# Amicus Curiae Brief — Keystone Chapter Associated Builders & Contractors, Inc. v. Pennsylvania Secretary of Labor & Industry > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_1159%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1995 - **Citation:** 514 U.S. 1032 ## Text 7 © IN THE SUPREME COURT OF THE UNITED STATES October Term, 1994 KEYSTONE CHAPTER, ASSOCIATED BUILDERS AND CONTRACTORS, INC., IN REPRESENTATION OF ITS MEMBERS, Petitioner, V. SECRETARY OF LABOR & INDUSTRY FOR THE COMMONWEALTH OF PENNSYLVANIA, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT BRIEF OF AMICUS CURIAE BY STEAMFTITERS LOCAL UNION NO. 420, UNITED ASSOCIATION OF JOURNEYMEN AND APPRENTICES OF THE PLUMBING AND PIPE- FITTING INDUSTRY, FOR THE RESPONDENT Richard B. Sigmond, Esquire Counsel of Record Terence E. Coles, Esquire SAGOT, JENNINGS & SIGMOND 150 South Independence Mall West Suite 1172 Philadelphia, Pennsylvania 19106-3490 (215) 351-0669 Counsel for Amicus Curiae PACKARD PRESS® / APPELLATE DIVISION, 1617 JFK BOULEVARD, PHILA, PA 19103 (215) 563-9000 - ee eS e+ 4,5 Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987)... .3, 8 General Electric Co. v. New York State Dept. of Labor, 891 F.2d 25 (2d Cir. 1989), cert. denied, 496 U.S. 912 CIR os ie wow aes Ua ee RS Ee en es 6 Keystone Chapter, Assoc. Builders and Contractors, Inc. v. Foley, 37 F.3d 945 (3rd Cir. 1994) .......... a 2,6, 7,8 Kulzer Roofing v. Com. Dept. of Labor and Industry, 68 Pa.Cmwilth. 642, 450 A.2d 259 (Pa. Cmwith. 1982).. 3 Local Union 598 v. J.A. Jones Constr. Co., 846 F.2d 1213 (9th Cir. 1988), aff’d, 488 U.S. 881 (1988).......... 6 Mackey v. Lanier Collection Agency & Service Co., 486 Re I 6.8 5b oss Fa oon eee sda ases 5 Massachusetts v. Morash, 490 U.S. 107 (1989) .......... 8 Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724 ENN + sich 6 5 pk wok ode a haa ae ee es eee tua tes 3 National Elevator Industry, Inc. v. Calhoun, 957 F.2d 1555 (10th Cir. 1992), cert. denied, 113 S.Ct. 406, 121 Ree ee I i ok6 4 ks ha oko a hawet Glee thee 6 Pennsylvania Prevailing Wage Board of Appeals v. Steve Black, Inc., 27 Pa. Cmwlth. Ct. 21, 365 A.2d 685 TABLE OF CITATIONS Cases Cited: Page Rebaldo v. Cuomo, 749 F.2d 133 (2d. Cir. 1984), cert. Gahad, S72 EE. TOG CRIED «occ sv cncccctvasuccnes 6 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983)........ 4 Standard Oil Co. v. Agsalud, 633 F.2d 760 (9th Cir. 1980), gE eer ee 6 United States v. Binghampton Const. Co., 347 U.S. 171 er ee entre Merry Kner 2 United Wire, Etc. v. Morristown Memorial Hosp., 995 F.2d 1179 (3d Cir. 1993), cert. denied, 114 S.Ct. 382, 126, Ree ee CD 6-0 ns 5055 Xb eds ceeeeeee aes 4,6 Statutes Cited: ie Se PE ove 60s 0o500005b sus eee 3 MUSE. CIT. oooncecccck vee 3 STATEMENT OF INTERESTS OF AMICUS CURIAE Steamfitters Local Union No. 420, United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry (“Local 420” or “Union”) is a labor organization that represents more than 3500 skilled steamfitters, pipefitters and welders in Southeastern Pennsylvania. The Union represents employees who perform steamfitting, pipefitting and welding work on a wide variety of private and public construction projects as well as numerous skilled classifications in the heat- ing, ventilation and air conditioning service industry. Its mem- bership includes apprentices and tradespersons who, through job experience and classroom instruction, have obtained jour- heymen status. Local 420 is signatory to a number of collective bargaining agreements with employers in the construction industry. The collective bargaining agreements establish wages and other terms and conditions of employment, including con- tributions to employee benefit funds regulated by ERISA, for work performed in the Private sector as well as on public works projects. Members of Local 420 have substantial interest in obtain- ing and retaining employment on public works projects that the State and local governments typically award to the lowest responsible