Court of Appeal Rules Prevailing Wage is Required on San Diego Hilton Project

July 21, 2011 - The California Court of Appeal has issued a unanimous decision holding that the construction of a San Diego Hilton hotel on land leased by the Port District was covered by California's prevailing wage law because the Port District gave the developer a $46.5 million rent credit.

In Hensel Phelps Construction Company v. San Diego Unified Port District, the court ruled that the rent credit to the developer resulted in the project being “paid for in whole or in part out of public funds,” pursuant to the California Labor Code, and that prevailing wage was therefore required.

The Department of Industrial Relations had issued an administrative determination that the project was covered by the prevailing wage law.  The developer and the construction manager filed suit, and the trial court set the decision aside.

The Schwarzenegger Administration refused to file an appeal to defend the Department of Industrial Relations' coverage decision.  But contract compliance groups appealed, and the State Building Trades filed an amicus brief arguing that the project was covered by the prevailing wage law.  The Court of Appeal unanimously agreed.

The Port District and the Developer should be ashamed of themselves for trying to deny workers prevailing wages on a major hotel project that received a $46.5 million rent credit from a public agency. 

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