California Division of Labor Standards Enforcement v. Dillingham Construction, N. A.
Headline: Court rejects ERISA preemption and upholds California’s prevailing wage law, allowing the State to bar apprentice wages for workers from unapproved training programs, affecting contractors and apprenticeship programs.
Holding: The Court held that ERISA does not pre-empt California’s prevailing wage law, so the State may bar apprentice wages for apprentices trained in programs not approved under state standards.
- Allows California to enforce apprentice wage limits against unapproved programs.
- Leaves ERISA plans free to choose approval or pay higher wages.
- Affects contractors, unions, and apprentices on public construction projects.
Summary
Background
The State of California requires contractors on public construction projects to pay the local prevailing wage but allows a lower apprentice wage for workers in approved apprenticeship programs. A subcontractor paid apprentice wages to workers from a training committee that had not yet received California approval. State officials ordered withholdings and enforcement, and the contractor and subcontractor sued, arguing that ERISA (the federal law that governs employer-provided benefit and training funds) preempted the state law.
Reasoning
The central question was whether ERISA’s broad preemption of state laws “relates to” employee benefit plans and thus overrides California’s rule. The Court examined whether the state rule directly referenced or controlled ERISA plans, and whether the law bound plan administrators. The Court found California’s law does not refer to ERISA plans because approved apprenticeship programs can be funded either through separate trust funds (which may be ERISA plans) or through an employer’s general assets (which are not ERISA plans). The law only changes economic incentives; it does not force apprenticeship programs or ERISA plan administrators to adopt particular structures or benefits. Relying on prior decisions, the Court held the state rule has only an indirect effect on ERISA plans and is not preempted.
Real world impact
Practically, California can continue to condition the lower apprentice wage on approval under state apprenticeship standards. Contractors, unions, apprenticeship committees, and apprentices on public works will face the state’s approval rules and related wage consequences. The Court reversed the lower court and returned the case for further proceedings consistent with that ruling.
Dissents or concurrances
Justice Scalia, joined by Justice Ginsburg, agreed with the result but urged a different, clearer approach to ERISA preemption doctrine to reduce future confusion.
Opinions in this case:
Ask about this case
Ask questions about the entire case, including all opinions (majority, concurrences, dissents).
What was the Court's main decision and reasoning?
How did the dissenting opinions differ from the majority?
What are the practical implications of this ruling?