City v. STATE, DEPT. OF LABOR AND INDUSTRIES

• Decision Date: 12 May 2000
• Docket Number: No. 23660-5-II.,23660-5-II.
• Citation: 998 P.2d 913,100 Wash.App. 805
• Parties: CITY OF SPOKANE and Wheelabrator Spokane, Inc., Appellants, v. The STATE of Washington, DEPARTMENT OF LABOR AND INDUSTRIES, Respondent, and Rebound and United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local Union No. 44, Intervenors.
• Court: Washington Court of Appeals

998 P.2d 913

100 Wash.App. 805

CITY OF SPOKANE and Wheelabrator Spokane, Inc., Appellants, v. The STATE of Washington, DEPARTMENT OF LABOR AND INDUSTRIES, Respondent, and Rebound and United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, Local Union No. 44, Intervenors.

No. 23660-5-II.

Court of Appeals of Washington, Division 2.

May 12, 2000.

Karen F. Jones, Riddell Williams, P.s., Daniel Joseph Gunter, David S. Frockt, Graham & James/Riddell Williams, Seattle, Michael Joseph Piccolo, Spokane City Attorney's Office, Spokane, for Petitioners.

Martha Patricia Lantz, Atty. Gen. Office/Labor & Ind., Olympia, for Respondent.

George Stephen Karavitis, Asst. City Atty., Tacoma, Daniel Brian Heid, City of Lakewood/Legal Dept., Lakewood, for amicus curiae Wash. State Assn. of Mun. Attys.

Richard Howard Robblee, Hafer, Price, Rinehart & Robblee, Anne Elizabeth Senter, Seattle, for Respondent Intervenors rebound & United Assn. of Journeymen Union #44.

HUNT, J.

The City of Spokane (City) and Wheelabrator Spokane, Inc., (Wheelabrator) appeal from the Department of Labor and Industries Director's (Director) determination that Wheelabrator must pay prevailing wages for maintenance work at the City's waste-to-energy facility, which Wheelabrator operates under contract. Finding no error, we affirm.

FACTS

Wheelabrator operates a City-owned waste-to-energy facility,¹ known as the Spokane Regional Solid Waste Disposal Project (SWDP). Under the Operation and Maintenance Contract,

the City is obligated to pay Wheelabrator a flat fee per ton of solid waste processed at the SWDP. The fee is the City's sole ordinary financial contribution to the operation and/or maintenance of the SWDP. The fee may vary from year to year in accordance with a contractually agreed formula incorporating three national economic indices, but is otherwise fixed; the fee does not vary with the SWDP's maintenance or operating costs. The City raises the fee through "tipping charges" to customers.

. . . .

... Wheelabrator, at its sole cost and expense, is required to provide all management, supervision, personnel, materials, equipment, services and supplies necessary to operate, maintain and repair the facility....

Financed solely by the City, Wheelabrator operates the SWDP independently, using its own employees, equipment, and supplies:

Wheelabrator, at its sole cost and expense, is responsible for regularly maintaining the SWDP in a clean, orderly and fully functioning condition, including performing maintenance, implementing necessary repairs, and purchasing equipment or parts necessary to meet the performance standards set forth in the contract....

Since the SWDP began operating [in 1991], Wheelabrator has shut the plant down annually for maintenance ("the annual maintenance shutdown" [AMS]). The time and duration of the [AMS] is at Wheelabrator's sole discretion....

Wheelabrator, in its sole discretion, determines the nature and extent of maintenance to be performed during each [AMS].... Beyond its monitoring and oversight authority, the City has no authority to direct and control Wheelabrator's actions during the [AMS]....

All work during the shutdown is performed by Wheelabrator employees or contractors selected by Wheelabrator. The City does not employ or contract with any of the workers, and it does not direct or supervise any of the work....

Wheelabrator is responsible for all costs incurred during the [AMS]. The fees paid by the City do not vary according to the nature and extent of maintenance performed while the SWDP is out of service....

The purpose of the [AMS] is to keep the SWDP in proper working order....

. . . .

Wheelabrator has the exclusive authority to select and control the employees or contractors who perform work during the [AMS]. Wheelabrator selects, directs, and pays its subcontractors directly and without the City's involvement. Although the fees ordinarily paid by the City to Wheelabrator via the "tipping fee" pay for these expenses, the fees do not vary with Wheelabrator's maintenance costs.

Wheelabrator, a non-union employer, has not paid prevailing wages for the work performed during the AMS.

On March 7, 1997, the Department of Labor and Industries (L & I) requested the Office of Administrative Hearings to determine whether RCW 39.12 (the Prevailing Wage on Public Works Act) applies to work performed during the AMS. Following a hearing, the administrative law judge ruled that the work "is not subject to the prevailing wage laws of the State of Washington, Chapter 39.12 RCW."

