VECTOR RESOURCES, INC., Plaintiff and Appellant, v. CHRISTINE BAKER, as Director, etc., et al., Defendant and Respondent.
No. D065224
Fourth Dist., Div. One.
May 26, 2015.
237 Cal.App.4th 46
Sheppard, Mullin, Richter & Hampton, Richard M. Freeman and Matthew S. McConnell for Plaintiff and Appellant.
Christopher Jagard and John J. Korbol for Defendants and Respondents.
OPINION
NARES, Acting P. J.—This action arises out of a determination by the Department of Industrial Relations (the Department) that plaintiff Vector Resources, Inc. (Vector), failed to pay the appropriate prevailing wages to its workers on a public works project for the San Diego Unified School District. Specifically, the Director of Industrial Relations (the Director) issued a decision in which she found that Vector underpaid its employees by failing to pay a higher “shift differential” rate for work performed during shifts commencing after 12:00 noon. The Director‘s decision was based on regulatory language in a document entitled “Important Notice To Awarding Bodies and Other Interested Parties Regarding Shift Differential Pay in the Director‘s General Prevailing Wage Determinations” (the Important Notice), which was posted on the Department‘s Web site. The Important Notice addresses shift differential pay for various crafts used on public works projects, and is augmented by additional regulatory language in a “Note” that the Department
Vector filed a declaratory relief action against the Department, seeking a declaration that the Important Notice and Stamp are invalid and unenforceable as “underground regulations” because they were not promulgated in compliance with the notice and hearing requirements of the Administrative Procedure Act (APA). (
Vector contends the summary judgment in favor of the Department must be reversed because (1) the Department admitted that the shift premium rule is a regulation, (2) the Department admitted that that regulation was not adopted in compliance with the APA, (3) the Department failed to prove that the shift premium regulation establishes or fixes rates within the meaning of
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual Background
The factual background is largely based on facts to which the parties stipulated in support of their cross-motions for summary judgment.
When the Department determines that the regular, straight-time hourly rate within a collective bargaining agreement is prevailing for a craft, classification, and locality, the Department may adopt the collective bargaining agreement by reference. Over 90 percent of the Department‘s prevailing wage determinations are based on collective bargaining agreements.
The Department regularly issues prevailing wage determinations for shift work applicable to a craft, classification, or type of work, in connection with the general prevailing wage determinations. In 2002, the Director issued an Important Notice regarding shift differential pay. The Important Notice states: “The Director‘s General Prevailing Wage Determinations includes shift differential pay for various crafts used on public works projects. This notice is to clarify the worker‘s eligibility to receive the shift differential pay when working on a public works project. Please note that not all crafts have shift differential pay published in the Director‘s General Prevailing Wage Determinations. [¶] When a worker is required to work a regular shift, he/she must be paid the applicable craft rate from the Director‘s General Prevailing Wage Determinations for the construction activity he/she is performing. However, when a worker is required to work a shift outside of normal working hours, he/she must be paid the shift differential pay according to the shift he/she is working. For example, if only one shift is utilized for the day, and the work being performed is during the hours typically considered to be a swing (second) shift or graveyard (third) shift, the worker employed during the hours typically considered to be a swing shift or graveyard shift must be paid the shift differential pay for the shift he/she is working. If multiple shifts are used for the day, the worker working on the second or third shift must be paid according to the shift he/she is working.” (Italics added.)
In 2006 the Director began to place the Stamp on the cover page of the prevailing shift provisions. The Stamp states: “Note: The shift provisions provided in the following pages provide guidance on the work hours that are applicable to each shift. Shift differential pay is required and will be enforced during each applicable shift where shift differential pay is in the determinations. Any shift provision restricting the work hours for a particular shift for a type of work will not be enforced on public works. However, if work is performed during hours typically associated with a 2nd or 3rd shift the appropriate shift rate of pay is required. Shift differential pay shall not
The Department issued the Important Notice and the Stamp without publishing a notice of intent to engage in rulemaking, inviting public comment, or holding a public hearing as the APA requires before the adoption of an administrative regulation, unless an exemption under
The Department maintains a Web site where the current prevailing wage determinations are available to the public. Public works contractors look to the Web site for the particular prevailing wage rates in effect at the time of the bid advertisement date for a public works project. For nearly all of the prevailing wage determinations posted on the Department‘s Web site, the Department also posts specific provisions of the applicable collective bargaining agreements regarding holidays, scope of work, and travel and subsistence. Some, but not all, prevailing wage determinations also include shift rates. For those determinations, the Department also posts associated shift provisions.