bidder. Local 420 members have worked in the past, are presently working, and desire to work in the future on public works construction projects that are covered by the Act. In upholding the Act, the Third Circuit Court of Appeals’ decision directly effects the wages of Local 420 members who are currently employed on public works projects. The earnings of Local 420 members on future contracts are similarly affected in a beneficial manner, as the wage and benefit rates in the collective bargaining agreements to which Local 420 is a party closely parallel the rates determined by the Secretary of Labor and Industry for public works projects. For members of Local 420 and other similarly-situated tradespersons, the decision of the Court of Appeals results in work opportunities and stable wages and fringe benefits on 1. The cost of labor on public works projects is an integral part of the competitive bid submitted by a Prospective contractor. 1 2 public works projects. Employers who are bound by collective bargaining agreements are placed on a competitive footing in bidding on public contracts vis-a-vis employers who offer fewer or no fringe benefits to their employees. If the Act were to be overturned, employers who offer no benefits will have a decided advantage as public works contracts are typically awarded to the lowest responsible bidder. United States v. Binghampton Const. Co., 347 U.S. 171 (1954). SUMMARY OF ARGUMENT The Pennsylvania Prevailing Wage Act (“Act”) is a valid exercise of state power in the area of health and welfare and is not preempted by ERISA. In upholding the Act, the Third Circuit decision, Keystone Chapter, Assoc. Builders and Con- tractors, Inc. v. Foley, 37 F.3d 945 (3rd Cir. 1994) (“Keystone”), follows Supreme Court precedent and is consistent with other Circuit decisions. The Act does not relate to any benefit plan covered by ERISA, and, therefore, does not fall under ERISA’s preemp- tion standard. The Act directs the Secretary of Labor and Industry to set minimum prevailing wages, including a cash component and a benefit component. The benefit component can be satisfied by contributions to employee benefits or addi- tional cash wages. Therefore, the Act does not place any restrictions or requirements on ERISA benefits, but rather, only demands that certain wages be paid. In sum, the Act can be fulfilled without any reference to ERISA-covered benefit plans and neither directly or indirectly regulates conduct towards ERISA plans. ERISA’s preemption clause was not intended to prevent states from regulating in the area of wages or employee com- pensation generally. Although state wage regulation, such as the Act, may affect employer decisions regarding ERISA- covered benefit plans, both this Court and lower federal courts have recognized that this type of affect falls well outside the parameters of ERISA preemption. Thus, as a legitimate exer- cise of state regulation, the Act is not preempted by ERISA and the “Petition for a Wnt of Certiorari” should not be granted. 3 ARGUMENT I. THE PENNSYLVANIA PREVAILING WAGE ACT IS A VALID EXERCISE OF HEALTH AND SAFETY REGULATION AND IS NOT PREEMPTED BY ERISA. , The purpose of the Act is to “protect workmen from sub- standard pay by ensuring that they receive the prevailing mini- mum wage.” Kulzer Roofing v. Com. Dept. of Labor and Industry, 459 A.2d 259, 261 (Pa. Cmwith. Ct. 1982), citing, Pennsylvania Prevailing Wage Appeals Bd. v. Steve Black, Inc., 27 Pa. Cmwith. Ct. 21, 365 A.2d 685 (1976). In making a deter- mination of the prevailing minimum wage, the “employer and employe contributions for employe benefits pursuant to a bona fide collective bargaining agreement shall be considered an integral part of the wage rate.” 43 P.S.A. § 165-7. To accom- plish this, the Act requires the Secretary set a prevailing wage that consists of a cash component and may include a benefits component. This Court has recognized that Congress never intended ERISA to infringe on traditional areas