Legal Challenge to Senate Bill 7 in City of El Centro v. Lanier Is Over, No Appeal Filed

The legal challenge to Senate Bill (S.B) 7 (codified as Labor Code Section 1782), in City of El Centro et al. v. Lanier, is over.   

The California legislature passed S.B. 7  so that charter cities would have a financial incentive to require contractors on their local public works projects to pay good solid prevailing wages.  The legislature wanted to further the state’s prevailing wage laws, which create and maintain good jobs and training opportunities in the construction industry and preserve the middle class.

S.B. 7 prohibits a charter city from receiving or using certain types of state funding on public construction projects if the city has a charter provision or ordinance that authorizes contractors not to comply with California’s prevailing wage laws.  In other words, S.B. 7 requires charter cities to pay prevailing wages on local public works projects as a condition of receiving state funding for public construction projects.

After S.B. 7 was passed, charter cities sued the State of California, claiming  that S.B. 7 violated the California Constitution. The charter cities recently lost their legal challenge in a state appellate court. The court found there was nothing unconstitutional about the state using its funding as a financial incentive to encourage charter cities to require compliance with state prevailing wage laws on their local public works projects.  

Specifically, in its decision, City of El Centro et al. v. Lanier, 245 Cal.App.4th 1494 (2016), the Court of Appeal rejected the charter cities’ arguments that S.B. 7:

  1. violated the “home rule” provision of the California Constitution, and
  2. violated the Constitution’s prohibition against legislative restrictions on the use of local tax. 

In ruling that S.B. 7 did not violate the Constitution’s “home rule” provisions, the Court of Appeal emphasized that the state’s pursuit of policy goals through financial incentives is generally constitutional, given the state’s high level of lawmaking authority over the state’s budget.  In ruling that S.B. 7 did not violate the Constitution’s local tax provision, the Court of Appeal reasoned that S.B. 7 does not expressly require charter cities to pay prevailing wages, does not conflict with charter city law, and is not coercive.

No appeal was filed within the time period to appeal the Court of Appeal’s decision.  On June 1, 2016, the Court of Appeal closed the case, ending this legal challenge to S.B. 7.

S.B. 7 remains in effect and charter cities must continue to comply with its provisions.  This is an important victory that will help maintain construction work as an occupation that provides middle-class jobs to hundreds of thousands of California workers, help provide necessary on-the-job training opportunities for the tens of thousands of apprentices enrolled in state-approved apprenticeship programs in the building trades, and enable workers to support families and contribute to their communities.

For further information regarding S.B. 7 please contact your labor law counsel. 

By Minsu Longiaru | July 5, 2016

Legal Developments