Drake v. Molvik & Olsen Elec., Inc.

Decision Date16 October 1986
Docket NumberNos. 51398-8,51399-6,s. 51398-8
Citation726 P.2d 1238,107 Wn.2d 26
CourtWashington Supreme Court
Parties, 27 Wage & Hour Cas. (BNA) 1443, 55 USLW 2300, 114 Lab.Cas. P 56,201 Richard DRAKE, Appellant, v. MOLVIK & OLSEN ELECTRIC, INC., United Pacific Insurance Company, (Surety) Defendants, Seattle Housing Authority, Respondent. Edward HILLMAN, James Eaton, and Kenneth Higgins, Appellants, v. MOLVIK & OLSEN ELECTRIC, INC., United Pacific Insurance Company, (Surety) Defendants, Seattle Housing Authority, Respondent.

Hafer, Price, Rinehart & Schwerin, Hugh Hafer, David Campbell, Seattle, for appellant.

Copple, Ferm & Wade, Daniel Ferm, Seattle, for respondent.

Kenneth Eikenberry, Atty. Gen., Mark Dynan, Asst. Atty. Gen., Tacoma, Barbara Gary, Asst. Atty. Gen., Olympia, amici curiae for appellants.

BRACHTENBACH, Justice.

The question is whether a state statute, RCW 39.12, which mandates payment of prevailing wages on public works, applies to a federally-funded construction project by the Seattle Housing Authority (SHA). The trial court granted summary judgment for the SHA. We reverse.

Resolution of the issue involves interpretation of several state statutes and possible federal preemption.

First, the factual setting. The SHA is a housing authority created pursuant to RCW 35.82. The SHA decided to build an apartment complex for low income elderly persons. The project was entirely funded by federal money administered by the United States Department of Housing and Urban Development (HUD). 42 U.S.C. § 1437 et seq. Plaintiffs were employees of a subcontractor. They were paid less than the prevailing wages which would have been required by the state statute, RCW 39.12.

Now, the law. In 1945 the Legislature mandated that wages paid to laborers, workmen or mechanics upon all public works of the state, county, municipality or political subdivision shall not be less than the prevailing rate in the same trade or occupation in the locality. RCW 39.12.020. The statute provides a methodology for determination of the various elements of the prevailing wage rate, but these are matters not here in dispute. RCW 39.12.

The first issue is whether the SHA is within the scope of the prevailing wages statute. There is no doubt that a housing authority entity is within the statutory scope of the statutory scheme. RCW 39.04.010, dealing with public works, is so inclusive as to include every governmental body.

However, the triggering condition of the statute is that a public work exists only if the work is at "the cost of the state [or other covered entity] ... or which is by law a lien or charge on any property therein". RCW 39.04.010.

The SHA argues that since the project was totally funded by the federal government and the contractor and the subcontractor complied with the federal minimum wage law, cited hereafter, the state law does not apply. The federal law is the Davis-Bacon Act, 40 U.S.C. § 276a (1982).

The clear answer is that the federal law provides that the wages shall not be less than those determined under the Davis-Bacon Act. 42 U.S.C. § 1437j (1978). It does not prohibit wages which are more than required by the Davis-Bacon Act.

In fact the contract between HUD and the SHA recognizes the very possible obligation to pay wages higher than required by the Davis-Bacon Act. The contract provides that if the contractor or any subcontractor finds it necessary to exceed the contracted wages, such excess shall not increase the contractual amount due. Thus the contractor or the subcontractor and finally the SHA may have to pay more than the federally funded contract amount. That is a legislative problem, not one for judicial resolution.

To summarize to this point, we conclude that the SHA is within the ambit of the public works prevailing wage statute. The Legislature was very specific in a 1977 amendment when it stated "[a]ll public works ... shall comply with ... RCW 39.12.020." Laws of 1977, 1st Ex. Sess., ch 177, § 1.

Our result is consistent with an opinion of the Attorney General on this precise issue. AGO 2 (1983). That analysis is correct and we incorporate it by reference. The source of funding does not determine the applicability of the prevailing wage statute. We recognize the practical difficulties of the conflict between federal funding and the consequences of the state wage law. However, that is a problem which must be solved by the Legislature and/or Congress.

The SHA concedes with candor that this is not a preemption issue so that question is not addressed.

We concur with the Attorney General who appeared as amicus curiae that the Davis-Bacon Act and the state statute serve a similar purpose, and both should be enforced. United States v. Binghamton Constr. Co., Inc., 347 U.S. 171, 74 S.Ct. 438, 98 L.Ed. 594, reh'g denied, 347 U.S. 940, 74 S.Ct. 625, 98 L.Ed. 1089 (1954).

