Department of Industrial Relations v. Nielsen Construction Co.

• Decision Date: 18 December 1996
• Docket Number: No. D024612,D024612
• Court: California Court of Appeals Court of Appeals
• Parties: , 133 Lab.Cas. P 58,236, 3 Wage & Hour Cas.2d (BNA) 1168, 96 Cal. Daily Op. Serv. 9248, 96 Daily Journal D.A.R. 15,158, Pens. Plan Guide (CCH) P 23931E DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT, Plaintiff and Appellant, v. NIELSEN CONSTRUCTION COMPANY et al., Defendants and Respondents.

Page 785

59 Cal.Rptr.2d 785

51 Cal.App.4th 1016, 133 Lab.Cas. P 58,236,

3 Wage & Hour Cas.2d (BNA) 1168,

96 Cal. Daily Op. Serv. 9248,

96 Daily Journal D.A.R. 15,158,

Pens. Plan Guide (CCH) P 23931E

DEPARTMENT OF INDUSTRIAL RELATIONS, DIVISION OF LABOR STANDARDS ENFORCEMENT, Plaintiff and Appellant, v. NIELSEN CONSTRUCTION COMPANY et al., Defendants and Respondents.

No. D024612.

Court of Appeal, Fourth District, Division 1, California.

Dec. 18, 1996.

[51 Cal.App.4th 1019] Ramon Yuen-Garcia, San Francisco, for Plaintiff and Appellant.

Booth, Mitchel & Strange and Robert C. Niesley, Los Angeles, for Defendants and Respondents.

HALLER, Associate Judge.

Under California's prevailing wage law (LAB.CODE, § 1720¹ et seq.), all public works contracts involving projects of more than $1,000 require workers be paid no less than the general prevailing wage rates consisting of cash wages and fringe benefits. In this case, we are called upon to decide whether the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1001 et seq.) preempts California's prevailing wage law to preclude the recovery of unpaid wages for labor performed on a public works contract. We conclude the prevailing wage law is not preempted by ERISA and accordingly reverse the judgment.

BACKGROUND

The Prevailing Wage Law

California's prevailing wage law for public works contracts requires that contractors pay their employees a minimum wage, called the "prevailing rate of per diem wages." (§§ 1771, 1773, 1774.) "The overall purpose of the prevailing wage law is to protect and benefit employees on public works projects. [Citation.]" (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 985, 4 Cal.Rptr.2d 837, 824 P.2d 643.) The prevailing wage is determined by the Director of the Department of Industrial Relations (Director) according to the craft, classification or type of worker needed for the project in the particular locality in which the work is to be performed. (§§ 1770, 1773.) "Per diem wages shall be deemed to include employer payments for health and welfare, pension, vacation, travel time, and subsistence pay ..., apprenticeship or other training programs ... and similar purposes...." (§ 1773.1.)

Public works contractors required to pay their employees the prevailing wage may do so through a combination of cash and benefits. "To calculate the wage, the employer adds the hourly cash wage paid plus the total amount of employer contributions to benefits plans.... If this sum falls short of the prevailing wage, then the employer must make up the difference in cash." (WSB Electric, Inc. v. Curry (9th Cir.1996) 88 F.3d 788, 791 (WSB ).) Because a minimum cash wage must be paid, "an 'excess benefit cap' applies, whereby employers may not credit more than a fixed amount of benefits contributions toward the prevailing wage. If the employer contributes more than the fixed amount for benefits, it is not credited in the A public works contractor that fails to pay the prevailing wage to its employees is liable for the deficiency and is subject to a statutory penalty. (§ 1775.) The general contractor is also responsible for any violations of its subcontractors under the contract. (Ibid.; see also O.G. Sansone Co. v. Department of Transportation (1976) 55 Cal.App.3d 434, 445, 127 Cal.Rptr. 799.) The Division of Labor Standards Enforcement (DLSE) is the California agency charged with the investigation and enforcement of the prevailing wage requirements. (§§ 90.5, 1733, 1775, 1776.) If the money due a contractor from the "awarding body" ² is insufficient to pay all the imposed penalties and deficiencies, or if the contract does not provide for payments by the awarding body to the contractor, DLSE is authorized to bring an action to recover the deficiencies due and penalties assessed. (§ 1775; Lusardi Construction Co. v. Aubry, supra, 1 Cal.4th at p. 986, 4 Cal.Rptr.2d 837, 824 P.2d 643.)

prevailing wage calculation and the employer must make up any shortfall in cash." (Ibid.)

Facts and Procedure

In February 1993, Nielsen Construction Company (Nielsen) entered into a contract with the San Diego Unified School District Public School Building Corporation (Building Corp.) for the construction of a public elementary school. As part of its statutory obligation under the public works contract, Nielsen purchased a performance and payment bond from Federal Insurance Company (Federal), naming Building Corp. as obligee. (Civ.Code, § 3247, subd. (a).) ³ Nielsen subcontracted the rough framing and carpentry work to Baldan Construction (Baldan). ⁴

On May 20, 1993, Baldan began participating in a pension plan on behalf of its employees through a third party administrator. During construction of the school, Baldan submitted certified payroll documents weekly to Nielsen, stating: "In addition to the basic hourly wage rates paid to each laborer or mechanic listed in the above referenced payroll, payments [of] fringe benefits as listed in the contract have been or will be made to appropriate programs for the benefit of such employees...."