of state control such as health and welfare. The state regulation of wages is one of those “areas of traditional state regulation that ... Congress did not intend to preempt.” Metropolitan Life Ins. Co. v. Mas- sachusetts, 471 U.S. 724, 740 (1985). Similarly, the establish- ment of minimum labor standards is a traditional police power generally left to the states. Fort Halifax Packing Co, Inc. v. Coyne, 482 U.S. 1, 21 (1987). Il. THE THIRD CIRCUIT’S DECISION UPHOLDING THE PENNSYLVANIA PREVAILING WAGE ACT FOLLOWS SUPREME COURT PRECEDENT The Third Circuit’s decision upholding the Act conforms with the rulings of the Supreme Court. ERISA’s preemption section — §514(a) — promotes uniform regulations of employee benefits plans by preempting “any and all State law insofar as they may now or hereafter relate to any employee benefit plan” covered by ERISA. 29 U.S.C. § 1114(a) (empha- sis added). This Court has interpreted “relate to” to mean 4 having a “connection with”, or “reference to”, ERISA- covered plans, and the Court has cautioned that some state actions may affect employee benefit plans in “too tenuous, remote, or peripheral a manner to warrant a finding that the law ‘relates to’ the plan.” Shaw v. Delta Air Lines, Inc., 463 US. 85, 97, 100 n.21 (1983). See also, District of Columbia v. Greater Washington Bd. of Trade, ___ U.S. ___, 113 S.Ct. 580, 583 n.1 (1992). The Act has just such a “remote” and “periph- eral” relationship to ERISA. The Petitioner concedes that the Act and regulations do not bear any direct relationship to ERISA plans. The Act does not “single out” ERISA plans for special treatment or even refer to such plans. United Wire, Etc. :. Morristown Memorial Hosp., 995 F.2d 1179, 1192 (3d Cir. 1993), cert. denied, 114 S.Ct. 382, 126, L.Ed.2d 332 (1993). Rather, the Petitioner incorrectly argues that the Act is preempted by vir- tue of its indirect relation to ERISA. Although a state law’s indirect relation to ERISA can be grounds for preemption, the Act bears no such relationship. The Act’s relationship to ERISA is most analogous to the New York disability benefits law upheld by this Court in Shaw, supra. Although disability benefits are exempt from ERISA, the New York law allowed employers tc include these benefit obligations in multibenefit ERISA plans which were subject to ERISA preemption. Even so, this Court held that the New York law was not preempted because, even though the State was prohibited from forcing an employer to alter its ERISA plan, it could “force the employer to choose between provid- ing disability benefits in a separately administered plan and including the state-mandated benefits in its ERISA plan.” Shaw, supra, at 108 (emphasis added). Thus, if New York was dissatisfied with the disability benefits included in an employ- er’s ERISA plan, it could avoid ERISA preemption by forcing the employer to maintain a separate disability benefits plan. The Act, like the New York law, refrains from placing any requirements on ERISA benefits and only requires that an employer fulfill a wage obligation and not a benefits obliga- tion. Just as the New York law can be fulfilled by maintaining a separate disability plan, the Act can be fulfilled using non- 5 ERISA benefit contributions or cash wages. As the Third Cir- cuit noted, “[l]ike the New York law in Shaw, the Prevailing Wage Act is not preempted because an employer may comply without making any adjustment in its ERISA plans.” Key- stone, 37 F.3d at 961. See also, Mackey v. Lanier Collection Agency & Service Co., 486 U.S. 825, 830-841 (1982) (approv- ing garnishment law that would apply to ERISA plan benefits as well as other assets of debtors). The state statutes and regulations that this Court has found preempted by ERISA are distinguished from the Penn- sylvania law in that they directly or indirectly require compli- ance with ERISA benefits. In District of Columbia v. Greater Washington Bd. of Trade, __ U.S. __, 113 S.Ct. 580 (1992) (“Greater Washington”), a