L & I appealed the ruling to the Director. Siding with L & I, Rebound² and the United Association of Journeymen and Apprentices for the Plumbing and Pipefitting Industry of the United States and Canada, Local Union No. 44 (UAJA), moved to intervene and submitted briefs on the prevailing wage issue. The Director granted the motion to intervene and reversed the administrative law judge's decision, entering the following three conclusions of law at issue here:

III.

The work performed during the [AMS] is done at Wheelabrator's discretion and direction, however the City of Spokane pays Wheelabrator with money it collects from citizens to accomplish the public purpose of converting garbage into electricity. Part of that process requires this annual shutdown. This is a City owned facility, paid for with public funds, operating to benefit the public. Therefore, the work performed during the [AMS] of the Spokane facility is "public work."

IV.

The work performed during the [AMS] is "performed by contract" under RCW 39.04.010, and is therefore not exempt from prevailing wage under RCW 39.12.020.

V.

The terms "ordinary maintenance" and "maintenance" in RCW 39.04.010 are ambiguous as evidenced by the dispute over their meanings. Therefore, examining legislative history of the public work statute is appropriate. The Washington Prevailing Wage on Public Works Act is remedial and should be construed liberally to effect the purpose of the statute. The purpose of the Act is "to protect the employees of governmental contractors from substandard wages and to preserve local wage standards...." The purpose of preserving the local wage structure is achieved when "maintenance performed by contract" is public work. All maintenance, when performed by contract is public work, and subject to prevailing wage. Maintenance is "ordinary" under the statute, when it is performed by in house employees of the public entity, and excluded.

(Citations omitted.)³

The Thurston County Superior Court certified the Director's decision for direct review by the Court of Appeals, see RCW 34.05.518, and we granted review. See RAP 6.3.

ANALYSIS

I. Prevailing Wage—Standard of Review

Whether the prevailing wage requirements of RCW 39.12.020 and 39.04.010 apply to the annual maintenance portion of Wheelabrator's contract is a legal question; thus, we review the Director's decision de novo to determine whether he has "erroneously interpreted or applied the law." RCW 34.05.570(3)(d); see Superior Asphalt & Concrete Co. v. Department of Labor & Indus., 84 Wash.App. 401, 404, 929 P.2d 1120 (1996)

. Application of the prevailing wage laws, however, involves "utilization of the specialized knowledge and judgment of the director of the Department of Labor and Industries." Southeastern Wash. Bldg. & Constr. Trades Council v. Department of Labor & Indus., 91 Wash.2d 41, 47, 586 P.2d 486 (1978). Accordingly, we must give deference to the Director's interpretation. Superior Asphalt, 84 Wash.App. at 405,

929 P.2d 1120.

The Legislature generally requires that minimum or "prevailing" wages be paid for "public works" as follows:

The hourly wages to be paid to laborers, workers, or mechanics, upon all public works and under all public building service maintenance contracts of the state or any county, municipality or political subdivision created by its laws, shall be not less than the prevailing rate of wage for an hour's work in the same trade or occupation in the locality within the state where such labor is performed.

RCW 39.12.020 (emphasis added). The Supreme Court has mandated liberal construction of this "remedial" statute to protect "`the employees of government contractors from substandard earnings and to preserve local wage standards.'" Everett Concrete Prod., Inc. v. Department of Labor & Indus., 109 Wash.2d 819, 823, 748 P.2d 1112 (1988) (quoting Unity Bank & Trust Co. v. United States, 756 F.2d 870, 873 (Fed.Cir.1985)). I. Public Works

The term "public work"

include[s] all work, construction, alteration, repair, or improvement other than ordinary maintenance, executed at the cost of the state or of any municipality, or which is by law a lien or charge on any property therein. All public works, including maintenance when performed by contract shall comply with the provisions of RCW 39.12.020.

RCW 39.04.010 (emphasis added).

A. "At the Cost of the City

The parties agree that, for the AMS work to be "public work" within the meaning of the statute, it must either (1) be executed at the cost of the state or municipality; or (2) give rise to a lien or charge on any property in the SWDP. The City and Wheelabrator argue that neither requirement is met here. L & I, Rebound, and UAJA argue to the contrary. We find the first alternative meaning dispositive.⁴

Although under contract with the City,⁵ Wheelabrator operates and maintains the facility independently, except for City oversight. "[T]he fees ordinarily paid by the City to Wheelabrator via the `tipping fee' pay for these expenses," including the AMS. As the Director correctly noted, the waste facility is owned by the City, paid for with public funds, and operates to benefit the public. Accordingly, the AMS work is "executed at the cost of the City.

The Washington Supreme Court has held that

the Legislature mandated that wages paid to laborers, workmen or

...