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By: Thomas S. Tripodianos Published: April 2020

New York to Require Prevailing Wage for Private Construction

The NYS Budget, signed by Gov. Andrew Cuomo on April 3, 2020, expands prevailing wage laws, extending them to cover workers on certain private construction projects.  The act takes effect on January 1, 2022.

The legislation (S.7508-B/A.9508-B) amends the Labor Law by adding a new section 224-a. which would apply to projects that are worth more than $5 million and get at least 30% of their financing from public funds, such as certain types of loans, tax credits, and other tax incentives that promote construction.

The law excludes certain projects, such as small residential (“one or two family dwellings where the property is the owner's primary residence, or construction  work performed on property where the owner of the property owns no more than four dwelling units”), school construction, affordable housing, nonprofit projects, brownfields rehabilitation under the state program, work performed pursuant to a PLA, projects receiving 421-A benefits and others. 

However, “funds used to incentivize or ensure the development of a comprehensive sewage system, including connection  to  existing  sewer  lines  or creation  of new sewage lines or sewer capacity” shall be  deemed to be a public work covered  under  the provisions of the article.  As many private projects involve the creation of infrastructure such as sewers, it is unclear how this component of the project will be dealt with by the developer moving forward.

The law also creates a 13-member public subsidy board consisting of state agency heads, construction industry representatives, and organizations representing building owners and developers.

The Board has the power to recommend and make changes to rules regarding the minimum threshold percentage of public funds, minimum dollar threshold of project costs, which work is to be considered exempt, defining construction, and what constitutes public funds.

The owner or developer of a covered project shall be responsible for retaining original payroll records for a period of six years which shall be subject to inspection on request. Such owner or developer may authorize the prime contractor of the construction project to take responsibility for retaining and maintaining payroll records, but will be held jointly and severally liable for any violations of this requirement by such contractor. All records retained by the fiscal officer shall be subject to the freedom of information law.

Additionally, each owner and developer subject to the requirements of the new law shall comply with the objectives and goals of minority and women-owned business enterprises and service-disabled veteran-owned businesses.

Although the law does not take effect for some time, it is sure to have an impact on private construction throughout the State.  As always, consulting with a knowledgeable construction attorney as to compliance issues is highly recommended.

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