District of Columbia worker com- pensation law was held preempted by ERISA because it required employers who provided health insurance for their employees to provide equivalent workers’ compensation. The District could only determine an employer’s workers compen- sation benefit obligation by reference to that employer’s obli- gations under its ERISA plan. Therefore, the required health insurance was held preempted because it was a welfare benefit plan regulated by ERISA. Greater Washington, supra, at 583. The Act is clearly distinct from the worker compensation law in Greater Washington in that it does not regulate a plan covered under ERISA. Whereas the District’s law was predi- cated on the existence of ERISA plans, the Pennsylvania law is only predicated on the existence of a prevailing wage. Under the Act, the Pennsylvania Secretary of Labor and Industry could measure a locality’s prevailing benefits contri- butions even if all of the contributions were non-ERISA ben- efits. Similarly, a public works contractor could satisfy the ben- efits component of a given prevailing wage by only making non-ERISA benefit contributions, or by paying the equivalent in cash. As the Third Circuit noted, “[i]n the absence of ERISA plans, the Prevailing Wage Act could be meaningfully applied.” Keystone, 37 F.3d at 957. 6 Ill. THE THIRD CIRCUIT’S DECISION UPHOLDING THE PENNSYLVANIA PREVAILING WAGE ACT IS CONSISTENT WITH OTHER FEDERAL CIRCUIT COURT DECISIONS. The Third Circuit decision and ERISA preemption analy- sis conforms with other federal Appellate Court decisions that have found other state laws “too tenuous, remote, or periph- eral” to warrant ERISA preemption. A previous Third Circuit decision held that a New Jersey statutory scheme setting mini- mum hospital rates was not preempted despite its obvious eco- nomic impact on ERISA plans because the statute could be “meaningfully applied” in the absence of any ERISA plans. United Wire, Etc. v. Morristown Memorial Hosp., 995 F.2d 1179 (3d Cir. 1993), cert. denied, 114 S.Ct. 382, 126 L.Ed. 332 (1993). In Aetna Life Ins. Co. v. Borges, 869 F.2d 142, 148 (2d Cir. 1989), cert. denied, 493 U.S. 811 (1989), the Second Circuit upheld escheat laws that affected ERISA plans because a law’s “indirect impact alone is not sufficient”. See also, Rebaldo v. Cuomo, 749 F.2d 133, 140 (2d. Cir. 1984), cert. denied, 472 U.S. 1008 (1985) (statute regulating hospital rates that affected ERISA plans’ ability to negotiate rates held not preempted). State laws that Circuit Courts have found ERISA pre- emption can be distinguished from the Act by their far greater affect on ERISA benefits. Local Union 598 v. J.A. Jones Constr. Co., 846 F.2d 1213 (9th Cir. 1988), aff’d, 488 U.S. 881 (1988) (state prevailing wage statute requiring contributions to apprenticeship program, an ERISA plan, preempted by ERISA), aff’d, 488 U.S. 881 (1988); Standard Oil Co. of Cali- fornia v. Agsalud, 633 F.2d 760 (9th Cir. 1980), aff’d, 454 U.S. 801 (1981) (Hawaii law requiring comprehensive health ben- efits for all workers preempted by ERISA); National Elevator Industry, Inc. v. Calhoun, 957 F.2d 1555, 1561 (10th Cir. 1992), cert. denied, 113 S.Ct. 406, 121 L.Ed.2d 331 (1992) (Oklahoma law reducing the minimum wage for employees only in speci- fied apprenticeship program, which was an ERISA plan, pre- empted by ERISA); General Electric Co. v. New York State Dept. of Labor, 891 F.2d 25 (2d Cir. 1989), cert. denied, 496 U.S. 912 (1990) (New York prevailing wage law requiring ben- 7 efit contributions in particular categories preempted by ERISA). Unlike these laws, the Pennsylvania Act neither favors nor restricts ERISA benefits. Two lower court decisions have incorrectly interpreted both the ERISA preemption test applied by this Court and the Third Circuit Keystone decision. See Associated Builders & Contractors, Saginaw Valley Area v. Perry, No. 93-CV-10016- BC, 1994 WL 668241 (E.D.Mich.), 2 WH Cases 2d (BNA) 754 (“Perry”); Associated