Employment Law Daily California had rational basis for including ready-mix contract drivers (and not other drivers) in prevailing wage law
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Monday, September 24, 2018

California had rational basis for including ready-mix contract drivers (and not other drivers) in prevailing wage law

By Lisa Milam, J.D.

Finding meaningful differences between ready-mix concrete delivery drivers and other materials drivers sufficient to survive rational basis scrutiny—distinctions that a federal district court in California had “wrongly disregarded as irrelevant”—the Ninth Circuit held the lower court improperly struck down on equal protection grounds a California Labor Code amendment which extended the state’s prevailing wage laws to include ready-mix concrete drivers. The district court also erred in refusing to allow the Teamsters to intervene in the legal challenge brought by a group of ready-mix concrete suppliers, the appeals court said, concluding that the union had a protectable interest in the outcome of the dispute. Finally, the Federal Aviation Administration Authorization Act (FAAAA) did not preempt the Labor Code provision, the court held, affirming on this point and remanding, so that the court below could vacate summary judgment in favor of the concrete suppliers and enter judgment for the state (Allied Concrete and Supply Co. v. International Brotherhood of Teamsters, September 20, 2018, Tashima, A.).

California prevailing wage law was enacted to ensure that employees on public works projects receive a certain minimum wage. Generally defined, “public works” means “construction or related work, done under contract, and paid for in any part out of public funds.” In 2015, the state enacted A.B. 219, which amended its prevailing wage law by adding Section 1720.9. That provision expanded the meaning of “public works” to include “the hauling and delivery of ready-mixed concrete to carry out a public works contract.” Consequently all ready-mix drivers delivering to public works jobs, regardless of who employs the driver or whether the driver is delivering from a dedicated batch plant, were to be paid prevailing wage. (The legislature also contemplated expanding the prevailing wage provision to include asphalt delivery drivers, but ultimately did not do so.)

A group of employers in California’s ready-mix concrete industry sued, alleging the amendment violated the Fourteenth Amendment’s Equal Protection Clause. They also asserted that the Labor Code amendment was preempted by the FAAAA. The district court ruled in the companies’ favor on their constitutional claim, finding no “legally relevant” distinction between ready-mix concrete drivers and other drivers, and no rational basis for singling them out. Therefore, it enjoined the state from enforcing the statute. However, the court dismissed the companies’ FAAAA preemption cause of action. Moreover, along the way, the court rejected a bid by the Teamsters union to intervene in defense of the amendment.

Ready-mix drivers are different. Although the district court determined that the state’s classification of ready-mix drivers from other materials drivers was “arbitrary,” and the differences between the drivers “immaterial,” the Ninth Circuit panel saw “legally relevant” differences between concrete ready-mix drivers and other drivers, which the state legislature could rationally have relied on in extending the prevailing wage law to these drivers, but not others. The starting point was the statutory goals of the prevailing wage law itself and, according to the appeals court, the state legislature “could have rationally concluded that extending the prevailing wage law to ready-mix drivers ahead of other drivers would further these respective goals.” There were several reasons why.

First, ready-mix drivers are more fully integrated into the “the flow of construction” than other drivers because they deliver “a perishable commodity” to construction sites. A Teamsters rep drove this point home convincingly at a legislative hearing on the measure. It was up to the plaintiffs to rebut this justification, which is “rational on its face,” as inconceivable, but they failed to do so. In addition, ready-mix drivers are more skilled, carry a different driver’s license endorsement, and use specialized trucks (asphalt drivers, by comparison, just use dump trucks). They have “unique responsibilities” in that they deliver a material that is more crucial to public works projects and more often used in more sensitive “structural” projects, like walls or footing (while asphalt is typically just used for paving). Therefore, a prevailing wage is needed in order to attract higher-quality workers to ready-mix driver jobs.

Moreover, ready-mix drivers are more typically unionized, and thus more vulnerable to underbidding by nonunion suppliers. The plaintiffs challenged this contention, but it was not the state’s burden to produce empirical evidence to support the statute; it was the plaintiffs’ (unmet) burden to negate this justification. The plaintiffs also argued this rationale amounted to improper protectionism, but they presented no actual evidence of improper favoritism (and the case law they offered in support of their argument was inapposite). They pointed to the fact that the legislature had considered but opted not to include asphalt drivers in the amendment, but without more, this fact was not suggestive of improper motive.

Are these legislative justifications correct? They are “at least debatable,” the appeals court said, and they support a finding that the legislature’s classification was rationally related to furthering the statutory goals of the prevailing wage law, which include protecting workers on public works projects (and, it follows, improving the efficiency and quality of public works), and ensuring union contractors will be able to compete with nonunion contractors. That was enough to survive rational basis scrutiny.

Teamsters’ interest in the case. The Ninth Circuit also reversed the court’s denial of the Teamsters’ motion to intervene, holding that the union had a significantly protectable interest at stake in the challenge to the prevailing wage amendment (and that the union’s appeal was not moot in light of the reversal here, as the plaintiffs could still seek en banc or Supreme Court review). The district court had applied an unduly narrow reading of a 1998 circuit court decision which held the Teamsters were entitled to intervene in support of the state’s prevailing wage law, and it relied on an overly technical distinction between the two, with respect to whether those drivers were already contractually entitled to a prevailing wage by virtue of an applicable collective bargaining agreement, to disregard the circuit precedent. The Ninth Circuit panel, however, found the facts here were nearly identical to the appeals court’s earlier holding. Consequently, it found the union was entitled to intervene as of right.

No federal preemption. The district court had properly dismissed the plaintiffs’ claim of FAAAA preemption, however, the appeals court found, agreeing that California’s prevailing wage law is not related to prices, routes, and services, and therefore is not subject to the FAAAA’s preemption clause. (The panel’s affirmance doesn’t fully resolve the matter, though, as the plaintiffs have already signaled their intent to seek en banc rehearing of this holding.)

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