Lawsuit Against S.B. 954 Filed by Associated Builders and Contractors (ABC) Group Dismissed

On January 27, 2017 in, Associated Builders & Contractors of California Cooperation Comm., Inc. v. Becerra, No. 3:16-cv-02247-BEN-NLS (S.D. Cal. Jan. 27, 2017), a federal district court judge dismissed a lawsuit by the California Cooperation Committee of the ABC, a trade association that promotes nonunion labor in the construction industry, and Interpipe Contracting. 

The lawsuit was a challenge to Senate Bill (S.B.) 954, a 2016 amendment to the State’s prevailing wage law at Labor Code section 1773.1.  The State Building and Construction Trades Council of California (SBCTC) sponsored the legislation.

An “industry advancement fund” is a type of industry-specific lobbying group.  S.B. 954 requires that starting January 1, 2017, an employer may not credit payments it has made to an industry advancement fund against the prevailing wages that it must otherwise pay to its workers, unless the employer is required to contribute to the industry advancement fund by a collective bargaining agreement. 

The SCBTC and other supporters of S.B. 954 argued that too many nonunion contractors were applying credits taken against workers’ prevailing wages to fund industry advancement groups without workers’ consent or representation, and then using those funds to support lobbying and other activities contrary to workers’ interests, such as efforts to weaken health and safety and apprenticeship training standards, and to reduce wages on public works.  In effect, the bill’s supporters argued that workers’ wages were being reduced to fund the nonunion contractors’ own “industry advancement.” 

In the lawsuit, the ABC alleged in its complaint that as a consequence of S.B. 954 it will suffer “severe financial harm in the form of lost revenues as a result of reduced employer payments resulting from the loss of” the credit, and those lost revenues will force ABC to “curtail or discontinue its advocacy on behalf of open shop employers.”

In upholding S.B. 954, the court rejected the ABC’s and Interpipe’s arguments that S.B. 954 violated the equal protection clause, the First Amendment, and was preempted by the National Labor Relations Act (NLRA).  We will continue to monitor this case for further developments.  For more information on S.B. 954 please contact your local labor law counsel. 

By Minsu Longiaru | February 21, 2017

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