The California Supreme Court effectively expanded the scope of “public works” work carried out for specific counties in its recent Kaanaana v Barrett Business Services, Inc. ruling.

In Kaanaana, the defendant hired a recruitment agency to provide a sanitary facility with belt sorters for two facilities. In particular, the plaintiffs were hired to sort the garbage on a conveyor belt to remove recyclable materials and process the rest. The plaintiffs, like all other employees of the recruitment agency, did not receive any applicable wages for this work – presumably because it is generally assumed that the applicable wages are only required for construction and construction-related work on public projects. The plaintiffs sued the defendant for failure to comply with:

  1. Pay minimum wages and / or prevailing wages;
  2. Pay overtime at the applicable wage rates;
  3. Provide meal times;
  4. Timely payment of all wages owed at the time of termination;
  5. For unfair business practices.

In the trial, the defendant successfully deleted the plaintiffs’ prevailing wage allegations on the grounds that the district does not fall under the definition of a covered district under the Labor Code Section 1720 (a) (2) and that the work being done was not the type of Work falling under Section 1720 (a) (2). The plaintiff appealed the court’s decision. On appeal, the appeals court overturned the trial and ruled that plaintiffs’ work qualified as “public works” under Section 1720 (a) (2), entitling them to applicable wages.

The defendant moved a petition and the California Supreme Court issued a charter to settle the matter. The Court has been asked to determine whether the work performed by personnel of the recruitment agency, when assigned to a county sanitary district to perform work unrelated to construction, constitutes Section 1720 (a ) (2) of the Labor Code, which reads as follows:

“(A) In this chapter,” public works “means:

. . .

(2) Works for irrigation, utilization, reclamation and improvement areas and other areas of this type. “Public works” does not include the operation of an irrigation or drainage system of an irrigation or reclamation area, except as used in Section 1778 relating to the maintenance of wages. “

The Court unanimously ruled that the recruitment agency’s workers were qualified as public works and authorized them to pay applicable wages under Section 1720 (a) (2).

In making its decision, the Court went into the history of the term “public works” and noted that its definition has evolved since it came into force in 1931 to adapt to the times. In reviewing this history, the Court acknowledged that the initial application of applicable wages was limited to construction work only. To this end, the defendant put forward four unsuccessful arguments. The essence of any argument is that public works are restricted to workers that include “construction” or construction-related work such as “remodeling, demolition, installation or repair”. In this regard, the defendants argued that the plaintiffs’ work was not “work”.

The defendant argued that:

  1. The Construction and Installation Law of Section 1720 (a) (1) amends the covered district provision of Section 1720 (a) (2) to limit its application to workers engaged in construction work.
  2. The seven other definitions of “public works” in Section 1720 (a) relate to construction or infrastructure, so the scope of Section 1720 (a) (2) should also be limited.
  3. Laws outside of the Labor Code show that “public works” are commonly understood to be limited to construction works owned by the public and intended to be used for the benefit of the public.
  4. There is no logical reason why the legislature would have widened the range of activities covered by applicable wages had it been conducted for counties falling under Section 1720 (a) (2) as opposed to other uncovered counties.

The court rejected all of the defendant’s arguments.

The Court stated that Section 1720 (a) (2) defines public works in terms of the government district for which the work is being carried out, and not in terms of tasks within the meaning of Section 1720 (a) (1). Accordingly, the legislature must have intended to include a wide range of activities that are not construction activities evidenced by the use of “work” and not a list of tasks in Section 1720 (b) (2 ). The Court also found that other provisions of Section 1720 (a) which it established contained seven separate definitions of “public works” that contained restrictive language, but 1720 (a) (2) did not. In addition, the Court found that the clear text form of Section 1720 (a) (2) in context indicates that its scope is not limited to the type of construction activity and maintains the purpose of applicable wage laws: the protection of those under contract work Poor wages benefit the public and the higher wages make up for the lack of job security and benefits generally associated with public employment.

The Court described section 1720 (a) as a “Scattershot series of subjects” rather than a list of uniform types of work. The Court also found that, contrary to the defendant’s arguments, the seven other different definitions of “public works” supported the finding that Section 1720 (a) (2) is not limited to construction or infrastructure works. Instead, the separate definitions serve to support a finding that the legislature could have limited the range of activities that qualify as public works, but did not choose to do so.

The Court was also not persuaded by the reference to other laws that provided for compliance with applicable wages in construction projects. We found that just because laws governing construction projects require compliance with applicable wages, it does not mean that applicable wage laws only apply to construction projects. Finally, the court apparently took a political stance, finding that the defendant failed to explain why belt sorters were so different from workers who were vulnerable and vulnerable to exploitation and who received poor wages.

The effects of Kaanaana are significant for recruitment agencies. For one thing, the Court has shown that it will not hold back in trying to uphold the political purpose of the wages in force – to protect workers from inferior wages – even if that means widening the generally understandable scope of wages in force . Second, the recruitment agencies need to review the wages they pay their workers to perform work for a county called “irrigation, supply, reclamation and improvement”. Third, it is unclear and the Court has not given any indication as to which other counties fall under the definition of “other counties of this type”. Therefore, recruitment agencies should review the type of work being performed by other government departments with which they are contracting to provide workers and assess whether that work might fall under the work described in Section 1720 (a) (2).

The finding of the Court of Justice is also in line with the most recent legislative action, namely AB 1768, which came into force on January 1, 2020, and has amended Section 1720 (a) (1) to broaden the definition of “construction” to include works that are carried out during the planning, site assessment, feasibility studies and other pre-construction phases of the construction, regardless of whether further construction work is actually carried out. Indeed, the consensus opinion from Justice Kruger penalizing lawmakers for failing to clarify the definition of “public works” calls on lawmakers to revise the definition to reflect the current scope of applicable wage laws and protection This time around, the current wages offer to employees. As we have seen in other contexts, it is entirely possible that lawmakers are trying to respond to Justice Kruger’s appeal and possibly suggesting changes to clarify or even widen the scope of applicable wages.

Currently, recruitment agencies should review their current government contracts and assess the possible application of applicable wages to the work performed by their workers under such contracts. Similarly, prior to bidding or entering into a contract with county recruitment agencies, recruitment agencies should consider entering into contracts to pay workers the statutory wages due for the contracted work.