Assoc. Gen. Contractors of Wash. v. State

544 P.3d 486, 2 Wash. 3d 846
Washington Supreme Court·Decided March 14, 2024·No. 101,997-1·Published·Cited by 7 cases

Opinion

FILE THIS OPINION WAS FILED FOR RECORD AT 8 A.M. ON

IN CLERK’S OFFICE MARCH 14, 2024 SUPREME COURT, STATE OF WASHINGTON MARCH 14, 2024 ERIN L. LENNON

SUPREME COURT CLERK

IN THE SUPREME COURT OF THE STATE OF WASHINGTON

ASSOCIATED GENERAL CONTRACTORS No. 101997-1 OF WASHINGTON, a Washington Nonprofit Corporation; ASSOCIATED BUILDERS AND CONTRACTORS OF WESTERN EN BANC WASHINGTON, INC., a Washington Nonprofit Corporation; INLAND PACIFIC Filed :______________ March 14, 2024

CHAPTERS OF ASSOCIATE BUILDERS AND CONTRACTORS, INC., a Washington Nonprofit Corporation; and INLAND NORTHWEST AGC, a Washington Nonprofit Corporation, Respondents,

v.

STATE OF WASHINGTON; JAY INSLEE, Governor; JOEL SACKS, Director of Washington State Department of Labor and Industries; and JIM CHRISTENSEN, Washington State Department of Labor and Industries Program Manager and Industrial Statistician, Prevailing Wage Program; in their official capacities, Petitioners.

GORDON MCCLOUD, J.— When the State of Washington builds a bridge, a road, or any other public project, it must pay the workers a fair wage—what the legislature has called the “prevailing rate of wage.” RCW 39.12.020. Before 2018,

the legislature directed the State to determine the prevailing rate of wage by using wage and hour surveys dependent on voluntary compliance by employers and unions. WAC 296-127-019; Clerk’s Papers (CP) at 2559. The “data collected” from those surveys could be used “only in the county for which the work was performed.” RCW 39.12.026(1).

In 2018, the legislature changed the method for determining the prevailing rate of wage on most projects. It directed the State to determine that rate “by adopting the hourly wage, usual benefits, and overtime paid for the geographic jurisdiction established in collective bargaining agreements [CBAs] for those trades and occupations that have [CBAs].” RCW 39.12.015(3)(a).

In Associated General Contractors, the Court of Appeals declared this 2018 statute unconstitutional on the ground that it conflicted with the single-county geographic limitation in the older statutory subsection, RCW 39.12.026(1).1 Specifically, the Court of Appeals held that RCW 39.12.026(1) provides that “data collected” by the State to determine prevailing wage rates may be used “only in the county for which the work was performed,” the new CBA-adoption statute lacks that geographic limitation, and the RCW 39.12.026(1) single-county limit conflicts

1 Associated Gen. Contractors of Wash. v. State, No. 54465-2-II (Wash. Ct. App.

Apr. 18, 2023) (unpublished), https://www.courts.wa.gov/opinions/pdf/D2%2054465-2- II%20Unpublished%20Opinion.pdf (AGC III).

with RCW 39.12.015(3)(a)’s seeming permission to adopt wage rates from CBAs that cover more than one county. The Court of Appeals concluded that this was a fatal conflict—that it violated article II, section 37 of the Washington Constitution.

We disagree. The older statutory subsection, RCW 39.12.026(1), was enacted at the time that the older wage-survey method was in force and, when RCW 39.12.026(1) is read in context of the full statute and chapter in which it appears, that statutory subsection’s single-county use limitation applies only to the wage-survey “data collection” method. It does not apply to the newer CBA- adoption method at all. Thus, the older statute does not conflict with the newer statute; they just apply to different situations.

We therefore reverse the decision of the Court of Appeals.

