Prevailing Wage Cases

Prevailing wages are the minimum amounts that laborers must be paid for performing certain types of public work.  Government agencies determine prevailing wage rate amounts based on the average hourly rate that union members in specific trades or occupations receive in a geographic area.  In other words, the prevailing wage, as its name implies, is the rate that “prevails” for a given type of work in a region.  In New York City, the Comptroller’s Office sets the prevailing wage rate. The New York State Department of Labor does so for all other counties in the rest of New York State.  Both government agencies change the applicable prevailing wage rates every year and publish schedules and charts reflecting the revised rates.

The payment of prevailing wages is a very important protection for workers in New York State.  The New York State Constitution provides: “No laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work shall be paid less than the rate of wages prevailing in the same trade or occupation in the locality within the state where such public work is to be situated, erected or used.”

What are the requirements to pay prevailing wages in the construction industry?  Three requirements to pay prevailing wages in the construction industry are set forth in the law.  First, a government agency and a contractor, like a construction company, have to enter into a contract that calls for the employment of laborers, workers, or mechanics.  Second, the contract must call for the performance of construction work that is paid for using public funds.  Finally, the primary goal of the construction work must be to benefit the general public, as opposed to benefitting only a specific group of people or private entities.  When all three of these requirements are met, the company that contracted with the government to do the work must pay the laborers, workers, and mechanics working on the worksite at least the prevailing wage rate.  For example, let’s say a company enters into a contract with the City of New York to repave several streets in Manhattan.  In this example, the company would have to employ laborers, workers, or mechanics to repave the streets.  The work is construction, and the City is funding it using taxpayer money.  Finally, the primary goal of repaving roads is to benefit the general public driving, biking, or walking on the streets.  In this example, the company that entered into the contract with the City, known as the “prime contractor,” must pay all laborers, workers, and mechanics working on the project at least the prevailing wage rate per hour worked.

The so-called prime contractor is always responsible for ensuring that the workers on the public worksite receive the prevailing wage rate.  Under the law, it does not matter that the prime contractor may have brought on several subcontractors with their own employees to work on the site.  New York law prohibits the prime contractor from simply saying that it was not the employer of its subcontractor’s employee and will hold the prime contractor responsible for paying all workers on the site their proper wages due.

What are the components of the prevailing wage?  The two components are an hourly rate and a benefits rate.  The hourly rate is the minimum amount that employees working on the public work must receive per hour worked.  These rates are much higher than the standard minimum wage rate in New York State.  For example, a boilermaker working in New York City in August 2023 must receive at least $65.88 per regular hour worked, far greater than the standard $15 per hour minimum wage rate.  Depending on the trade or occupation, companies must pay their workers one and one-half times or even double the regular prevailing wage rate for hours worked over forty per workweek, over eight per workday, on certain times of the day, or on weekends or holidays.  The supplemental benefits hourly rate is a minimum amount per hour that the employer must pay employees directly as a cash payment, through benefits, or through a combination of both.  Benefits can include insurance coverage premiums, 401(k) or other pension plans, or similar benefits.  For example, a boilermaker working in New York City in August 2023 must receive, in addition to the minimum $65.88 regular hourly rate mentioned, at least $48.47 per hour in supplemental benefits.

As an example, the following chart outlines the hourly wage and supplemental benefits rates due to eight types of constructions workers in New York City as of July 1, 2023.  The rightmost column summarizes some special rules requiring additional pay, at 1.5 or double rates, for certain workers when they work certain hours or days:

The New York Labor Law provides important protections for construction workers and ensures that they receive a fair wage for performing public construction work.  Failures to comply with the law have resulted in multi-million-dollar class action lawsuits and settlements and, in severe cases, imprisonment.

Pechman Law Group has handled several major prevailing wage cases, including a case against JLJ IV Enterprises, Inc., in which we obtained a $ 2.9 million settlement for flaggers on construction sites.  Franco Cuadra has lectured on prevailing wage law before the New York City Bar Association and co-authored an article with Lou Pechman on prevailing wage which appeared in the New York Law Journal.