Dive Brief:

• New York lawmakers have introduced legislation that would expand the use of prevailing wages to include privately owned projects receiving any financial assistance from industrial development agencies, the New York Business Journal reported.
• The new prevailing wage requirements would be applicable to any company getting tax breaks, loans or other type of funding from state and local development agencies or corporations and would require such companies to pay prevailing wages at all stages of their construction projects.
• The new law would "broaden" the definition of a public works project, and New York business groups and developers have said it would substantially drive up the costs of these types of projects. Lawmakers could vote on the measure by June 15, according to the Business Journal.

Dive Insight:

Prevailing wages, also known as Davis-Bacon Act wages, are already required on publicly owned projects and are tied to higher union wage scales. Proponents say the measure puts all bidders on a level playing field and eliminates the risk of employees being paid lower-than average wages in order for the low bidder's numbers to "work." Critics, however, maintain that the law interferes with the free market and uses union wages as the benchmark, even in areas where that wage may be higher than the market would normally support. 

In April, a DC appeals court ruled against a Department of Labor requirement that a developer pay prevailing wages on a private project being built on land leased from the District. In the court's decision, it said that because the city was not party to any of the construction contracts and was acting only as a landlord, the project could not be considered a "public work." The court called the attempt on the part of the city "a massive, atextual, and ahistorical expansion of the Davis-Bacon Act."

Trade associations like the National Home Builders Association and the Associated Builders and Contractors are pushing Congress to repeal Davis-Bacon, arguing that this is one of many regulatory burdens adding significant costs to the bottom line of construction projects. In fact, in the DC case, a prevailing wage requirement would have added $20 million in costs to that project, according to the ABC.

Prevailing wage mandates also seem to be an area where some contractors believe they can circumvent the law. In April, a New York contractor was charged with 139 counts of fraud for allegedly failing to pay employees more than $250,000 in union benefits and filing false certified payroll records with the Port Authority of New York and New Jersey while working on a project at John F. Kennedy Airport. In another case, a Massachusetts contractor was charged for violating state prevailing wage laws and fined $54,000 after the Attorney General’s office alleged the company did not pay required overtime wages and did not provide investigators with accurate certified payroll documentation.