Link to Mo. Sup. Ct. Opinion
Missouri’s Prevailing Wage Act governs the payment of wages to workers engaged in public works’ projects. This remedial legislation ensures fair compensation and protects those individuals involved in construction – not maintenance – of public structures. This case concerns a contractor, Utility Service, Inc. (“Utility Service”), that was hired by Monroe City, Missouri to care for the city’s water storage tank and tower structure, add a safety structure, and thoroughly clean and inspect the unit. After entering into the contract, Utility Service contacted the Department of Labor and Industrial Relations (“Department”) to confirm that their contract with Monroe City did not require the payment of prevailing wages. However, the Department disagreed with the company’s assessment, arguing that the work performed on the water storage tank and tower constituted “construction” under the Prevailing Wage Act. The trial court granted the Utility Service a declaratory judgment against the Department that the work was merely “maintenance.” The Western District Court of Appeals affirmed, but the Supreme Court of Missouri granted transfer and reversed, finding that Utility Service’s contract with Monroe City involved “construction” work and therefore required the payment of prevailing wages.
I. Facts and Holding
Monroe City and Utility Service entered into a contract that provided professional services for work on the city’s 250,000 gallon water tower.[2] By the terms of the agreement, Monroe City required Utility Service to “annually inspect and service the tank . . . [by] drain[ing] and clean[ing the interior,] . . . furnish all specialized services . . . to maintain and repair the tank and tower[,] . . . install an anti-climb device on the access ladder[, and] . . . furnish relief valves, if needed, to install in the water system.”[3]
During the course of the contract, Utility Service requested the oversight of the Department, which audited Utility Service’s payroll and informed the company that the work on the water tower required the payment of prevailing wages to its employees because it constituted construction work.[4] To reach that conclusion, the Department relied on the Prevailing Wage Act’s definition of “construction,” which included “‘construction, reconstruction, improvement, enlargement, alteration, paging and decorating, or major repair.’”[5] Utility Service, in response, argued that the contracted work was better classified as “‘maintenance work’ because it did not change the size, type, or extent of the existing water storage tank or tower.”[6]
To settle the dispute, Utility Service sought court review of the Department’s decision and confirmation that its contract did not require the payment of prevailing wages because the work involved was purely maintenance.[7] The trial court agreed with Utility Service, finding that the work fell into the maintenance work exception to the Act, and awarded summary judgment to the company.[8]
On de novo review, the Western District Court of Appeals affirmed the trial court’s order of summary judgment for Utility Service.[9] The Department appealed and the Supreme Court of Missouri granted transfer to decide the case.[10] In a unanimous opinion, the supreme court engaged in an analysis of both the language and purpose of the Prevailing Wage Act.[11] The court read the Act as remedial, requiring a broad application of the law and a narrow construal of the exceptions, such as the maintenance work exemption.[12] In addition, because the Act failed to fully flesh out the definition of “construction work,” the court looked to the regulations codified by the Department.[13]
After examining the Department’s interpretation of the law and precedent dealing with that interpretation, the court disagreed with the prior established test of defining work based on whether it “changes the size, type, or extent of an existing facility” and held that work “encompassed in the plain meaning of . . . ‘construction’ under [the Act] . . . requires payment of prevailing wages, regardless of whether the work changes the size, type, or extent of an existing facility.”[14] The court then looked to the specific work performed under the contract between Monroe City and Utility Service, finding that tasks quite clearly constituted construction.[15] As a result, the trial court’s order of summary judgment was reversed.[16]
II. Legal Background
Missouri’s Prevailing Wage Act dates back to 1957 and was enacted as a state version of the federal Davis-Bacon Act of 1931, which required the payment of “reasonable wages” to employees engaged in public works projects.[17] The Act differentiates between construction work and maintenance, so that contractors engaged only in repair work are not required to pay higher wages.[18] Generally, the courts’ statutory analysis, however, begins with a plain language read of the text in order to determine the legislative intent and meaning of each individual word and section.[19]
It is well established that the Prevailing Wage Act is remedial in purpose, requiring interpretation of law to benefit “the greatest public good.”[20] As a result, Missouri courts generally apply the law in broad strokes to encompass as many contracts as possible, strictly construing the exceptions so as not to exclude workers that benefit greatly from receiving prevailing wages.[21] However, the law provides very little guidance to courts that are called on to discern between projects that constitute construction and those that are merely maintenance.
