Opinion ID: 702607
Heading Depth: 1
Heading Rank: 3

Heading: the machinists doctrine

Text: 11 The Machinists doctrine was designed to supplement Garmon pre-emption by addressing questions concerning activity that was neither arguably protected against employer interference by Secs. 7 and 8(a)(1) of the NLRA, nor arguably prohibited as an unfair labor practice by Sec. 8(b) of the Act. Metropolitan Life, 471 U.S. at 749, 105 S.Ct. at 2394. The Court stated that this second line of pre-emption analysis has been developed in cases focusing upon the crucial inquiry whether Congress intended that the conduct involved be unregulated because 'left to be controlled by the free-play of economic forces.'  Machinists, 427 U.S. at 140, 96 S.Ct. at 2553 (citations omitted). The Court further stated in Machinists that 12 [o]ur decisions ... have made it abundantly clear that state attempts to influence the substantive terms of collective bargaining agreements are as inconsistent with the federal regulatory scheme as are such attempts by the NLRB: Since the federal law operates here, in an area where its authority is paramount, to leave the parties free, the inconsistent application of state law is necessarily outside the power of the State. And indubitably regulation, whether federal or State, of the choice of economic weapons that may be used as part of collective bargaining [exerts] considerable influence upon the substantive terms on which the parties contract. 13 Machinists, 427 U.S. at 153, 96 S.Ct. at 2559 (internal quotations and citations omitted). The particular issue confronted in the Machinists case was a state judgment enforcing a cease and desist order that prevented workers from exerting a concerted peaceful refusal to work overtime as a form of economic pressure in furtherance of their demands. This was held to be pre-empted. The Court held that regulation of the workers' economic weapons was pre-empted because of the regulation's influence upon the substantive terms on which the parties contract. Id. (emphasis added). It was the State's attempt to influence the substantive terms of collective-bargaining agreements that was held to be inconsistent with the federal regulatory scheme. 14 The Supreme Court in Metropolitan Life made it clear that not all state regulation that affected the substantive terms of labor negotiations was pre-empted by the NLRA. In that case, Massachusetts had enacted a statute that required all general health insurance policies or employee health-care plans that covered hospital and surgical expenses to also include minimum mental health-care benefits. The Court noted 15 [T]here is no suggestion in the legislative history of the Act that Congress intended to disturb the myriad state laws then in existence that set minimum labor standards, but were unrelated in any way to the processes of bargaining or self-organization.... States possess broad authority under their police powers to regulate the employment relationship to protect workers within the State. Child labor laws, minimum and other wage laws, laws affecting occupational health and safety ... are only a few examples. 16 .... 17 Federal labor law in this sense is interstitial, supplementing state laws where compatible and supplanting it only when it prevents the accomplishment of the purposes of the federal Act. Thus the court has recognized that it cannot declare pre-empted all local regulation that touches or concerns in any way the complex interrelationships between employees, employers, and unions; obviously, much of this is left to the States. When a state law establishes a minimal employment standard not inconsistent with the general legislative goals of the NLRA, it conflicts with none of the purposes of the Act. 18 Metropolitan Life, 471 U.S. at 756-57, 105 S.Ct. at 2397-98 (internal quotations and citations omitted and emphasis added). 19 The Court later upheld as a minimum labor standard that was not pre-empted by the NLRA, a state law requiring a one-time severance payment to employees upon the closing of a plant that employed over 100 workers. Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1, 20-22, 107 S.Ct. 2211, 2222-23, 96 L.Ed.2d 1 (1987). The Court in Fort Halifax confirmed its holding in Metropolitan Life that the NLRA is concerned with insuring an equitable bargaining process. The Court has thus made it clear, as it stated in Metropolitan Life, that [n]o incompatibility exists, therefore, between federal rules designed to restore the equality of bargaining power, and state or federal legislation that imposes minimal substantive requirements on contract terms negotiated between parties to labor agreements, at least so long as the purpose of the state legislation is not incompatible with these general goals of the NLRA. Metropolitan Life, 471 U.S. at 754-55, 105 S.Ct. at 2397 (emphasis added). 20 The essential question in this case is whether the Ordinance is incompatible with the goals of the NLRA. The Court has clearly held that state legislation, which interferes with the economic forces that labor or management can employ in reaching agreements, is pre-empted by the NLRA because of its interference with the bargaining process. See, e.g., Machinists; Golden State Transit Corp. v. Los Angeles, 475 U.S. 608, 106 S.Ct. 1395, 89 L.Ed.2d 616 (1986). 21 The Court has also clearly held that a state's requirement of minimal substantive requirements on contract terms is not such an interference with the bargaining process as to be pre-empted. There is no doubt that imposing substantive requirements does affect the bargaining process. Viewed in the extreme, the substantive requirements could be so restrictive as to virtually dictate the results of the contract. The objective of allowing the bargaining process to be controlled by the free-play of economic forces can be frustrated by the imposition of substantive requirements, as well as by the interference with the use of economic weapons. See Barnes v. Stone Container Corp., 942 F.2d 689, 693 (9th Cir.1991); Bechtel Const. v. United Brotherhood of Carpenters, 812 F.2d 1220, 1226 (9th Cir.1987). The question then becomes the extent of the substantive requirements that a state may impose on the bargaining process. 