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(A
version of this article will appear in the California Construction
Law Reporter, published by the West Group.)
By James E. Acret
The
California Labor Code requires contractors and subcontractors
on public projects to pay a prevailing wage determined by
the state. Public agencies are required to withhold from
progress payments wages and penalties that have been forfeited
for failure to pay prevailing wages. (§1727) If money
is withheld from a contractor because of a subcontractor's
failure to pay prevailing wages, the contractor may withhold
such sums from the subcontractor. (§1729) The contractor
may bring suit against the agency within 90 days of the
completion of the contract and acceptance of the work to
recover wages and penalties withheld. (§§1730,
1731, 1732)
As
ordered by the Division of Labor Standards Enforcement,
agencies withheld more than $135,000 in wages and penalties
based on the alleged failure of G&G to pay prevailing
wages. G&G asserted that the issuance of withholding
orders without a hearing constituted a deprivation of property
without due process of law in violation of the 14th Amendment.
The District Court granted summary judgment; declared §§1727,
1730 to 1733, 1775, 1776 (g), and 1813 of the Labor Code
unconstitutional; and enjoined the state from enforcing
these provisions against G&G. REVERSED. Lujan v.
G&G Fire Sprinklers, Inc., ___ F.3d ___, 2001 DJDAR
3701 (9th Cir. 2001).
"The
Due Process Clause grants the aggrieved party the opportunity
to present his case and have its merits fairly judged."
G&G was not presently entitled to exercise dominion
over the payment. G&G was deprived of a payment it contends
it is owed under a contract based on the state's determination
that G&G failure to comply with the contract's terms.
G&G has only a claim that it did comply
with those terms. This interest can be fully protected by
an ordinary breach of contract suit. "We hold that
if California makes ordinary judicial process available
to respondent for resolving its contractual dispute, that
process is due process."
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To learn more about Thelen Reid's Construction and Government Contracts Department, click here. For more information about books and other legal materials written by James Acret, click here and enter "Acret" in the Search Products Field. To learn more about topics covered in this article, contact Paul Berning at (415) 369-7229 or at pwberning@thelen.com.
©2001 Thelen Reid Brown Raysman & Steiner LLP
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