City of Oklahoma City v. State ex rel. Oklahoma Dept. of Labor

• Decision Date: 10 October 1995
• Docket Number: No. 85888,85888
• Citation: 918 P.2d 26,1995 OK 107
• Parties: 130 Lab.Cas. P 58,007, 2 Wage & Hour Cas.2d (BNA) 1615, 3 Wage & Hour Cas.2d (BNA) 557, 1995 OK 107 The CITY OF OKLAHOMA CITY, a municipal corporation; Oklahoma City Airport Trust; Oklahoma City Public Property Authority; Oklahoma City Water Utilities Trust; and Central Oklahoma Transportation and Parking Authority, public trusts, Appellees, v. The STATE of Oklahoma ex rel. OKLAHOMA DEPARTMENT OF LABOR, Appellant.
• Court: Oklahoma Supreme Court

Page 26

918 P.2d 26

130 Lab.Cas. P 58,007, 2 Wage & Hour Cas.2d

(BNA) 1615,

3 Wage & Hour Cas.2d (BNA) 557, 1995 OK 107

The CITY OF OKLAHOMA CITY, a municipal corporation Oklahoma City Airport Trust; Oklahoma City Public Property Authority; Oklahoma City Water Utilities Trust; and Central Oklahoma Transportation and Parking Authority public trusts, Appellees, v. The STATE of Oklahoma ex rel. OKLAHOMA DEPARTMENT OF LABOR, Appellant.

No. 85888.

Supreme Court of Oklahoma.

Oct. 10, 1995.

As Corrected Oct. 13, 1995.

Opinion Supplementing Decision on

Rehearing May 14, 1996.

William O. West, Municipal Counselor, Diane Lewis, Deputy Municipal Counselor and Michelle G. Porta, Craig B. Keith, Assistant Municipal Counselors, Oklahoma City, for City of Oklahoma City, Oklahoma City Airport Trust, Oklahoma City Public Property Authority, Oklahoma City Water Utilities Trust, Central Oklahoma Transportation and Parking Authority.

W.A. Drew Edmondson, Attorney General of Oklahoma, Scott D. Boughton, Assistant Attorney General, Litigation Division, Oklahoma City, for The State of Oklahoma ex rel. Oklahoma Department of Labor.

McCaffrey & Tawwater by Loren Gibson, Oklahoma City, for Amicus Curiae Oklahoma State Building and Construction Trades Council, Steve Skinner and Jimmy Fish.

HODGES, Justice.

This dispute concerns the constitutionality of Oklahoma's Minimum Wages on Public Works Act, Okla.Stat. tit. 40, §§ 196.1-196.14 (1991), also known as the Prevailing Wage Act or the Little Davis-Bacon Act. This Court holds that the Act violates article IV, section 1, and article V, section 1 of the Oklahoma Constitution. It delegates the power to determine prevailing wages to a department of the federal government without setting standards for the exercise of that determination. Other assertions of unconstitutionality need not be addressed.

The City of Oklahoma City (City) became concerned about dramatic increases in the prevailing wage between October 31, 1994, and December 30th of that year. The Oklahoma City Airport Trust filed a "Request for a Hearing, Protest and Objection to the Validity of the Prevailing Wage Rate Act, and Request to Void or Amend the Prevailing Wage Rates" with State Labor Commissioner, Brenda Reneau, asking her to review the wage determinations. In response, Reneau explained that, pursuant to the Act, the determinations were made by the United States Department of Labor and that she had no statutory authority to investigate errors on inaccuracies in the federal determinations.

The City and four of its public trusts then filed an action in the district court seeking declaratory judgment, a permanent injunction, and a petition for review of the Labor Commissioner's decision that she had no authority to review the federal agency's wage determinations. The City moved for summary judgment raising several theories as to how the Act was void because it violated the Oklahoma Constitution. The trial court granted the motion without articulating the bases upon which the Act was constitutionally infirm.

The appeal, brought by the State of Oklahoma to this Court, is governed by the accelerated procedures found in Rule 1.203 of the Rules of Appellate Procedure in Civil Cases, Okla.Stat. tit. 12, ch. 15, app. 2 (Supp.1994). The parties were allowed to brief the issues on appeal. In addition, the Oklahoma State Building and Construction Trades Council was allowed to file a brief as amicus curiae.

The challenged Act was promulgated in 1965. It mirrors provisions of the federal Davis-Bacon Act, 40 U.S.C. §§ 276a-276a-5 (1994), which requires the payment of prevailing wages on federally financed construction projects. The Oklahoma Act declares the policy underlying its passage:

It is hereby declared to be the policy of the State of Oklahoma that a wage of no less than the prevailing hourly rate of wages for work of a similar character in the locality in which the work is performed shall be paid to all workmen employed by or on behalf of any public body engaged in public works exclusive of maintenance work.