22 The Ordinance here involved does much more than the type of state regulation that has previously been held not preempted. Here, we have a prevailing wage concept, which was developed for use by government entities when they are acting as proprietors and participants in the marketplace, being imposed to regulate the wages paid on private construction projects. 23 The Supreme Court recently crystallized the difference between the government acting as a proprietor and participant in the market place as opposed to the government acting as a regulator. Building Trades v. Associated Builders, --- U.S. ----, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993). The Court noted that a State does not regulate simply by acting within one of the zones protected by the NLRA. When a State owns and manages property, for example, it must interact with private participants in the market place. In so doing, the State is not subject to pre-emption by the NLRA, because pre-emption doctrines apply only to state regulation. Id. at ----, 113 S.Ct. at 1196, 122 L.Ed.2d at 576. The federal prevailing wage statute enacted by the Davis Bacon Act, 40 U.S.C. Sec. 276(a) et seq., has long been recognized as consistent with the NLRA. Similarly, state prevailing wage laws for public works projects, such as the California Prevailing Wage Statute, have also been recognized as not pre-empted because the State is acting as a proprietor and not a regulator. 24 Thus, those cases relied upon by the appellant, which involve the State acting as a proprietor and participant in the marketplace rather than a regulator, do not pertain to the inquiry before us in this case. Here, the County is definitely acting as a regulator, imposing the substantive requirements of California's prevailing wage law, which applies to public works projects. The question before us, therefore, is whether this prevailing wage concept utilized for public works projects can be imported by a County, acting as a regulator, to establish a minimum wage and benefit package for private construction projects. The California State statute, Cal.Lab.Code Secs. 1773 and 1773.1, does not directly establish the prevailing wages in a particular locality. They are developed pursuant to regulations promulgated by the Director of the Department of Industrial Relations. See California Admin. Code Sec. 16000. The Director uses formulas that average the wages and benefits for each craft pursuant to collective-bargaining agreements applicable in each labor market. Thus, the prevailing wage determined by the Director is not a fixed statutory or regulatory minimum wage, but one derived from the combined collective bargaining of third parties in a particular locality. The wage thus imposed is therefore not the result of the bargaining of those employers and employees actually involved in the selected construction projects in Contra Costa County. 1 25 The manner in which the Ordinance operates affects not only the total of the wages and benefits to be paid, but also the division of the total package that is paid in hourly wages directly to the worker and the amount paid by the employer in health, pension, and welfare benefits for the worker. The California prevailing wage rate that is set for each craft in a labor market is composed of the average hourly rate paid directly to the workers and the benefits paid for the workers. The Ordinance provides that this total per diem rate must be paid directly to the workers with a credit for benefits paid for the workers. However, at least the base hourly rate calculated in California's prevailing wage calculation must be paid directly to the worker. This means that if the employer and the workers have agreed to a total wage and benefit package that is equivalent to the total of the prevailing wage, but allocates more to benefits and less to direct wages, this would not comply with the Ordinance. For example, if the California prevailing wage calculation was 26 Hourly Wages Hourly Benefits Total $12. $3. $15. 27 and the contractor's wage scale was 28 Hourly Wages Hourly Benefits Total $10. $5. $15. 29 the contractor's wage scale would not comply with the Ordinance. The contractor, to comply, would have to pay an additional $2 in hourly wages for a total per diem rate of $17 or else seek to reduce the benefits to $3 per hour. This would place considerable pressure on the contractor and its employees to revise the labor agreement to reduce the benefit package and increase the hourly wages in order to remain competitive and obtain the contracts and jobs in Contra Costa County. 30 It is clear that this Ordinance affects the bargaining process in a much more invasive and detailed fashion than the isolated statutory provisions of general application approved in Metropolitan Life and Fort Halifax. This is also very different from a minimum wage law, applicable to all employees, guarantying a minimum hourly rate. This Ordinance provides for specific minimum wages and benefits to be paid to each craft and only to those workers who are engaged in the specific construction projects covered by the Ordinance. This is not a wage and benefit package that has been bargained for in any fashion by these construction employers and employees, but rather is a minimum wage and benefit package that is promulgated by the Director of the Department of Industrial Relations of the State of California, and that is developed by averaging the bargains struck by other employers and employees.