Ohio Prevailing Wage Law Changes
By: Nick Nykulak | 9/15/2011 | Category: Labor Law-Prevailing Wage
It has been more than a decade since the legislature has made any changes to Ohio’s Prevailing Wage Law, a law that requires the payment of union scale wages and benefits on public construction projects. Given the need to bolster job creation in the state, coupled with the monumental challenge of closing a nearly eight billion dollar budget hole inherited from the previous administration, Governor Kasich wisely sought to overhaul Ohio’s archaic prevailing wage laws. The end result was various changes to when prevailing wage laws apply to a project, how the prevailing wage is determined, as well as changes to the way prevailing wage laws are enforced against contractors and subcontractors.
The amendments significantly change when prevailing wage laws apply to a public project. Projects undertaken by a port authority were removed from prevailing wage requirements altogether. Also eliminated was section 4115.032 of the Ohio Revised Code, which applied prevailing wage requirements to private construction projects that were subject to various bonds issued by public authorities to finance private investment in the state, most notably, industrial revenue bonds. The legislature also made clear to school boards and to the Ohio School Facilities Commission that both lack authority to apply prevailing wage requirements to school construction projects. Various school boards and the Ohio Schools Facility Commission have recently attempted to apply prevailing wage requirements to school projects even though such projects were removed from prevailing wage requirements by the legislature in 1997.
The legislature also increased the prevailing wage thresholds on new construction projects for public authorities. The increases in the thresholds will be implemented gradually over the next several years. When the cost of construction is below the threshold set, prevailing wage requirements do not apply to a public project. Beginning September 29, 2011, the prevailing wage threshold for new construction projects will increase to $125,000. On September 29, 2012, the threshold will move to $200,000, and on September 29, 2013 the threshold will reach its maximum, at $250,000. The threshold for renovations, alterations and repairs was also increased to $38,000 beginning on September 29, 2011. On September 29, 2012, the threshold will be $60,000, and will reach its maximum of $75,000 on September 29, 2013. The current thresholds for new construction, currently $78,258, and for renovations, $23,477, will remain the same for all road construction projects, with inflationary adjustments being made by the Ohio Department of Commerce every two years.
The legislature also modified how the prevailing wage rate is determined in the state. Currently, the Ohio Department of Commerce simply adopts the wage rates and fringe benefit packages negotiated by labor organizations as the “prevailing wage rate” in any given Ohio locality. However, questions have been raised as to whether labor organizations have been providing the Ohio Department of Commerce with all of the agreements negotiated that may contain special or different rates. Thus, in order to protect Ohio’s taxpayers from fraud, and taking into consideration that Ohio taxpayers are mandated to pay a rate negotiated by third parties, labor organizations are now required to submit any and all collective bargaining agreements and/or understandings they have to the Ohio Department of Commerce. The Department of Commerce will then determine the prevailing wage rates from all of the agreements submitted. Labor organizations submitting agreements must also certify under the penalty of law that they have submitted all of the agreements in the applicable locality to ensure any special rates or exemptions negotiated by any labor organization are taken into consideration and equally applied to public works projects paid for by Ohio taxpayers.
Finally, the legislature made changes to the way prevailing wage laws are enforced against contractors who work on public projects. It is not a violation of prevailing wage laws for a contractor to be out of ratio by two or fewer apprentices for not more than two days in any thirty day period. Since apprentices are paid significantly less than journeymen, contractors are required under the law to maintain a specific ratio of apprentices to journeyman on a given jobsite to protect the competitive bidding process. Also, in response to a recent decision by the Supreme Court of Ohio, any contractor that has a subcontractor that violates prevailing wage laws is still liable for any underpayments made by the subcontractor, but the contractor is no longer liable for the 100% penalties if the contractor made a “good faith effort” to ensure the subcontractor’s compliance with the law. The legislature also added a much needed “de minimis rule” for inadvertent underpayments that may occur to employees on a public project. Thus, if a contractor is found to have underpaid any employee $1,000 or less in wages, and makes full restitution to the employee, the contractor is not subject to any further action under the prevailing wage law’s enforcement mechanisms.
In order to address a rash of recent prevailing wage litigation, the legislature also increased the waiting period for interested parties to file lawsuits, allowing the Ohio Department of Commerce more time to complete administrative investigations. The waiting period for interested parties was increased from sixty days to one hundred and twenty days, with an automatic ninety-day extension that can be taken at the discretion of the Director of the Department of Commerce. Administrative investigations could now last up to two hundred and ten days without the threat of a lawsuit from an interested party.
Further, all interested party prevailing wage complaints filed with the Ohio Department of Commerce must be on the Department’s complaint form, must identify a specific contractor and a specific violation, and the interested party must attach evidence to support the violation alleged. If not, the Department of Commerce does not have to investigate the administrative complaint. Further, administrative prevailing wage complaints may only be filed against a successful bidder on a public project if the unsuccessful bidder, or the interested party to which the unsuccessful bidder is a member, had submitted a bid on the same contract for the project.
This article is only meant to be a summation of some of the changes to Ohio’s Prevailing Wage Law. If you have any specific questions or would like more detailed information, please do hesitate to call Alan Ross or Nick Nykulak.