By: Alexander A. Miuccio Thomas H. Welby Published: August 2009

Union Challenges Prevailing Wage Rate Determination

New York Labor Law Section 220 requires contractors to pay its workers the appropriate prevailing wages and benefits on public works projects. Collective bargaining agreements are used as a means of determining the prevailing wage rate, provided such agreements cover at least thirty percent of the workers in a particular trade. 

How is the prevailing rate determined where there are two unions covering the same work in a given locality? This question was answered in the recent case of Matter of International Union of Elevator Constructors Local No. 1 AFL-CIO v. Thompson, where the trade workers were represented by two unions, each of which had collective bargaining agreements containing different wage rates and benefits. 

Background 

In New York City, Local 1 and Local 3 are two main labor unions that represent elevator repair and maintenance workers. Local 1’s collective bargaining agreement provides for a higher rate of pay than that of Local 3. The Comptroller of the City of New York is responsible for establishing prevailing wage rates which must be paid to workers on public projects in New York City. This differs from projects outside of New York City, where it is the Commissioner of the New York State Department of Labor who is responsible for establishing prevailing wage rates. 

The City Comptroller used the rates set forth in Local 3’s collective bargaining agreement, rather than the higher rates set forth in Local 1’s collective bargaining agreement, in determining the prevailing wage rates for New York City elevator repair and maintenance workers for the period of July 1, 2008 through June 30, 2009.

The City Comptroller conducted a survey to determine which union had the most members. Mailings were sent to 78 contractors previously identified as employing Local 1 members and 27 contractors previously identified as employing Local 3 members. Only 12 of the Local 1 contractors responded, indicating 130 members performed elevator work. Of the 27 Local 3 contractors, 20 contractors responded, indicating 1,331 members performed elevator work. The City Comptroller concluded that Local 3 had more members and therefore its rates were the “prevailing” wage rates among elevator repair and maintenance workers.

Local 1 learned of the Comptroller’s determination and sued to annul the determination. According to Local 1, the Comptroller’s survey method and determination were arbitrary, capricious and not supported by substantial evidence. Local 1 argued that it actually had 1,608 members to Local 3’s 1,331 members. It was Local 1’s position that when more than one union represented a particular type of worker, it was the historical practice for the Comptroller to use the rates set forth in the collective bargaining agreement for the predominant union for the trade, with the predominant union to be measured by the number of each union’s members. Since Local 1 claimed to have more members performing elevator work than Local 3, Local 1 argued that its rates should apply and the Comptroller’s determination should be annulled. 

Decision

The court agreed with Local 1’s argument that the Comptroller’s reliance upon the survey data was based on flawed data since so few Local 1 contractors responded. The court held that the use of a survey with such a poor response from contractors identified by Local 1 resulted in a determination that “is without foundation in fact.” In evaluating the meaning of the term “prevailing”, the court relied on past judicial decisions interpreting the word to mean “commonly accepted or predominant” and “most frequent.” Based on its analysis of the term “prevailing”, the court held that the larger union’s collective bargaining agreement should establish the prevailing wage rate. However, the court stopped short of annulling the determination of the City Comptroller to use Local 3’s rates. With the limited evidence presented, it could not be sure of which union truly had the greater number of members. The court ordered that a hearing take place with the taking of testimony and submission of evidence to determine which union had more members performing elevator work. The predominant union’s collective bargaining agreement would establish the prevailing wage rate. 

Comment 

The prevailing wage statute does not set forth how the “prevailing rate” is to be determined where there is more than one union representing a particular type of work. This case shines a light on how the prevailing wage rate should be determined in such a case. 

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