Department of Industrial Relations v. Nielsen Construction Co.

Under California’s prevailing wage law (Lab. Code, § 1720 et seq.), all public works contracts involving projects of more than $1,000 require workers be paid no less than the general prevailing wage rates consisting of cash wages and fringe benefits. In this case, we are called upon to decide whether the Employee Retirement Income Security Act of 1974 (ERISA) ( 29 U.S.C. § 1001 et seq.) preempts California’s prevailing wage law to preclude the recovery of unpaid wages for labor performed on a public works contract. We conclude the prevailing wage law is not preempted by ERISA and accordingly reverse the judgment.

Background

The Prevailing Wage Law

California’s prevailing wage law for public works contracts requires that contractors pay their employees a minimum wage, called the “prevailing rate of per diem wages.” (§§ 1771, 1773, 1774.) “The overall purpose of the prevailing wage law is to protect and benefit employees on public works projects. [Citation.]” (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 985 [ 4 Cal.Rptr.2d 837 , 824 P.2d 643 ].) The prevailing wage is determined by the Director of the Department of Industrial Relations (Director) according to…