City wage policy confounds council, upsets unions

City wage policy confounds council, upsets unions

Michele Ellson

When Vice Mayor Rob Bonta asked his fellow City Council members to require Alameda to pay prevailing wages on its public works projects, some expressed surprise. They thought the city already had one.

“I thought it was very clear that Alameda followed prevailing wage,” City Councilwoman Beverly Johnson said.

A 1996 resolution supporting prevailing wage laws and “reaffirming commitment to uphold prevailing wage requirements on city public work projects” declared the council’s “unwavering commitment to uphold prevailing wage requirements on City public works projects.” And in 2004, city leaders voted to send a letter to the state supporting the prevailing wage concept.

But city staff interpreted the council’s actions differently. They said that while the council may have supported the concept of paying the going rate for construction jobs funded with local dollars, they never formally adopted rules requiring the city to pay them – and Alameda hasn’t been.

“There was never a requirement that we pay prevailing wage,” Public Works Director Matt Naclerio said. “From 1996 until now, that’s the way the city has operated.”

The city’s stance has been questioned by local unions and has led to a state complaint from a Sacramento-based group that monitors contracting practices. The Foundation for Fair Contracting has filed a complaint with the California Labor Commissioner challenging Alameda’s failure to provide prevailing wages on local public works jobs, executive director Bryan Berthiaume said.

Berthiaume also said he plans challenge the city’s decision to contract out a pair of construction jobs without requiring the contractor to pay prevailing wages in a filing with the state Department of Industrial Relations.

City Manager John Russo said on February 21 that he’d issue an administrative order requiring the city to pay prevailing wages on locally funded public works projects while a wage ordinance is drafted. Meanwhile, the California Supreme Court is set to consider a case that could eliminate locals’ power to choose.

Projects funded with federal and state money are required to use workers who are paid prevailing wages, which are set according to profession and region. Leaders of charter cities like Alameda have local discretion over whether to pay those rates for locally funded projects, though the use of that discretion is often a matter of dispute, according to an attorney with the Department of Industrial Relations.

Bonta said he discovered the city wasn’t paying prevailing wages on all of its construction projects in early February, when city leaders, city staff and union leaders sat down to discuss a citywide project labor agreement that would cover wages and other items. He said some people who attended the meeting believed the city had rules in place, but city staff disagreed.

Eight years after the passage of the 1996 resolution, the council voted to send the state a letter supporting the concept of a statewide prevailing wage, meeting minutes show. But at that time, Alameda’s city attorney told the council the city never set a prevailing wage policy, and that the letter they were set to approve wouldn’t create one either, the minutes showed.

Naclerio said paying prevailing wages on public works projects increases their cost by 4 to 12 percent, though members of the council said paying prevailing wages doesn’t substantially increase the cost of such projects. City staff, who asked the council not to impose local prevailing wage rules, made the same argument in 2004.

Mike Croll of Operating Engineers No. 3 learned the city wasn’t paying prevailing wages when he asked the city about a public works project being conducted near the union’s South Loop Road offices. He said the union requested certified payrolls from the city showing prevailing wages were paid and was denied because the city claimed an exemption from the rule.

“We were just blown away,” Croll said.

Naclerio said the majority of the city’s capital improvement projects are funded locally, as are sewer projects, on which the city is spending $7 million a year. He said staff are holding off on a $1.5 million street resurfacing project in order to include a prevailing wage requirement in the contract.

Naclerio said he’s not sure whether the city would have been required to pay prevailing wages on the road project, which may be funded with Measure B transportation funds and state gas tax money, though Croll said that a project that uses any funds not generated in the city needs to pay prevailing wages.

The Department of Industrial Relations attorney, who asked not to be named because he hadn’t gotten clearance to be quoted from the department’s media representatives, said that if any money for a project comes from outside a city, their exemption from prevailing wage rules probably doesn’t apply. He said the department has ruled administratively against cities that have used gas tax funds, for instance, on projects where prevailing wages weren’t paid.

Johnson said the apparent confusion over the rules made her wonder if city staff needs more oversight to ensure they follow through on council decisions, though Naclerio called council members’ assertions about the wage rules a “reinterpretation” of earlier council actions.

Nevertheless, Johnson said she’s on board with an ordinance that will require contractors who handle all of the city’s construction projects to pay prevailing wages, and Bonta is pressing ahead with the wage ordinance, which he said will make those intentions crystal clear.

“I think you need more than one line to provide the guidance and clarity for how it’s going to be used. So that’s what we’re going to get,” Bonta said.