Without a clear line, tension has arisen between the administrative interpretation of that distinction and court decisions.[22] Administrative law allows agencies “to form policy and make necessary rules to fill gaps left by the legislature,” relieving courts of the responsibility of supplying details for application of the law.[23] Indeed, the Department attempted to draw the line based on the magnitude of work performed, but after judicial reprimand, amended its regulation to define construction as certain activities “without limitation.”[24]
Based on that regulation, the Missouri Courts of Appeals had construed the maintenance exception of the Act as applicable if it is “‘(1) work that is repair, not replacement; (2) in an existing facility; . . . [that does not (3)] change or increase . . . the size, type, or extent of the ‘existing facility.’’”[25] Known as the City Utilities test, this standard stood for over a decade until the Supreme Court of Missouri provided further guidance.[26]
Indeed, the instant case – one of only a handful of high court rulings on the Prevailing Wage Act[27] – rejected the test in favor of a plain text analysis.[28] Because of the remedial nature of the Act, the court surmised that the maintenance exception could not “be applied in a way that reduce[d] the scope of what is ‘construction’ under the plain meaning of [the law],” as the City Utilities test had done.[29] The inherent confusion in the Act required a new test since the statute and administrative interpretation of construction had already included work performed “without any change to a facility’s size, type, or extent.”[30] The Supreme Court of Missouri’s conclusion in this case was to adhere to the plain text of the law and hold that work shall be defined as construction if it is “encompassed in the plain meaning of the language defining ‘construction’ . . . regardless of whether the work changes the size, type, or extent of an existing facility.”[31]
III. Comment
The Prevailing Wage Act includes a number of contradictory and hard-to-reconcile provisions, the most quizzical of which are the artificial legal differences between “construction” and “maintenance work.” Indeed, the law defines “construction” as “construction, reconstruction, improvement, enlargement, alteration, painting and decorating, or major repair,” while “maintenance work” – which is exempted from prevailing wage requirements – “means the repair, but not the replacement, of existing facilities when the size, type or extent of the existing facilities is not thereby changed or increased.”[32]
There are a number of overlapping terms in both definitions, requiring further explication. For example, it seems that a contract calling for restoration of a dilapidated building, including repainting, ceiling replacement, and other extensive renovations should be considered “construction”; however, Missouri courts have disagreed.[33] On the other hand, one would think that a mechanic would not require the prevailing wage if his job involved only the repair, servicing, and maintenance of equipment during a highway project. However, courts have held that prevailing wage applied in such a situation because the new highway was not an existing facility and thus the mechanic’s work that supported the highway constituted “construction.”[34]
These inconsistencies make it very difficult for contractors, municipalities, and other individuals engaged in public works’ projects to adequately determine the costs of their projects. Worse yet, they can cause bidders to inflate the costs of their projects in case of prevailing wage requirements, costing public entities thousands of dollars. Indeed, even a cursory look at the instant case shows that several diverse groups had an interest in the case. Amicus briefs from the Missouri School Boards’ Association, the Missouri Association of School Administrators, and the Missouri Municipal League argued for affirmation of the trial court, while the Missouri State Building and Construction Trades Council, AFL-CIO, argued for reversal.[35].
These groups have a major stake in how prevailing wage law is to be applied in Missouri, but, unfortunately, the Utility Service court provided little guidance. Indeed, the court acknowledged the confusion stemming from the Act and its sister regulations but emphasized that it could not write “regulations or rewrite the statutes enacted by the legislature . . . [as those confusions are] best remedied through actions of the other branches of government.”[36] By passing the responsibility to the legislative and executive branches, little consolation is offered to the groups caught in the crossfire of prevailing wage confusion.
-Brianna L. Lennon
[1] No. SC90963 (Mo. March 1, 2011) (en banc), available at http://www.courts.mo.gov/file.jsp?id=44941. The West reporter citation is Utility Service Co., Inc. v. Dep’t of Labor and Indus. Relations, 331 S.W.3d 654 (Mo. 2011) (en banc).
[2] Utility Service Co., Inc. v. Dep’t of Labor and Indus. Rel., WD70800 at *2 (March 23, 2010) (unpublished).
[3] Utility Service Co., Inc., 331 S.W.3d at 656. The contract also called for painting and cleaning of the interior and exterior. Id.
[4] Utility Service Co., Inc., WD70800 at *3.
