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Worker Win: California Court Rules Employers Can Sue Competitors for Not Paying Prevailing Wages

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While the prevailing wage faces a broad-based attack by GOP majorities in Wisconsin, Nevada, Kentucky, Pennsylvania, West Virginia, New Hampshire, Michigan and New Mexico, a 2-1 decision in the California 2nd District Court of Appeal is doing just the opposite: strengthening the important worker protection.

That court ruled recently that companies can sue their competitors for failing to pay the prevailing wage.  The case, Roy Allan Slurry Seal v. American Asphalt South, involves a company that had been continually outbid by their rival. The reason, they say? Underpaying of workers.

Lawyers for Roy Allan Slurry Seal argued that American Asphalt South had outbid them on 23 projects worth a total of $14.6 million to apply a slurry seal coating to various roads throughout Los Angeles, San Bernardino, Riverside, Orange, and San Diego counties.  Roy Allan Slurry Seal, along with Doug Martin Contracting, successfully argued that if American Asphalt had paid their workers the prevailing wage they would not have been able to outbid them.  The case was sent back to Riverside County Superior Court with the appeals court noting that American Asphalt’s actions created intentional interference with prospective economic advantage.

“Plaintiffs do not seek to enforce the prevailing wage laws; they seek to enforce their right to compete for public works contracts free of unlawful manipulation by their competitors,” says the majority ruling.

“The duty American allegedly breached was the duty to not interfere with plaintiffs’ prospective economic advantage by violating the prevailing wage laws in order to make it appear as if American were the lowest bidder. Finally, if, as alleged, plaintiffs submitted the true lowest bids and American was able to misrepresent itself as the lowest bidder by violating the prevailing wage laws, then that misconduct was the proximate cause of the public works contracts being awarded to American instead of plaintiffs.”

Justice Laurence Rubin notes that there is precedent in the case, the 2003 ruling in Korea Supply Company vs. Lockheed Martin:

“As Korea Supply suggests, a bidder on a government contract who submits a superior bid and loses out only because a competitor manipulated the bid selection process through illegal conduct has been the victim of actionable intentional interference.  This is consistent with the notion that the true lowest bidder may bring a mandate action to compel the public agency to reverse its previous decision improperly awarding a contract.  Absent some enforceable right, such mandate actions would not be possible.”


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