## Facts

- The Industrial Welfare Commission (IWC) adopted Wage Order 5-76 regulating wages, hours, and working conditions in the public housekeeping industry, including hotels and motels.
- A hotel and motel trade association representing covered employers challenged the order by petition for writ of mandate.
- The association argued the order was procedurally invalid because the IWC (1) did not conduct required investigations or make required findings under Labor Code § 1178 and (2) failed to provide an adequate “statement of basis” under Labor Code § 1177.
- The superior court denied relief and upheld the wage order.
- The association appealed, and the California Supreme Court reviewed the validity of the wage order under the cited statutes.

## Issues

1. Whether the wage order was invalid because the IWC failed to investigate and find the conditions required by Labor Code § 1178.
2. Whether the wage order was invalid because the IWC failed to issue an adequate “statement of basis” as required by Labor Code § 1177.

## Decision

- The court held the IWC’s investigation and findings were sufficient to satisfy Labor Code § 1178.
- The court held the wage order was defective because the IWC did not provide an adequate “statement of basis” under Labor Code § 1177.
- The court reversed the superior court’s judgment and directed issuance of a writ of mandate requiring the IWC to prepare an adequate statement of basis and proceed consistently with the court’s standards.

## Legal Principles

- Under Labor Code § 1178, the IWC must investigate and find that wages are inadequate for proper living costs or that hours/conditions are prejudicial to workers’ health, morals, or welfare; substantial compliance may be shown by the record and need not take highly formal, adjudicatory findings.
- Under Labor Code § 1177, each wage order must be accompanied by a statement that meaningfully explains the factual and policy grounds for the adopted provisions, not merely a conclusory reference to authority or proceedings.
- A § 1177 statement of basis must be detailed enough to permit a reviewing court to evaluate whether the order is supported by the evidence before the agency and consistent with statutory purposes, while not requiring exhaustive discussion of every item in the record.
- Materials that fail to explain the rationale for specific wage rates and regulatory choices, or that rely mainly on conclusory assertions, do not satisfy § 1177.

## Conclusion

The court sustained the IWC’s compliance with the investigatory and findings requirement of Labor Code § 1178 but set aside the wage order for failure to provide an adequate statement of basis under § 1177, ordering mandate relief to require a sufficient explanatory statement to support further agency action.


Cal. Hotel & Motel Ass’n v. Indus. Welfare Comm’n, 25 Cal. 3d 200, 599 P.2d 31 (Cal. 1979)