[5] Utility Service Co., Inc., 331 S.W.3d at 656 (quoting Mo. Rev. Stat. § 290.210(1) (2000)).
[6] Id.
[7] First Substitute Brief of Appellants, at *8 (Sept. 20, 2010).
[8] Utility Service Co., Inc., 331 S.W.3d at 657.
[9] Utility Service Co., Inc., WD70800 at *12.
[10] Utility Service Co., Inc., 331 S.W.3d at 656, n. 2.
[11] Id. at 658.
[12] Id.
[13] Id. at 659-660.
[14] Id. at 660.
[15] Id. at 656.
[16] Id.
[17] Utility Service Co., Inc., WD70800 at *4 (citing Chester Bross Constr. Co. v. Mo. Dep’t of Labor & Indus. Relations, 111 S.W.3d 425, 427 (Mo. App. E.D. 2003)).
[18] Utility Service Co., Inc., 331 S.W.3d at 658-660 (citing Mo. Rev. Stat. § 290.210 (2000)).
[19] Id. at 658 (citing United Pharm. Co. of Mo., Inc. v. Mo. Bd. of Pharm., 208 S.W.3d 907, 910 (Mo. 2006) (en banc); Neske v. City of St. Louis, 218 S.W.3d 417, 424 (Mo. 2007) (en banc)).
[20] Utility Service Co., Inc., WD70800 at *5 (citing Chester Bross Constr. Co., 111 S.W.3d at 427).
[21] Utility Service Co., Inc., 331 S.W.3d at 658 (citations omitted).
[22] See 8 CSR 30-3.020 (1990) (invalidated by Dep’t of Labor & Indus. Relations v. Bd. of Pub. Utils. of the City of Springfield, 910 S.W.2d 737, 744 (Mo. App. S.D. 1995) (“City Utilities”)).
[23] Utility Service Co., Inc., 331 S.W.3d at 660 (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984)).
[24] Id. (citing 8 CSR 30-3.020 (1995)).
[25] Brief of Amicus Curiae Missouri School Boards’ Association, at *10 (quoting City Utilities, 910 S.W.2d at 745; Mo. Rev. Stat. § 290.210(4) (2000)).
[26] See id. (referencing Hadel v. Bd. of Educ. of Sch. Dist. of Springfield R-12, 990 S.W.2d 107, 109 (Mo. App. S.D. 1999); Carver v. Pemiscot County Memorial Hospital, 2009 WL 5126644, *1 (Mo. App. S.D. 2009)).
[27] Since the law’s inception, only seven cases have been heard by the Supreme Court of Missouri on prevailing wage, including the instant case. See State ex rel. Evans v. Brown Builders Elec. Co., Inc., 254 S.W.3d 31 (Mo. 2008) (en banc); Division of Labor Standards, Dep’t of Labor & Indus. Relations v. Friends of the Zoo of Springfield, Mo., Inc., 38 S.W.3d 421 (Mo. 2001) (en banc); State v. Lee Mechanical Contractors, Inc., 938 S.W.2d 269 (Mo. 1997) (en banc); State Dep’t of Labor & Indus. Relations v. SKC Elec., Inc., 936 S.W.2d 802 (Mo. 1997) (en banc); City of Kennett v. Labor & Indus. Relations Comm’n, 610 S.W.2d 623 (Mo. 1981) (en banc); City of Joplin v. Indus. Comm’n of Mo., 329 S.W.2d 687 (Mo. 1959) (en banc).
[28] Utility Service Co., Inc., 331 S.W.3d at 660.
[29] Id. (citations omitted).
[30] Id. (citing Mo. Rev. Stat. § 290.210(1) (2000)).
[31] Id.
[32] Mo. Rev. Stat. §§ 290.210(1), (4) (2000)).
[33] See Carver v. Pemiscot County Memorial Hospital, 2009 WL 5126644, *1 (Mo. App. S.D. 2009).
[34] See Chester Bross Const. Co. v. Dep’t of Labor & Indus. Relations, 111 S.W.3d 425 (Mo. App. E.D. 2003).
[35] Brief of Amicus Curiae Missouri School Boards’ Association; Brief of Amicus Curiae Missouri Association of School Administrators; Brief of Amicus Curiae Missouri Municipal League; Brief of Amicus Curiae Missouri State Building And Construction Trades Council, AFL-CIO.
[36] Utility Service Co., Inc., 331 S.W.3d at 660, n.6.
