Kaanaana v. Barrett Bus. Servs., Inc.

• Citation: 483 P.3d 144,276 Cal.Rptr.3d 417,11 Cal.5th 158
• Decision Date: 29 March 2021
• Docket Number: S253458
• Parties: David KAANAANA et al., Plaintiffs and Appellants, v. BARRETT BUSINESS SERVICES, INC., et al., Defendants and Respondents.
• Court: United States State Supreme Court (California)

11 Cal.5th 158

483 P.3d 144

276 Cal.Rptr.3d 417

David KAANAANA et al., Plaintiffs and Appellants,

v.BARRETT BUSINESS SERVICES, INC., et al., Defendants and Respondents.

S253458

Supreme Court of California.

March 29, 2021

Hayes Pawlenko, Matthew B. Hayes, South Pasadena, and Kye D. Pawlenko, Pasadena, for Plaintiffs and Appellants.

Hinshaw & Culbertson, Frederick J. Ufkes and Filomena E. Meyer, Los Angeles, for Defendants and Respondents.

Lewis Brisbois Bisgaard & Smith, Lann G. McIntyre, San Diego, Claire Hervey Collins, Los Angeles, and Paul J. Beck, Los Angeles, for County Sanitation District No. 2 of Los Angeles County, League of California Cities, California State Association of Counties, California Special Districts Association, California Association of Sanitation Agencies and Association of California Water Agencies as Amici Curiae on behalf of Defendants and Respondents.

Opinion of the Court by Corrigan, J.

California's prevailing wage law is a minimum wage provision that generally applies to those employed on public works. Different provisions define the term "public works" in various contexts. As relevant here, the term includes "work done" for certain types of government districts. ( Lab. Code, § 1720, subd. (a)(2).)¹ Plaintiffs are contract workers who act as belt sorters for a county sanitation district. We hold that their work falls within the definition of public works in section 1720, subdivision (a)(2) (hereafter section 1720(a)(2) ).

I. BACKGROUND

Los Angeles County Sanitation District No. 2 (the District) maintains and operates a system for the transfer and disposal of refuse. ( Health & Saf. Code, § 4741.) The Downey Area Recycling and Transfer Facility and the Puente Hills Material Recovery Facility are part of that system. At these warehouse-style sites, refuse is received, recyclables are removed, and the residual waste is transferred to landfills.

Defendant Barrett Business Services, Inc. (Barrett) contracted with the District to provide belt sorters and others to staff and operate the two facilities. These workers were under Barrett's supervision and not considered District employees. In each site, refuse is deposited onto a conveyor belt and manually sorted. Belt sorters remove nonrecyclable materials, clear obstructions, sort recyclables, and put them into containers.

Plaintiffs in this class action sued Barrett and a former manager on behalf of all belt sorters employed at the two locations from April 2011 to September 2013. The complaint alleged causes of action for failure to: (1) pay minimum and/or prevailing wages; (2) pay overtime at prevailing wage rates; (3) provide meal periods; and (4) timely pay all wages owed at the time of termination. It also alleged unfair business practices and sought both civil penalties and restitution of wages. Plaintiffs alleged their work fell under section 1720(a)(2), entitling them to prevailing wage compensation. Barrett moved to strike plaintiffs’ prevailing wage allegations, arguing they were not entitled to those wages because the District does not fall under the statutory definition of a covered district and plaintiffs’ labor was not the type of work covered by section 1720(a)(2). The trial court granted the motion to strike.²

In a split decision, the Court of Appeal reversed the trial court's ruling on the motion to strike. The majority concluded that plaintiffs’ belt sorting qualified as public work under section 1720(a)(2).³ ( Kaanaana v. Barrett Business Services, Inc. (2018) 29 Cal.App.5th 778, 798, 240 Cal.Rptr.3d 636 ( Kaanaana ).)

II. DISCUSSION

A. Standard of Review

There is no factual dispute about the kind of work plaintiffs performed.

Whether they were entitled to the prevailing wage because their labor fell under the applicable statutory definition of "public works" is a question of law we review de novo. ( City of Long Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942, 949, 22 Cal.Rptr.3d 518, 102 P.3d 904 ( City of Long Beach ).)

Since the original public works statutes were passed nearly 90 years ago, the Legislature has enacted many provisions relating to public works. Lawmakers have used various formulations to describe what they intended to designate as public works for purposes of these enactments. When different formulations are used over the evolving history of a concept, often reflecting the prevailing forces of the times or the realities at play in different segments of the workplace, courts occasionally encounter the need for statutory interpretation. This is one such case.

