State natural resource grant programs have recently experienced a conflict with the labor code that precludes the use of volunteers in grant funded projects. This prohibition on volunteer labor appears to extend to all public works projects and therefore affects schools, emergency responsiveness, and many other state initiatives. This prohibition appears to prohibit students from engaging in public works projects and thus runs counter to current service learning strategies being employed throughout California schools.

The current definition of a public works project is “construction, alteration, demolition, installation or repair work done under contract and paid in whole or in part out of public funds,” (except work done directly by any public utility company pursuant to order of the Public Utilities Commission or other public authority) (Labor Code Section 1720). Refuse removal is also defined as a public works project (Labor Code Secton 1720.3) if public funds are involved, which means that creek and beach clean-up events may be public works projects. Much of the work done under the grant programs contains some aspect of a public works project, which in turn triggers prevailing wage requirements for the entire project (labor Code Section 1771 and 1774).

Labor Code Impacts on State Grant Programs

DWR and other agencies involved in issuing grants to local agencies and nonprofit corporations for watershed planning and management, water quality improvements, ecosystem restoration and related work have consistently promoted the participation of volunteers as an enhancement to paid work done under contract. Community involvement in resource management activities is essential to build community stewardship, educate students, reduce vandalism and subsequent community maintenance costs, and generally to cultivate broad understanding of natural resource management.

The broad definition of public works projects in Labor Code Section 1720 encompasses much of the activities of local grant recipients and volunteers that work for them. This also captures many activities done in response to natural disasters such as fires or floods. Labor Code Sections 1771 and 1774 require that prevailing wage be paid for work done on public works projects. Therefore, no volunteer efforts are acceptable. There are two narrow exemptions in the statutes (Section 1720.4 and Section 1720(c)). Activities under the natural resource grant programs will not qualify for these exemptions.

In FY 2000-01, the Department of Water Resources provided grant funding for a stream restoration project on Sulphur Creek in the City of Redding. In Summer 2003, a complaint was made to the Department of Industrial Relations regarding compliance with Prevailing Wage law for workers used on the project. A determination by DIR on the case indicates that student and volunteer activities (including planting seeds, seedlings, or vegetative stakes, ground work and trash removal) promoted by the state should instead receive prevailing wage. The subsequent DIR Notice of Civil Wage and Penalty Assessment in this case assesses back wages and penalties for the students or volunteers. In another case, a precedential decision by DIR relating to student volunteers assisting in refurbishing a playing field also found that the student work required payment of prevailing wage (see DIR Public Works Case No. 2000-082, West Hills Field Renovation Project, City of Santee).

Labor Code Section 1775 provides for penalties and back wages to be assessed by the Labor Commissioner on contractors who have been found to pay less than the prevailing wage on public works projects. SB 966 (Chapter 804, Statutes of 2003) authorizes contractors to sue the awarding body of a public works contract for costs, penalties, and legal fees associated with compensation at less than prevailing wage.

The Labor Code interpretations by DIR also potentially place administrative responsibilities on the grant programs that have not been incorporated into program operations. Labor Code Section 1771.8 requires the establishment of a labor compliance program by the awarding body for anyone receiving Proposition 50 fund support. There is some controversy regarding which agencies are the awarding bodies for grants. However it is possible that this requirement applies to grantees who may have initiated their contracts with other funds but have now been switched to Prop 50 funding as needed for State budget management purposes. These responsibilities siphon grant funds away from project work and redirect them to administrative duties. The collective impact of precluding the use of volunteers and increasing administrative requirements threaten the direction and integrity of certain grant programs within the Resources Agency and its departments and within CalEPA. These labor code provisions also potentially affect programs of the Office of Emergency Services, the Department of Education and others.