Reversed.

DOLLIVER, C.J., and UTTER, DORE, PEARSON, ANDERSEN, GOODLOE and DURHAM, JJ., concur.

CALLOW, Justice (dissenting).

I would affirm the summary judgment in favor of the Seattle Housing Authority.

First, a further word on the background of the controversy. The Seattle Housing Authority was organized under RCW 35.82. It is the largest public housing authority in Washington State. It owns and operates more than 14,000 rental units in the city of Seattle for low income families, for senior citizens, and for handicapped persons. Most of the rents it receives are subsidized by the U.S. Department of Housing and Urban Development (HUD). The operating and construction budgets of the Housing Authority are almost entirely funded by HUD. Most of the Housing Authority's units have been built or acquired during the past 40 years with Federal funds administered under the U.S. Housing Act of 1937 as amended (42 U.S.C. § 1437, et seq.), under HUD regulations, and under an annual contributions contract between the Housing Authority and HUD.

In October 1981 the Housing Authority commenced work on Ross Manor, a 12-story apartment building for low income elderly persons. This project was developed entirely with Federal funds administered by HUD. HUD paid for the design, site acquisition and construction of the building and the Housing Authority developed plans and specifications for the project using money advanced by HUD. HUD reviewed and approved the plans and established a budget for the Housing Authority for completion of the building. The Ross Manor budget was based on HUD imposed "prototype costs" limitations. After approval by HUD of the bid and construction documents, the Housing Authority sought public bids from general contractors. The bid solicitation documents were drafted or approved by HUD. HUD approved the construction contract ultimately awarded to the general contractor.

HUD required the Housing Authority to include among the contract terms the provision requiring that all workers be paid "not less than the wages prevailing in the locality ... as predetermined by the Secretary of Labor pursuant to the Davis Bacon Act [40 U.S.C. §§ 276-276a-5] ..." Neither the bid solicitation package nor the construction contract referred to State prevailing rates established by the Department of Labor and Industries. The subcontract with Molvik & Olsen required compliance with the Davis-Bacon Act provisions (40 U.S.C. § 276a) but did not require compliance with the State statutes. The Housing Authority did not require the statement of intent or the affidavit described in RCW 39.12.040.

It is apparent that HUD policy prohibited state housing authorities from requiring payment of workers at state prevailing wage rates which exceeded the Davis-Bacon scales. HUD would not have allowed the Housing Authority to construct Ross Manor with Federal funds if the Housing Authority's contract with the contractor had required payment of wages at the higher State-established prevailing rates.

When the plaintiffs worked at Ross Manor as electricians, the State prevailing wage rate was higher than the Davis-Bacon rate. They sued the Housing Authority for the difference claiming under RCW 39.12.042.

The State Housing Authority Law was enacted in 1939. The initial preamble to the chapter was amended in 1965 and the finding and declaration of necessity now codified as RCW 35.82.010 reads:

It is hereby declared: (1) that there exist in the state insanitary or unsafe dwelling accommodations and that persons of low income are forced to reside in such insanitary or unsafe accommodations; that within the state there is a shortage of safe or sanitary dwelling accommodations available at rents which persons of low income can afford and that such persons are forced to occupy overcrowded and congested dwelling accommodations; that the aforesaid conditions cause an increase in and spread of disease and crime and constitute a menace to the health, safety, morals and welfare of the residents of the state and impair economic values; that these conditions necessitate excessive and disproportionate expenditures of public funds for crime prevention and punishment, public health and safety, fire and accident protection, and other public services and facilities; (2) that these areas in the state cannot be cleared, nor can the shortage of safe and sanitary dwellings for persons of low income be relieved, through the operation of private enterprise, and that the construction of housing projects for persons of low income (as herein defined) would therefore not be competitive with private enterprise; (3) that the clearance, replanning and reconstruction of the areas in which insanitary or unsafe housing conditions exist and the providing of safe and sanitary dwelling accommodations for persons of low income are public uses and purposes for which public money may be spent and private property acquired and are governmental functions of state concern; (4) that it is in the public interest that work on projects for such purposes be commenced as soon as possible...

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5 cases
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    • California Court of Appeals Court of Appeals
    • 31 mars 1997
    ... ... Scully II, Law Offices of Carroll & Scully, Inc., San Francisco, for Plaintiff and Appellant ...         [54 Cal.App.4th 886] Drake v. Molvik & Olsen Elec., Inc. (1986) 107 Wash.2d 26, 726 ... ...
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    • United States
    • Washington Supreme Court
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