ERISA plans, as in Mackey v. Lanier Collection Agency & Service, Inc., 486 U.S. 825, 108 S.Ct. 2182, 100 L.Ed.2d 836, or where the existence of such plans is essential to its operation, as in, e.g., Greater Washington Bd. of Trade, supra, and Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474. To determine whether a state law has a connection with ERISA plans, this Court looks both to ERISA's objectives as a guide to the scope of the state law that Congress understood would survive, New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. ----, ----, 115 S.Ct. 1671, 1672, 131 L.Ed.2d 695, and to the nature of the law's effect on ERISA plans, id., at ----, 115 S.Ct., at 1676. Where federal law is said to pre-empt state action in fields of traditional state regulation, this Court assumes that the States' historic police powers are not superseded unless that was Congress' clear and manifest purpose. E.g., id., at ----, 115 S.Ct., at 1676. Pp. ___-___.

(b) Because it appears that approved apprenticeship programs need not be ERISA plans, the California law does not make "reference to'' such plans. On its face, the law seems to allow the lower apprentice wage only to a contractor who acquires apprentices through a "joint apprenticeship committee''-an apprenticeship program sponsored by the collective efforts of management and organized labor. To comport with federal law, the expenses of such a committee must be defrayed out of monies placed into a separate fund, the existence of which triggers ERISA coverage. However, applicable regulations make clear that the class of apprenticeship program sponsors who may provide approved apprentices under California law is broad enough to include a single employer who defrays the costs of its program out of general assets. An employee benefit program so funded, and not paid for through a separate fund, is not an ERISA plan. See, e.g., Massachusetts v. Morash, 490 U.S. 107, 115, 109 S.Ct. 1668, 1673, 104 L.Ed.2d 98. The California law is indifferent to the funding, and, thus, to the ERISA coverage, of apprenticeship programs; accordingly, it makes no "reference to'' ERISA plans. Pp. ___-___.

(c) Nor does the California law have a "connection with'' ERISA plans. In every relevant respect, that law is indistinguishable from the New York statute upheld in Travelers, supra. As with the New York statute, the Court discerns no congressional intent to pre-empt the areas of traditional state regulation with which the California law is concerned. 514 U.S., at ----, 115 S.Ct., at 1676. And, like the New York statute, the California prevailing wage law does not bind ERISA plans-legally or as a practical matter-to anything. It merely provides some measure of economic incentive to apprenticeship programs to comport with the State's apprenticeship standards by authorizing lower wage payments to workers enrolled in approved apprenticeship programs. Cf. id., at 715. This Court could not hold the California law superseded based on so tenuous a relation without doing grave violence to the presumption that Congress does not intend the pre-emption of state laws in traditionally state-regulated areas. Pp. ___-___.

57 F. 3d 712 (CA 9 1995), reversed and remanded.

THOMAS, J., delivered the opinion for a unanimous Court. SCALIA, J., filed a concurring opinion, in which GINSBURG, J., joined.

John Rea, San Francisco, CA, for petitioners.

James Feldman, Washington, DC, for U.S. as amicus curiae, by special leave of the Court.

Richard N. Hill, San Francisco, CA, for respondents.

Justice THOMAS delivered the opinion of the Court.

The State of California requires a contractor on a public works project to pay its workers the prevailing wage in the project's locale. An exception to this requirement permits a contractor to pay a lower wage to workers participating in an approved apprenticeship program. This case presents the question whether the pre-emption provision of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 829, as amended, 29 U.S.C. §1001 et seq., supersedes California's prevailing wage law to the extent that the law prohibits payment of an apprentice wage to an apprentice trained in an unapproved program. We conclude that California's law does not "relate to'' employee benefit plans, and thus is not pre-empted.

I

A

Since 1931, the Davis-Bacon Act, 46 Stat. 1494, as amended, 40 U.S.C. §§276a to 276a-5, has required that the wages paid on federal public works projects equal wages paid in the project's locale on similar, private construction jobs. California, in 1937, adopted a similar statute, which requires contractors who are awarded public works projects to pay their workers "not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed.'' Cal. Lab.Code Ann. §1771 (West 1989). Under both the Davis-Bacon Act and California's prevailing wage law, public works contractors may pay less than the prevailing journeyman wage to apprentices in apprenticeship programs that meet standards promulgated under the National Apprenticeship Act, 50 Stat. 664, as amended, 29 U.S.C. §50 (known popularly as the Fitzgerald Act).¹ See 29 CFR §29.5(b)(5) (1996); Cal. Lab.Code Ann. §1777.5 (West 1989 and Supp.1997). California public works contractors are not obliged to employ apprentices, but if they do, the apprentice wage is only permitted for those apprentices in approved programs.

The federal arbiter of apprenticeship program adequacy is the Bureau of Apprenticeship and Training (BAT), located within the Department of Labor. An apprenticeship program that seeks to provide federal public works contractors with apprentice-wage-eligible apprentices must receive the blessing of either the BAT or a "State Apprenticeship Agency.'' 29 CFR §29.3 (1996). Since 1978, California's state apprenticeship agency, the California Apprenticeship Council (CAC), has been authorized under 29 CFR §29.12 to approve apprenticeship programs for federal purposes. App. 37. California has also charged the CAC with approving apprenticeship programs for purposes of California's prevailing wage statute. See Cal. Lab.Code Ann. §3071 (West 1989). Pursuant to the Fitzgerald Act, the United States Secretary of Labor has promulgated apprenticeship program standards. 29 CFR §29.5. California has adopted its own apprenticeship standards, 8 Cal.Code Regs. §212 (1996), that are "substantively similar'' to the federal standards. Southern Cal. Chapter of Associated Builders and Contractors, Inc., Joint Apprenticeship Committee v. California Apprenticeship Council, 4 Cal.4th 422, 434, 14 Cal.Rptr.2d 491, 497, 841 P.2d 1011, 1017 (1992) (Southern Cal. ABC). The CAC uses its own standards whether approving an apprenticeship program for federal or for state purposes.

An apprenticeship program in California may be sponsored by an individual employer, an individual labor union, a group of employers, a group of labor organizations, or by a joint management-labor venture (a so-called joint apprenticeship committee). See Cal. Lab.Code Ann. §3075 (West 1989).

B

In the spring of 1987, respondent Dillingham Construction was awarded a public works contract as the general contractor for the construction of the Sonoma County Main Adult Detention Facility. Dillingham subcontracted electronic installation work to respondent Manuel J. Arceo, doing business as Sound Systems Media.

When Sound Systems Media was awarded the subcontract, it was signatory to a collective bargaining agreement that provided a wage scale for apprentices, and required Sound Systems...