The essence of Barrett's argument is that some definitions of public work are limited to labor that generally involves construction. Perforce, they urge that all public works provisions should be interpreted as so limited. The particular provision at issue here does not include the limitation Barrett insists upon.

B. The Statutory Framework

California's prevailing wage law was first enacted in 1931 as an uncodified measure.⁴ (Public Wage Rate Act or 1931 Act; Stats. 1931, ch. 397, §§ 1–6, p. 910–912.) Congress enacted a federal counterpart ( 40 U.S.C. § 3141 et seq. ) the same year. Both sets of legislation responded to the dire economic conditions of the Great Depression, when private construction diminished severely and "the oversupply of labor was exploited by unscrupulous contractors to win government contracts ...." ( State Building & Construction Trades Council of California v. Duncan (2008) 162 Cal.App.4th 289, 294, 76 Cal.Rptr.3d 507 ( Duncan ); see also Universities Research Assn. v. Coutu (1981) 450 U.S. 754, 773–774, 101 S.Ct. 1451, 67 L.Ed.2d 662.) The goal of prevailing wage laws was to give local contractors and labor a fair opportunity to work on public building projects that might otherwise be awarded to contractors who hired cheaper out-of-market labor. ( Universities Research Assn. , at p. 774, 101 S.Ct. 1451.)

The overarching purpose of the prevailing wage law is to "protect and benefit employees on public works projects." ( Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 985, 4 Cal.Rptr.2d 837, 824 P.2d 643 ( Lusardi ).) "This general objective subsumes within it a number of specific goals: to protect employees from substandard wages that might be paid if contractors could recruit labor from distant cheap-labor areas; to permit union contractors to compete with nonunion contractors; to benefit the public through the superior efficiency of well-paid employees; and to compensate nonpublic employees with higher wages for the absence of job security and employment benefits enjoyed by public employees." ( Id . at p. 987, 4 Cal.Rptr.2d 837, 824 P.2d 643.) Courts liberally construe the law to fulfill these purposes. ( City of Long Beach , supra , 34 Cal.4th at pp. 949–950, 22 Cal.Rptr.3d 518, 102 P.3d 904 ; see also Azusa Land Partners v. Department of Industrial Relations (2010) 191 Cal.App.4th 1, 15, 120 Cal.Rptr.3d 27 ( Azusa ).)

Generally, prevailing wages must be paid to all those "employed on public works" (§ 1771), including those "employed by contractors or subcontractors in the execution of any contract for public work"⁵ (§ 1772). This requirement only applies to work performed under contract, not to "work carried out by a public agency with its own forces." (§ 1771.) The body awarding a public work contract must obtain the prevailing wage rate for each type of worker needed. (§ 1773.) A "contractor to whom the contract is awarded ... shall pay not less than the specified prevailing rates of wages to all workmen employed in the execution of the contract." (§ 1774.) A contractor who fails to do so is liable for the deficiency and subject to a penalty. (§ 1775.) The statutory obligation to pay prevailing wages is independent of any contractual requirement. ( Lusardi , supra , 1 Cal.4th at pp. 981–982, 4 Cal.Rptr.2d 837, 824 P.2d 643.) Prevailing wages must be paid regardless of any private agreement. ( Id . at p. 988, 4 Cal.Rptr.2d 837, 824 P.2d 643.)

"Public works" is a term of art defined by section 1720 and the sections that follow. (See §§ 1720(a), 1720.2 – 1720.9.) The protections afforded by the prevailing wage laws only extend to activities that qualify as public work. Section 1720(a) sets out eight separate definitions of the term. It provides in full that "[a]s used in this chapter,⁶ ‘public works’ means all of the following: [¶] (1) Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds, except work done directly by a public utility company pursuant to order of the Public Utilities Commission or other public authority. For purposes of this paragraph, ‘construction’ includes work performed during the design, site assessment, feasibility study, and other preconstruction phases of construction, including, but not limited to, inspection and land surveying work, regardless of whether any further construction work is conducted, and work performed during the postconstruction phases of construction, including, but not limited to, all cleanup work at the jobsite. For purposes of this paragraph, ‘installation’ includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems. [¶] (2) Work done for irrigation, utility, reclamation, and improvement districts, and other districts of this type. ‘Public works’ does not include the operation of the irrigation or drainage system of any irrigation or reclamation district, except as used in Section 1778 relating to retaining wages. [¶] (3) Street, sewer, or other improvement work done under the direction and supervision or by the authority of any officer or public body of the state, or of a political subdivision or district thereof, whether the political subdivision or district operates under a freeholder's charter or not. [¶] (4) The laying of carpet done under a building lease-maintenance contract and paid for out of public funds. [¶]...