By: Thomas S. Tripodianos Published: February 2014

Clarification sought on prevailing wage requirements

The United States Court of Appeals, Second Circuit, has asked New York’s highest Court to answer the following two questions relating to prevailing wages:

  1.         What deference, if any, should a court pay to an agency’s decision, made for its own enforcement purposes, to construe section 220 of the NYLL [New York Labor Law]prospectively only, when the court is deciding the meaning of that section for a period of time arising  before the agency’s decision?
  2.        Does a party’s commitment to pay prevailing wages pursuant to NYLL section 220 bind it to pay those wages only for work  activities that were clearly understood by the parties to be  covered by section 220, or does it require the party to pay  prevailing wages for all the work activities that are ultimately  deemed by a court or agency to be “covered” by that portion of the statute? 

As the Court sates in Ramos v. SimplexGrinnell LP, 12-4901-cv, “This case raises two questions of New York State law that are  unsettled and of importance to the relationship between the State’s administrative agencies and its courts, as well as to the functioning of New  York’s labor law.”

This case was commenced against Simplex Grinnell for failure to pay prevailing wages for testing and inspection of fire alarm and suppression systems. During the litigation Simplex Grinnell separately asked the New York State Department of Labor for clarification as to whether the work was covered.  The DOL posted on its website certain matrices created by Simplex Grinnell indicating the work was not subject to prevailing wage requirements.   Subsequently however the DOL Commissioner ordered the matrices removed and issued an opinion letter indicating the work was indeed “covered” but would only enforce this interpretation prospectively.

The first question dealing with the “decision of how to treat agency determinations that are made separately  from a direct legal claim, and the extent to which the agency’s own prospective enforcement decision ought to bear upon that, separately brought, claim, will affect cases far beyond the particular question before us.”

The second question, deals with the question of intent of the contracting parties.  It is undisputed that Simplex Grinnell agreed to pay prevailing wages under the statute as interpreted by the agency and the courts at the time of contract.  What is not clear is whether Simplex Grinnell “also contracted to be bound by what the statute was ultimately read to require, even if that requirement was not clear to the parties when the contract was signed.”

The decision in this case can have far reaching effects in how contractors bid on projects involving prevailing wages and how they handle disputes involving prevailing wages.  We will continue to monitor this case and will report on the Court of Appeals’ decision.

 

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