237 Cal. App. 4th 46
Cal. Ct. App.2015Background
- Vector worked on a San Diego Unified School District public works project; the Department of Industrial Relations (Director) found Vector failed to pay required shift differential pay for shifts commencing after 12:00 noon.
- The Department had posted an Important Notice (2002) and placed a cover-page Note (the "Stamp," begun in 2006) on prevailing-wage shift provisions clarifying when shift differential pay applies.
- Vector sued for declaratory relief, alleging the Important Notice and Stamp are invalid "underground regulations" because they were not adopted under the APA's notice-and-comment requirements.
- The Department conceded the shift-premium guidance is a regulation and was not adopted under the APA, but argued the guidance is exempt as part of rate-setting under Gov. Code § 11340.9(g) and, alternatively, under Labor Code § 1773.5(d).
- The trial court granted summary judgment for the Department, holding the Important Notice and Stamp are integral to prevailing-wage rate determinations and thus exempt from APA rulemaking requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Important Notice and Stamp are invalid underground regulations for lack of APA rulemaking | Vector: The Notice/Stamp are regulations requiring APA adoption; failure to follow APA makes them invalid | Department: Guidance is exempt because it establishes/fixes rates as part of prevailing-wage rate-setting (Gov. Code § 11340.9(g)); also exempt under Labor Code § 1773.5(d) | Court: Exempt — the Notice and Stamp are part of the Director's rate determinations and thus fall within the rate‑setting/prevailing‑wage exemptions; judgment for Department affirmed |
| Whether "determine" equals "fix/establish" rates for purposes of the APA exemption | Vector: Determination is not the same as fixing; Dept. does not set actual numeric rates here | Department: Statutory language treats determine/establish/fix interchangeably; Director’s determinations fix prevailing rates | Court: Held that statutory usage equates "determine" with "establish/fix," bringing the guidance within the exemption |
| Whether Ericsson controls (i.e., policy is rule subject to APA) | Vector: Ericsson held that an agency policy applying an existing rate to an unaddressed classification required APA rulemaking; analogous here | Department: Ericsson is inapposite because Ericsson applied rates to classifications lacking determinations; here the Notice/Stamp apply already‑established shift rates to covered workers as part of the rate‑setting process | Court: Agreed with Department; Ericsson inapplicable; Notice/Stamp are integral to rate determinations |
| Whether newer statutory amendment affects exemption analysis | Vector: (implicit) APA requirements apply unless clearly exempted | Department: Labor Code § 1773.5(d) (2014) expressly exempts determinations relating to shift rates from APA | Court: Even if not covered by Gov. Code § 11340.9(g) alone, the Notice/Stamp are exempt under Labor Code § 1773.5(d) |
Key Cases Cited
- Winzler & Kelly v. Department of Industrial Relations, 121 Cal.App.3d 120 (1981) (overall wage‑determination process and integral parts exempt from APA prior‑hearing requirements)
- Division of Labor Standards Enforcement v. Ericsson Information Systems, Inc., 221 Cal.App.3d 114 (1990) (agency policy applying an established rate to an unaddressed classification is a rule subject to APA)
- Tidewater Marine Western, Inc. v. Bradshaw, 14 Cal.4th 557 (1996) (statutory construction principles for agency rulemaking and APA compliance)
- Lusardi Construction Co. v. Aubry, 1 Cal.4th 976 (1992) (purpose of prevailing wage law is to protect public‑works employees)