Builders & Contractors v. Baca, 769 F.Supp. 1537 (N.D. Cal. 1991)(“Baca”). In both cases, the Dis- trict Courts held that their respective state prevailing wage laws were preempted by ERISA because the laws did not credit fringe benefits paid in excess of the fringe benefit com- ponent of the prevailing wage requirement. By limiting the amount of benefits that could be subtracted from the per diem wage calculations, these lower courts held that the laws ‘related to’ and regulated ERISA by discouraging payment of benefits at higher than prevailing levels. Perry, 1994 WL 668241, at *4, 2 Wage & Hour Cas. at 758; Baca, 769 F.Supp. at 1548. The Petitioner — presenting a similar argument in this — case misinterprets the legal standard necessary for ERISA preemption. When Petitioner presented this position on appeal to the Third Circuit, that court observed the irony of this argument: the party objects to a state prevailing wage law on the grounds that is does not relate enough to employee benefits and ben- efit plans. Thus, Petitioner suggests that the level of required cash wages should be tied to the level of benefits, whereas the Act currently fixes a cash wage component independent of a benefits component. As the Third Circuit noted, “[a] state law does not dictate or restrict the choices of ERISA plans by having nothing to do with employee benefits.” Keystone, 37 F.3d at 959. In fact, the objection raised by the Petitioner and the Michigan District Court could be raised against a prevailing hourly cash wage law that did not even have any benefits component. “Such a law would create the same “disincentive” against awardirg benefits,“ the Third Circuit stated in Key- stone, "because employers would have to pay the wage no 8 matter what level of benefits they provided.“ Jd. Like the ben- efits component, the minimum cash wage requirement imposes an additional cost on the Pennsylvania works contrac- tor and could influence its choices regarding ERISA benefits contributions. However, any wage regulation could have this effect and such wage regulation is clearly not preempted by ERISA. Massachusetts v. Morash, 490 U.S. 107 (1989) (Massa- chusetts statute requiring employers to pay employees for all unused vacation time upon discharge not preempted because law was instance of wage regulation and did not relate to ben- efit plans); Fort Halifax, 482 U.S. at 3-4 (Maine statute requir- ing employers to give severance payment of one week’s salary for every year an employee had worked in event of plant clos- ing not preempted).? The Third Circuit’s decision in Keystone upholds a valid exercise of state wage regulation. In its ruling, the Third Cir- cuit follows Supreme Court precedent and conforms with other Appellate Court decisions. This Court should not grant this Petition given the absence of any real conflict among the lower federal courts. 2. Both the Petitioner and the Eastern District Court of Michigan missed this crucial distinction between the Pennsylvania and District of Columbia laws and, based on this misperception, incorrectly accused the Third Circuit of using a discredited two-step ERISA preemption analysis. Perry, 1994 WL 668241, at *5, 2 Wage & Hour Cas. at 757. Greater Wash- ington held that if a state law mandates disability benefits that are covered under ERISA, the law is preempted. Contrary to the Eastern District’s opin- ion, the Third Circuit used the same analysis. However, unlike the District's law, the Act does not mandate any benefits covered under ERISA and therefore, the Act is not preempted. There was no “second step” in the Third Circuit’s analysis. 9 CONCLUSION The Petition for a Writ of Certiorari should not be granted. Respectfully submitted, RICHARD B. SIGMOND Counsel of Record SAGOT, JENNINGS & SIGMOND Attorney for Amicus Curiae 1172 Public Ledger Building Philadelphia, PA 19106 (215) 351-0669 February 15, 1995 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386012_1159%3A3. Public record. Not legal advice.