Okla.Stat. tit. 40, § 196.1. Thus, the Act prohibits state and local governments from driving down the amount of workers' wages through competitive bidding.

The Act applies to the erection, construction, or improvement of any structure or building constructed for public use costing over $600,000.00. See id. at §§ 196.2(7) & 196.2a. Since the Act's inception, its provisions have not applied to the Department of Transportation or the Turnpike Authority in the construction of roads. Id. at § 196.12.

The Act originally gave Oklahoma's Labor Commissioner complete authority to compile wage data and to determine prevailing wages. These determinations were made independently from any determination made by the United States Department of Labor. The Act required Oklahoma's Labor Commissioner to file wage determinations on July 1st of each year. Objections to those determinations were heard by the Labor Commissioner. Appeals from the commissioner's decisions were filed in district court.

In 1981, the Oklahoma Legislature amended the Act to provide that the prevailing wage, already determined by the United States Department of Labor for federally funded projects pursuant to the Davis-Bacon Act, be adopted by Oklahoma's Labor Commissioner. Id. at § 196.6. The Labor Commissioner can now determine a prevailing wage only when the United States Department of Labor has not determined the prevailing wage in a particular category of work or in a particular geographic area. No procedure was provided to protest or challenge a federal wage determination before Oklahoma's Labor Commissioner or in Oklahoma courts. A 1985 amendment to the Act provides for review only of wage rates set by the Labor Commissioner for a locality for which a federal determination has not been made.

The City charges that the Act impermissibly delegates the authority to make wage determinations to a federal agency while leaving Oklahoma's Labor Commissioner with no authority to check the accuracy of these determinations. The State of Oklahoma argues that the delegation is permissible because the United States Department of Labor is merely implementing the legislative policy articulated in the Act when it makes wage determinations.

Section 1 of article IV of the Oklahoma Constitution provides:

The powers of the government of the State of Oklahoma shall be divided into three separate departments: The Legislative, Executive, and Judicial; and except as provided in this Constitution, the Legislative, Executive, and Judicial departments of government shall be separate and distinct, and neither shall exercise the powers properly belonging to either of the others.

Section 1 of article V requires that "[t]he Legislative authority of the State shall be vested in a Legislature consisting of a Senate and House of Representatives...." From these constitutional provisions comes the prohibition against the delegation of legislative power.

The prohibition "rests on the premise that the legislature must not abdicate its responsibility to resolve fundamental policy making by delegating that function to others or by failing to provide adequate directions for the implementation of its declared policy." Democratic Party v. Estep, 652 P.2d 271, 277 n. 23 (1982). The facts of this case concern the second aspect of the prohibition.

The 1965 version of the Act prescribed the manner in which Oklahoma's Labor Commissioner determined prevailing wages. It gave the Labor Commissioner the responsibility to "investigate and determine the prevailing hourly rate of wages in the localities." 1965 Okla.Sess.Laws 580. It specifically instructed the Commissioner to "consider the applicable wage rates established by collective bargaining agreements, if any, and such rates as are paid generally within the locality." Id. It instructed the Commissioner how to conduct hearings on objections to wage determinations. It also gave the Commissioner subpoena power and the authority to administer oaths. Id. at 581.

Since the 1981 amendments, however, the Act has provided no definite standards or articulated safeguards for the United States Department of Labor to follow in implementing the legislative policy declared in the Act. The current Act leaves an important determination to the unrestricted and standardless discretion of unelected bureaucrats. Worse, it delegates to an administrative arm of the federal government. As a result, the federal agency which actually determines the prevailing wage is less answerable to the will of the people of Oklahoma than is the Labor Commissioner who holds elected office. It leaves public entities with no Oklahoma forum in which to challenge the accuracy of the United States Department of Labor's wage determinations.

When faced with a challenge to Arkansas' prevailing wage law, the Arkansas Supreme Court declared that its Act unconstitutionally delegated legislative authority. See Crowly v. Thornbrough, 226 Ark. 768, 294 S.W.2d 62 (1956). That court noted:

The Act fails to establish a standard or formula by which a wage scale may be formulated; but rather delegates to the Secretary of Labor of the United States the right to fix the minimum wage scale to be paid in a particular area of this State. The State retains no control over the Secretary of Labor of the United States. Therefore, the Act violates [provisions of] our State Constitution.

Id. at 66. After the decision, Arkansas revised its prevailing wage law to provide that the Arkansas Department of Labor would investigate and determine prevailing wages. Ark.Code Ann. § 22-9-313. Specific guidelines are provided to that department. See id.

Of the thirty-one states that currently have a prevailing wage law, only Oklahoma's version delegates authority to the United States Department of Labor as the sole method of determining the prevailing wage. Connecticut gives its Labor Commissioner the option...