The Important Notice is posted on the Department‘s Web site as one of at least 112 other “important notices” that clarify, explain, and provide guidance to the public regarding various aspects of prevailing wage determinations. The language of the Stamp appearing on the cover page of prevailing shift provisions is also posted on the Department‘s Web site.
B. Procedural Background
This case arises out of a prevailing wage enforcement action that the San Diego Unified School District brought against Vector. In that proceeding, the Director determined that Vector underpaid its employees on a public works project, by failing to pay the workers at a higher shift differential rate for work performed during a shift that began after 12:00 noon. Vector sought judicial review of the Director‘s decision by filing a petition for writ of mandate in superior court and the present action for declaratory relief.
In the present action, Vector filed a second amended complaint for declaratory relief against the Director and the Department (defendants) seeking a declaration that “(a) the [Department] impermissibly failed to comply with the APA,
The parties filed a stipulation to file cross-motions for summary judgment, stating they agreed “that the Court may be able to dispose of the issues in this case via summary judgment.”3 In its summary judgment motion, Vector argued that the rule requiring the payment of shift premiums set forth in the Important Notice and the Stamp was a regulation that must comply with the notice and hearing requirements of the APA. Because these requirements were not met, Vector asserted that the Important Notice and Stamp were invalid “underground regulations.”
The Department conceded that the shift premium rule was a regulation and that the notice and hearing requirements of the APA were not met. However, the Department argued that the shift premium regulations were exempt from the APA as a “regulation that establishes or fixes rates, prices, or tariffs,” under
The court granted summary judgment in favor of the Director and against Vector. The court decided the challenged regulations constituted rate setting that was exempt from the APA‘s rulemaking requirements under
I. STANDARD OF REVIEW
A motion for summary judgment or adjudication must be granted when there is no triable issue of material fact and the moving party is entitled to judgment as a matter of law. (
“We review a summary judgment or summary adjudication ruling de novo to determine whether there is a triable issue as to any material fact and whether the moving party is entitled to judgment as a matter of law. [Citation.] ‘In practical effect, we assume the role of a trial court and apply the same rules and standards which govern a trial court‘s determination of a motion for summary judgment.‘” (Mills v. U.S. Bank (2008) 166 Cal.App.4th 871, 895 [83 Cal.Rptr.3d 146].)
II. ANALYSIS
A. Applicable Authority
“The California Prevailing Wage Law is a comprehensive statutory scheme designed to enforce minimum wage standards on construction projects funded in whole or in part with public funds. [Citations.] Under the prevailing wage law, all workers employed on public works costing more than $1,000 must be paid not less than the general prevailing rate of per diem wages as determined by the Director ... for work of a similar character and not less than the general prevailing per diem wage for holiday and overtime work.” (Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc. (2002) 102 Cal.App.4th 765, 776 [125 Cal.Rptr.2d 804];
A prevailing wage determination is exempt from the notice and hearing requirements of the APA if it is “[a] regulation that establishes or fixes rates, prices, or tariffs.” (
We further conclude that the Important Notice and Stamp both constitute regulations that “establish” rates within the meaning of
Vector relies heavily on this court‘s opinion in Division of Lab. Stds. Enforcement v. Ericsson Information Systems, Inc. (1990) 221 Cal.App.3d 114 [270 Cal.Rptr. 75] (Ericsson) in arguing that the Important Notice and Stamp do not fall within the rate setting exemption of
The Ericsson court agreed that the DLSE‘s policy was a rule that “should be promulgated under the APA.” (Ericsson, supra, 221 Cal.App.3d at p. 128.) The court concluded the DLSE‘s policy was not “a step in the process of prevailing rate determinations so as to be exempt from the APA....” (Ibid.) Rather, the Ericsson court decided that the policy created “a standard for the application of already established rates, to cover a situation not addressed in the statute or regulations....” (Ibid.) Vector contends that like the policy at issue in Ericsson, the Important Notice and Stamp are subject to the notice and hearing requirements of the APA because they create a general standard or rule as to when and under what circumstances already existing shift premium rates must be paid.
We conclude Ericsson is inapposite. The DLSE‘s policy at issue in Ericsson applied established prevailing wage rates for a particular class of workers to a different class of workers for whom no prevailing wage determination had been made—i.e., the already established rates had not been established for the workers to whom the DLSE applied them. The DLSE‘s policy was not part of the overall rate determination process because
Even if the Important Notice and Stamp did not “fix” or “establish” rates within the meaning of
We construe the term “shift rate” in the italicized statutory language as a reference to the pay rate for shifts outside of normal working hours. Thus,
The judgment is affirmed. The Department is awarded its costs on appeal.
O‘Rourke, J., and Irion, J., concurred.
Appellant‘s petition for review by the Supreme Court was denied September 9, 2015, S227605. Werdegar, J., did not participate therein.