California Construction Trucking Association (CCTA)

By Robert R. Roginson and Jonathan Judge of Atkinson, Andelson, Loya, Ruud & Romo 12-20-11

The definition of what constitutes a “public work” for prevailing wage purposes has long included the hauling of refuse from a public works site to an outside disposal facility. Assembly Bill 514, signed by Gov. Brown in October of 2011, amends Section 1720.3 of the Labor Code by specifying what materials hauled from a work site are included in the definition of the “hauling of refuse” for purposes of clarifying if the employee is entitled to be paid the applicable prevailing wage rate. AB 514 is effective January 1, 2012.

AB 514 amends Section 1720.3 to define the “hauling of refuse” to include the “hauling soil, sand, gravel, rocks, concrete, asphalt, excavation materials, and construction debris.” This is not an exhaustive list, and accordingly the hauling of other, similar materials may be considered to be the hauling of refuse as well.

Proponents of AB 514 urged that loopholes under existing law rendered Section 1720.3 meaningless because contractors sold refuse hauled from public works sites for a nominal fee, a whole load for $1, for example, and then refused to pay prevailing wages for the hauling of such material contending that such materials were no longer “refuse.” Opponents of the bill, however, including the Associated General Contractors (AGC) of California and other construction related associations, submitted opposition letters to Governor Brown urging him to veto AB 514. They consistently and rightly argued that AB 514 overcorrects the problem, and unduly expands the prevailing wage requirements on construction materials that are not currently considered covered when off-hauling from a public works site by Labor Code Section 1720.3.

AB 514 includes a limited exception and provides that the “hauling of refuse” shall not include the “hauling of recyclable metals such as copper, steel, and aluminum that have been separated from other materials at the jobsite prior to transportation and that are to be sold at fair market value to a bona fide purchaser.” The California Department of Industrial Relations (DIR), which is the state agency responsible for determining whether specific types of work are covered by the prevailing wage statutes, has repeatedly found in its own public work coverage determinations that off-hauling of soil that was deposited at several landfills without charge to the contractor for re-use by the landfill as ground cover was not considered “hauling of refuse” under Labor Code Section 1720.3. This limited exception in AB 514 does not include soil or other nonmetal items, however, and accordingly it may likely be asserted that the hauling of such items from a public work site to an outside disposal facility, even when payment is made for such items or it is used by the disposal facility, for example using soil as ground cover, will no longer be exempt from the prevailing wage requirements.

AB 514 does not alter the three fundamental requirements for such hauling work to be covered under Section 1720.3. Specifically, Section 1720.3 applies to work involving (1) the hauling of refuse, (2) from a public works site, (3) to an outside disposal facility. Each of these three requirements must be met in order for the work to be considered a “public work” under Section 1720.3 for which the payment of prevailing wages is required. Instead, AB 514 amends the definition of “hauling of refuse,” which will most likely result in an expanded interpretation of what is considered to be covered work when such items are hauled from a public work to an outside disposal facility.

AB 514 constitutes a change to existing law terms of what type of work is covered by the prevailing wage statutes, and therefore under well-established California Supreme Court precedent, it should apply prospectively only and not to existing contracts entered into before the new law goes into effect, which is January 1, 2012.