LABOR CODE SECTION 1781-INDEMNIFICATION FOR ARBITRATION AWARDS

Nabors Corporate Services, Inc. v. City of Long Beach, 108 Cal. App. 5th 540

Nabors entered a contract with the City of Long Beach to perform oil well plug and abandonment work. The contract did not identify the work as public works and so Nabors did not pay the “prevailing wage” to its employees, which the California Labor Code would have required it to do had it been a public works project. After the work was completed, several Nabors’ employees filed arbitrations, asserting that the work was a public works project and demanding that Nabors pay them the difference between the wages that they received and the prevailing wage. In each case, the arbitrator found the work to be a public works project and ruled in favor of the complainant. All the awards were confirmed by the federal district court and Nabors paid the employees.

Nabors sued the City for indemnification under Labor Code Section 1781, which provides that if a municipality fails to identify a job as a public works project and a court issues a decision finding that the task was a public works project, then the contractor can recover the shortfall. The City filed a demurrer, asserting that an arbitral forum was not a court and therefore Section 1781 did not apply, The demurrer was sustained. Nabors appealed, arguing that the court orders confirming the awards were the source for its demand for indemnification.

The Court of Appeal reversed. The City contended that because “arbitrators” are not included in the list of decision makers in section 1781, the plain text of the statute excluded court orders confirming such awards. But under both federal and state law, a judgment entered following confirmation of a contractual arbitration award has the same force and effect as a judgment rendered after a court determination, regardless of whether an arbitrator, not a sitting judge, made the underlying factual and legal determinations.