In November 1993, Baldan stopped making contributions to the pension plan but failed to disclose this fact to its employees or to Nielsen. Three months later, Baldan defaulted on the construction project.

Following an investigation, DLSE found Baldan failed to pay its employees the full amount of the prevailing wage as required by sections 1770, 1771, 1773, 1773.1, 1774 and 1775. DLSE determined Baldan owed $46,004.30 in wages and assessed $68,150 in penalties against Nielsen. As a result, Building Corp. withheld from Nielsen $114,154.30 in earned contract funds.

DLSE sued Nielsen and Federal to enforce its claims to the wages and penalties withheld from them by Building Corp. At the same time, Nielsen sued Building Corp. and the San Diego Unified School District (School District) to recover the funds withheld. The cases were consolidated for all purposes.

Nielsen and Federal filed a motion for summary judgment on the ground DLSE's claim for wages and penalties based on the failure to pay pension benefits was preempted by ERISA. In essence, Nielsen and Federal argued DLSE had improperly attempted to supplement the remedies of ERISA by suing them rather than Baldan for unpaid pension benefits. Alternatively, Nielsen sought summary adjudication of the issue of whether DLSE's assessment of penalties against Nielsen was improper because DLSE had failed to consider the factors set forth in section 1775. ⁵

After hearing, the court denied Nielsen and Federal's motion for summary judgment, finding DLSE's claim was for unpaid wages and thus was not preempted by ERISA. However, the court granted Nielsen's motion for summary adjudication of issues as to penalties on the ground no evidence supported DLSE's claim that the penalty assessment was based on statutory considerations.

Nielsen and Federal successfully moved for reconsideration of the court's denial of summary judgment. Finding ERISA preempts California's prevailing wage law, the court granted summary judgment in favor of Nielsen and Federal. The court also granted Nielsen's request for attorney fees against DLSE, Building Corp. and School District, and Federal's request for attorney fees against DLSE in the amount of $40,486.24. DLSE appeals.

DISCUSSION

I. The Notice of Appeal was Timely Filed

Judgment in this case was entered on July 7, 1995, and notice of entry of judgment was served by mail on July 10, 1995. On August 28, 1995, counsel for Nielsen and Federal was served with an unconformed copy of DLSE's notice of appeal. Believing it had also filed a notice of appeal with the court on August 28, 1995, counsel for DLSE requested preparation of a clerk's transcript and a reporter's transcript on September 8, 1995. When the appeals section of the superior court indicated it had not received a notice of appeal, DLSE resubmitted its notice of appeal on September 19, 1995.

Nielsen and Federal filed a motion in this court, seeking dismissal of the appeal on the ground the filing of the notice of appeal more than 60 days after notice of entry of judgment was served is an absolute bar to appellate court jurisdiction. We denied their request, determining "[t]he notice to clerk to prepare transcripts on appeal filed in San Diego Superior Court on September 8, 1995 is also treated as a timely filed notice of appeal. The resubmission of notice of appeal filed September 19, 1995 is treated as an amended notice of appeal...." In their respondent's brief, Nielsen and Federal renew their position that we are without jurisdiction to consider DLSE's appeal due to its untimely filing. ⁶

Under California Rules of COURT, RULE 2(A)(2)⁷, a notice of appeal must be filed no later than 60 days after service of the notice of entry of judgment. Ordinarily, failure to file a notice of appeal within the time prescribed by this rule is an absolute bar to appellate court jurisdiction. (Hollister Convalescent Hosp., Inc. v. Rico (1975) 15 Cal.3d 660, 674, 125 Cal.Rptr. 757, 542 P.2d 1349.) However, "we are directed by ... rule 1(a) to liberally construe the notice of appeal in favor of its sufficiency. The strong public policy in favor of hearing appeals on the merits operates against depriving an aggrieved party or attorney of a right to appeal because of noncompliance with technical requirements. [Citations.]" (Moyal v. Lanphear (1989) 208 Cal.App.3d 491, 497, 256 Cal.Rptr. 296.) Thus, when the well-established policy of according the right of appeal in doubtful cases can be implemented in accordance with applicable rules of construction and interpretation, "timely and proper notice of appeal must be deemed in law to have been filed within the jurisdictional period." (Hollister Convalescent Hosp., Inc. v. Rico, supra, 15 Cal.3d at p. 674, 125 Cal.Rptr. 757, 542 P.2d 1349; see also United Farm Workers of America v. Agricultural Labor Relations Bd. (1985) 37 Cal.3d 912, 917, 210...