Aubry

The prevailing wage law governs wages and other conditions of employment on public works, which include "[c]onstruction, alteration, demolition or repair work done under contract and paid for in whole or in part out of public funds...." (Lab. Code, § 1720, subd. (a); all further unlabeled statutory references are to the Labor Code.) "Public works" contracts awarded to private contractors must include stipulations requiring the contractors and subcontractors to pay their employees no less than the applicable prevailing wage rates, as determined by the Director of the Department of Industrial Relations (the Director). (§§ 1773.2, 1775.)

This case involves an $18 million expansion of a public hospital. To keep the construction costs as low as possible, the public entity entered into a written agreement with a third party corporation, which appointed the public entity as its agent for all purposes on the construction project. The public entity, purportedly acting as agent for the third party corporation, then hired a private contractor to construct the project, without entering into the statutorily required stipulations that the contractor pay its employees the…

I agree with the majority that Lusardi Construction Company (Lusardi) cannot be held liable for statutory penalties. I respectfully dissent, however, from the remainder of the judgment and the majority’s reasoning. I have concurred in Justice Panelli’s explanation of why Lusardi should not be required to pay the difference between the prevailing wages and the wages that Lusardi contracted to pay. (Cone, and dis. opn. of Panelli, J., at pp. 999-1004, ante.) I write separately only to state that I also agree with Justice Arabian’s conclusion that the majority opinion results in a miscarriage of justice. (Cone, and dis. opn. of Arabian, J., at pp. 1004-1008, ante.) As he explains and as the Court of Appeal observed, this case cries out for application of equitable estoppel.

In an apparent attempt to render its harsh result more palatable, the majority suggests that Lusardi “has remedies against the District, Imperial, and perhaps others for indemnification . . . .” (Maj. opn., at p. 997, ante.) This result not only delays justice to Lusardi, it unnecessarily consumes court resources.

The prevailing wage law governs wages and other conditions of employment on public works, which include “[c]onstruction, alteration, demolition or repair work done under contract and paid for in whole or in part out of public funds . . . .” (Lab. Code, § 1720, subd. (a); all further unlabeled statutory references are to the Labor Code.) “Public works” contracts awarded to private contractors must include stipulations requiring the contractors and subcontractors to pay their employees no less than the applicable prevailing wage rates, as determined by the Director of the Department of Industrial Relations (the Director). (§§ 1773.2, 1775.)

This case involves an $18 million expansion of a public hospital. To keep the construction costs as low as possible, the public entity entered into a written agreement with a third party corporation, which appointed the public entity as its agent for all purposes on the construction project. The public entity, purportedly acting as agent for the third party corporation, then hired a private contractor to construct the project, without entering into the statutorily required stipulations that the contractor pay its employees the…

I dissent from the majority’s holding that the obligation of a contractor on a public works project to pay the prevailing wages arises from a statutory duty independent of any contractual agreement or notice to the contractor. (Maj. opn., ante, at pp. 986-988.) The majority bases its conclusion on the language of one of the public works law’s provisions that the prevailing wage “ ‘shall be paid to all workers employed on public works.’ ” (Id. at p. 987, italics omitted, quoting Lab. Code, § 1771.) 1 The majority also asserts that requiring contractors to comply with the public works laws only when their contracts require it would defeat the legislative objective of ensuring that workers on public works be paid the prevailing wages. (Maj. opn., ante, at p. 987.) I disagree with the majority’s interpretation of the prevailing wage laws. In my view, the statutory scheme as a whole does not disclose a legislative intent to hold contractors liable for paying the prevailing wages when the contract does not require those wages to be paid; rather, it reflects a view that the Legislature intended contractors to be aware of their obligations under the prevailing *1000 wage laws before…

Although I agree that the obligation to pay prevailing wage derives from statute as well as contract *1005 and that the Director of the Department of Industrial Relations (the Director) retains the inherent and necessary authority ultimately to determine a project’s public work status, I cannot support the majority’s refusal to accord Lusardi Construction Company (Lusardi) a modicum of fairness under this scenario. In my view, the circumstances “clearly establish that a grave injustice would be done if an equitable estoppel were not applied.” (Cal. Cigarette Concessions v. City of L. A. (1960) 53 Cal.2d 865, 869 [ 3 Cal.Rptr. 675 , 350 P.2d 715 ].) I would, therefore, affirm the judgment of the Court of Appeal.

The stipulated facts establish that the contract between Lusardi and Imperial Municipal Services Group, Inc. (Imperial) did not contain any reference, to the status of the expansion project as a public work or to any obligation to pay prevailing wages; that Lusardi inquired as to the nature of the project, expressly declining to enter into a public works contract; that in response the Tri-City Hospital District (the District) gave assurances, based on representations of…