FACTS AND PROCEDURAL HISTORY I. The legislature amends the prevailing wages on public works act The prevailing wages on public works act (Act) requires employers to pay no less than the “prevailing rate of wage” to laborers, workers, or mechanics working on public projects. RCW 39.12.020. The legislature originally defined the “prevailing rate of wage” as “the rate of hourly wage, usual benefits, and overtime paid in the locality . . . to the majority of workers, laborers, or mechanics, in the same trade or occupation.” RCW 39.12.010(1). The “‘locality’ is the largest city in the county wherein the physical work is being performed.” RCW 39.12.010(2).

The legislature placed the job of determining the prevailing wage for each trade and occupation in the hands of the industrial statistician of the Department of Labor and Industries (L&I). RCW 39.12.015(1).

Pursuant to that legislative grant of authority, the industrial statistician promulgated WAC 296-127-019, which lays out a multistep procedure for setting the prevailing wage by using wage surveys. Before 2018, the industrial statistician followed this method and set prevailing wage rates in Washington’s 39 counties by sending wage surveys to employers and unions, asking them to voluntarily report wage rates in various trades and occupations. WAC 296-127-019; CP at 2559. Then, the industrial statistician would “systemize” the survey data and “determine the majority or average rate by statistical estimation.” Associated Gen. Contractors of Wash. v. State, 200 Wn.2d 396, 401, 518 P.3d 639 (2022) (AGC II) (citing WAC 296-127-019); CP at 2555-59 (Christensen deposition).

In 2003, the legislature codified the wage survey process in RCW 39.12.026 and directed the statistician that “all data collected by [L&I] may be used only in the county for which the work was performed.” Former RCW 39.12.026(1) (2003).

In 2018, the legislature modified the prevailing wage process by enacting Substitute Senate Bill (SSB) 5493.2 That law requires the industrial statistician to

2 SSB 5493, 65th Leg., Reg. Sess. (Wash. 2018).

“adopt[]” the wages memorialized in CBAs to set most prevailing wage rates, rather than to collect, analyze, and apply data concerning wages, jobs, and hours through the wage-survey method. This newer law, codified at RCW 39.12.015, currently provides:

(3)(a) Except as provided in RCW 39.12.017,[3] and notwithstanding RCW 39.12.010(1), the industrial statistician shall establish the prevailing rate of wage by adopting the hourly wage, usual benefits, and overtime paid for the geographic jurisdiction established in [CBAs] for those trades and occupations that have [CBAs]. For trades and occupations with more than one [CBA] in the county, the higher rate will prevail.

(b) For trades and occupations in which there are no [CBAs] in the county, the industrial statistician shall establish the prevailing rate of wage as defined in RCW 39.12.010 by conducting wage and hour surveys. In instances when there are no applicable [CBAs] and conducting wage and hour surveys is not feasible, the industrial statistician may employ other appropriate methods to establish the prevailing rate of wage.

II. AGC challenges SSB 5493 In 2019, Associated General Contractors of Washington, Associated Builders of Western Washington Inc., Inland Pacific Chapter of Associated Builders and Contractors Inc., and Inland Northwest AGC Inc. (collectively AGC)

3 In 2019, the legislature amended RCW 39.12.015 to incorporate by reference the newly enacted RCW 39.12.017, which directs the industrial statistician to return to using wage surveys to determine prevailing wage rates for the residential construction occupation, regardless of whether there is an applicable CBA. LAWS OF 2019, ch. 29, § 2. RCW 39.12.017 is not at issue here.

filed this lawsuit challenging SSB 5493. AGC argued that SSB 5493 (1) unconstitutionally delegates legislative authority, (2) violates due process, (3) violates equal protection, and (4) violates article II, section 37 of the Washington Constitution. CP at 11-17. It sought declaratory judgment that the law is invalid as well as preliminary and permanent injunctions barring implementation of the law. Id. at 17.

The trial court denied AGC’s motion for a preliminary injunction. Id. at 182.

The parties filed cross motions for summary judgment, which the trial court resolved in favor of the State. Id. at 2536.

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Assoc. Gen. Contractors of Wash. v. State, 544 P.3d 486, 2 Wash. 3d 846 (Wash. 2024).

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