In Glacier Nw., Inc. v. Dep’t of Lab. & Indus., 32 Wn. App. 2d 189, 201, 555 P.3d 896 (2024), a recent published decision from Division I of the Washington Court of Appeals, the Court held a public works contractor’s obligation to pay prevailing wages does not necessarily end at the jobsite. Instead, if the work is contractually required and integral to the public works project, contractors may still have an obligation to pay prevailing wages—even if that work takes place off-site.
Offsite Quarry Workers Sought Prevailing Wages
In 2010, the Washington State Department of Transportation (WSDOT) contracted with Seattle Tunnel Partners (STP) to replace the Alaskan Way Viaduct on SR99 with an underground tunnel. Thereafter, STP subcontracted Glacier Northwest, Inc (Glacier) to manage, handle, store, and dispose of tunnel spoils—clean soil excavated from the SR99 site—at Glacier’s Mats Mats quarry near Port Ludlow, Washington. The spoils were transported from the SR99 site to Mats Mats by barge by a separate contractor.
From 2012 to 2017, workers at Mats Mats processed millions of tons of tunnel spoils from the SR99 site using cranes, hoppers, conveyors, and trucks; infrastructure built at Mats Mats specifically for the purpose of accepting the SR99 tunnel project spoils. Operators at Mats Mats were hired specifically for the SR99 tunnel spoils work, and in fact, STP’s contract barred Mats Mats from accepting material from any other site while the project was ongoing. The International Union of Operating Engineers, Local 302 filed a complaint with L&I, alleging Glacier violated the Prevailing Wage Act (PWA), chapter 39.12 RCW by not paying prevailing wages to workers at Mats Mats. L&I investigated and determined Glacier owed $370,666.08 in unpaid prevailing wages to 46 workers. Glacier appealed.
Court’s Reasoning: A Broad Interpretation of Worker Protections
Before the Court of Appeals, Glacier argued that the PWA does not apply to offsite workers who do not perform their work directly upon the public works projectjobsite, contending L&I’s decision to apply the PWA to Mats Mats quarry workers misapplied the law, was contrary to the PWA’s implementing regulations, and was arbitrary and capricious. The Court disagreed.
Rejecting a narrow construction of the PWA, the Court’s analysis was largely focused on the law’s overarching intent: to benefit workers, and it determined that a broad interpretation of the statute’s protections, and a narrow construction of its exemptions, was most consistent with that purpose. Under this reasoning, after dismissing several arguments Glacier raised regarding statutory interpretation and interpretation of the PWA’s implementing regulations, the Court concluded that the fact that the work occurs offsite does not necessarily mean that the PWA does not apply.
Instead, the Court applied a two factor test from Supporters of Ctr., Inc. v. Moore, 119 Wash. App. 352, 80 P.3d 618 (2003) to determine whether the work performed by workers at Mats Mats was executed at the cost of the State and qualified as a “public work” under the PWA: (1) whether the work was publicly funded, and (2) whether the character of the project was consistent with a public works project.
Glacier did not dispute the first factor—the SR99 project was funded by WSDOT. The fact that the SR99 tunnel was a state-funded project weighed in favor of applying the PWA. However, the Court’s inquiry did not end there. The question remained: did processing tunnel spoils at Mats Mats have the “character” of public work, even though it was performed off-site?
To answer this question, the court examined whether the work was merely incidental to the project or whether it was “contemplated” by the contract. The Court concluded that STPs contracts with both WSDOT and Glacier anticipated that the tunnel spoils would need to be transported and processed, even providing for STP oversight over the processes at Mats Mats, making this work a necessary and expected part of the project’s execution. The Court further emphasized the fact that Mats Mats workers were specifically hired for the SR99 tunnel spoils work, that infrastructure at Mats Mats was built exclusively for that same purpose, and that Mats Mats could not accept material from other projects, as further evidence of the public works character.
After rejecting Glacier’s other arguments about whether the L&I decision was arbitrary and capricious, whether it exceeded L&I’s rulemaking authority, and whether applying the PWA to offsite work violated the Washington constitution, the Court determined Mats Mats workers had to be paid prevailing wages under the PWA even though they performed their work miles from the jobsite.
Commentary:
This decision underscores the importance of understanding the scope of prevailing wage laws in Washington. A violation of the PWA can result in significant consequences, which may include temporary prohibitions on bidding on public contracts and a strike toward debarment. Contractors should carefully evaluate their projects and consult their lawyers to ensure compliance with the PWA, including for work performed away from the primary construction site.