“Educating the Government Contracting Community”

State Prevailing Wage Law Applies Even If State Says It Doesn't

Government Construction Contractors need to know if prevailing wage laws apply to their employees on non-federal public projects. But what do you do if the solicitation documents and contract documents do not provide a clear answer about particular types of workers being required to receive prevailing wages. One Government Construction Contractor learned the hard way what Not to do. SimplexGrinnell chose not to pay some of its employees prevailing wages under the New York Labor Law on many of its state and municipal contracts in New York. Those employees sued SimplexGrinnell for the unpaid prevailing wages. During that lawsuit, SimplexGrinnell went to the New York Department of Labor to obtain a determination that would clarify the issue. And by taking that action, SimplexGrinnell unwittingly set itself up for a lengthy and costly court battle that would ultimately turn on the decision that it asked the NY Department of Labor to make.

A group of SimplexGrinnell's employees who had tested and inspected fire protection equipment sued their employer for failing to pay prevailing wages in accordance with New York's prevailing wage statute. The NY prevailing wage statute did not explicitly name testing and inspection employees among its definition of workers required to be paid the prevailing wage. But SimplexGrinnell sought stronger grounds for its position and went to the NY DOL for a determination if fire protection system testing and inspection employees were covered by NY's Prevailing Wage statute -- N.Y.McKinney's Labor Law 220.

The NY DOL determined that despite the statute's silence regarding fire protection and inspection employees, such employees actually do qualify to receive prevailing wages under the statute. But the NY DOL also determined that because there had been so much confusion about the application of Labor Law 220 to that particular class of workers that it would only enforce violations of that statute for those types of employees on future public construction contracts and not to the projects at issue in the employees' claims against the Government Construction Contractor. At that point it seemed SimplexGrinnell had dodged a bullet. The NY DOL ruled against their position substantively, but procedurally SimplexGrinnell had an agency decision not to apply that interpretation against them for the projects on which they were sued.

The employees were obviously unhappy that the NY DOL found that law substantively required them to be paid the prevailing wage but that the agency enforce that interpretation to work on State and municipal projects already performed. So they pursued their claims through U.S. District Court for the Eastern District of New York and then on appeal to the United States Court of Appeals for the Second Circuit. The issue on appeal was, "Did the NY DOL decision merit deferential treatment by the US Federal Courts or could the federal courts examine the issues presented to the NY DOL fresh?"

The Second Circuit Court of Appeals sought guidance from the Court of Appeals of New York. The Court of Appeals of New York held that the NY DOL decision that the workers were covered by the NY Labor Law was a substantive decision that should be entitled to deference and should be accepted by the Second Circuit Court of Appeals. But the NY DOL's decision to apply that decision only prospectively to future public construction contracts merited no deference whatsoever. Accordingly, SimplexGrinnell's attempt to secure from the NY DOL protection from the application of the prevailing wage statute to some of its employees completely backfired.

For Government Construction Contractors trying to determine if and how prevailing wage statutes apply to particular employees on particular projects -- Get the RIGHT ANSWER EARLY.

To get that right answer, you've got to know where to go and how to get it. The solicitation, contract, and even the prevailing wage statute are just starting points. And even seeking guidance from the State Agency in charge of the interpretation and application of the prevailing wage statute can get you in trouble. As SimplexGrinnell's experience shows seeking the answer in the way that they did left them far worse off than had they not taken the initiative to find clarity.

Don't Guess. Know what the rules are. Know how the rules apply to your project. And Know how your efforts to learn the answers to those questions might work against you BEFORE you take those efforts.

GCARL helps Government Contractors navigate these types of situations so they avoid the problems that others have wandered into. And we are ready and able to help you. Become a GCARL Member at https://www.gcarl.com/becoming-member/

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