California Court of Appeal Affirms Strict Prevailing Wage Standards

Quick Hits

• On November 18, 2025, the California Court of Appeal affirmed penalties against Anton’s Services for misclassifying workers and failing to comply with prevailing wage and apprenticeship requirements on public works projects.
• The court’s decision highlights the strict enforcement of California’s Prevailing Wage Law, emphasizing the necessity of correct worker classification and adherence to apprenticeship statutes.
• The ruling clarifies that judicial review of administrative wage and penalty assessments is limited to the administrative record and governed by the substantial evidence standard.

Background

The case arose from two public works projects in San Diego County for road improvement and slope restoration. Anton’s Services was retained as a subcontractor on the slope restoration project, and its scope of work included “clearing and grubbing” the slope. The contractor was cited by the Division of Labor Standards Enforcement (DLSE) for misclassifying workers under the “Tree Maintenance” classification rather than the higher-paid “Laborer (Engineering Construction)” classification, failing to pay prevailing wages, and not complying with statutory apprenticeship requirements. The DLSE issued civil wage and penalty assessments for both projects, which the contractor challenged through administrative and judicial proceedings.

Key Holdings

Worker Misclassification and Prevailing Wage Obligations. The court upheld the administrative finding that the contractor misclassified workers on both projects. The work performed—primarily clearing and grubbing as preparatory construction activity—was found to be incidental to construction and thus subject to the “Laborer” classification, not “Tree Maintenance.” The court rejected arguments that certain tree-related work was outside the scope of construction or that a change order altered the classification analysis. The decision emphasizes that work incidental to a public works construction project must be classified and compensated in accordance with the applicable prevailing wage determination, regardless of the contractor’s licensing or invoicing practices.

Penalties and Liquidated Damages. The court affirmed the imposition of penalties under Labor Code section 1775 for failure to pay prevailing wages, finding no evidence of a good-faith mistake or prompt correction by the contractor. The court also upheld the assessment of liquidated damages under section 1742.1, clarifying that wages remain “unpaid” for purposes of liquidated damages until actually paid to workers or deposited with the Department of Industrial Relations, even if funds are withheld by the prime contractor and transmitted to the awarding body. The court declined to create an exception to the statutory scheme based on the withholding of funds under section 1727, emphasizing the Legislature’s clear intent and the plain language of the statutes.

Apprenticeship Requirements. The decision affirms findings that the contractor failed to (a) submit contract award information to an applicable apprenticeship program before commencing work, (b) employ the required ratio of apprentices to journeypersons, and (c) request dispatch of apprentices from appropriate committees. The court rejected arguments that self-training or prior approval excused compliance, and noted the existence of an irrebuttable presumption of knowledge of apprenticeship requirements where the contractor had prior violations or was notified by contract documents. Penalties for “knowing” violations were upheld under Labor Code section 1777.7.

Scope and Standard of Judicial Review. The court reiterated that judicial review of administrative wage and penalty assessments is limited to the administrative record and governed by the substantial evidence standard. Arguments relying on extra-record evidence or unsupported by the record were deemed forfeited.

Key Takeaways

Contractors on California public works projects must ensure proper worker classification and payment of prevailing wages for all work incidental to construction, regardless of how work is described or invoiced.

Strict compliance with apprenticeship requirements—including notice, employment ratios, and dispatch requests—is mandatory, and prior violations or contractual notice may establish knowledge for penalty purposes.

Liquidated damages for unpaid wages will be imposed unless the contractor pays workers or deposits the full assessment with the Department of Industrial Relations within sixty days, regardless of any withholding by the prime contractor.

Judicial review of administrative wage and penalty assessments is highly deferential, limited to the administrative record, and will not consider new evidence or arguments not raised below.

The Anton’s Services decision underscores the importance of diligent compliance with prevailing wage and apprenticeship laws on public works projects and the significant consequences for misclassification and related violations.

Ogletree Deakins’ California offices and Wage and Hour Practice Group will continue to monitor developments and will provide updates on the California, Construction, and Wage and Hour blogs as additional information becomes available.

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