California DIR Tells SF Bay Pipeline Contractors and Truckers that Off-Haul of Excavated Material Is Prevailing Wage

California DIR Tells SF Bay Pipeline Contractors and Truckers that Off-Haul of Excavated Material Is Prevailing Wage Work

California’s prevailing wage laws require that employers on public works projects pay their employees at specified wage and benefit rates set by the California Department of Industrial Relations (DIR). Generally, this so-called “prevailing” wage is not in fact the average wage paid to workers in the area, but instead is designed by the State to match the wages and benefits paid to local union workers. The prevailing wage rules that apply to on-haul and off-haul of materials to and from public works projects have been in a state of flux for much of the last decade. The DIR has issued a series of on-haul and off-haul rulings in recent years that are difficult to reconcile with one another, leaving contractors and trucking firms with a lack of certainty over just what constitutes hauling work subject to prevailing wage. 

Last month the DIR the added to this series with a new off-haul ruling. In a coverage determination letter concerning the San Francisco Public Utilities Commission’s “Bay Division Pipelines Reliability Upgrade” project, the DIR ruled that the off-haul of excavated material removed from the project is covered prevailing wage work. In other words, the DIR said that employees of companies doing the off-haul trucking work must be paid prevailing wages for the entirety of their haul. This ongoing pipeline project involves adding a five mile long, 108-inch internal diameter pipeline to the City of San Francisco water system, extending five miles under the San Francisco Bay.

The prime contractor on the project entered into a subcontract with S & S Trucking to transport and dispose of surplus excavated materials. The subcontract runs from August 16, 2010 through May 30, 2015, and S & S Trucking anticipates off-hauling a total of approximately 225,000 cubic yards of excavated material from the project over the term of the subcontract. In the first year under the subcontract, S & S Trucking had off-hauled 1,655 loads of material to the Dumbarton Quarry, a private disposal site. S & S Trucking had argued that the off-haul should not be deemed prevailing wage work.

They contended that off-haul has not traditionally been prevailing wage work, subject to limited exceptions such as off-haul from one public works project to another or the off-haul of refuse. S & S Trucking viewed this as a job where the off-haul fit the traditional model – the off-hauled material was being hauled to a private site and the material had some value (in other words, it was not refuse). They pointed out that the specifications addressing off-haul of surplus excavated material granted the contractor and its subcontractors several options for how and where to dispose the material. Therefore, S & S Trucking claimed, the off-haul of material was not within the flow of construction and should not be subject to prevailing wage. 

The DIR rejected this argument. It applied an expansive interpretation of the prevailing wage laws. According to the DIR, all off-haul work was subject to prevailing wage if it could be considered part of the “execution” of the work. Since the DIR reasoned that you can’t install pipe unless you first trench a place to install it, and you can’t trench unless you remove your trench spoils, it followed (to the DIR) that the off-haul of those trench spoils was part of the “execution” of the work. And under the DIR’s interpretation of the prevailing wage laws, if the off-haul was part of the execution of the work, then all employees performing that off-haul work must be paid prevailing wage. S & S Trucking has appealed the DIR’s decision, and that appeal is pending. The RockBlog intends to report on any future developments in this case and in this evolving area of prevailing wage law.