By Keith Schneider, Partner at Maguire & Schneider LLP
Published in MY Business, The magazine from the National Federation of Independent Business
Background/Applicability
Prevailing wage (PW) laws require that workers on certain public construction projects be paid a specified minimum wage. Recently, Gov. Ted Strickland significantly expanded the prevailing wage guidelines to include even more types of projects. Among other applications, the new guidelines broaden prevailing wage to projects involving state support for environmental cleanup, as well as to the purchase of machinery and equipment with sate dollars. Even a privately financed factory may be subject to the prevailing wage laws if the machinery inside was purchased with public assistance.
Newly Issued Guidance Issued by Department of Commerce
Recently, the Department of Commerce has issued guidance to “clarify” when PW is triggered on privately funded construction activity as a part of a “public improvement project.” There is a presumption that PW applies to a privately funded construction project when it is “completed” within six months of publicly supported construction that is used to facilitate the use of the private construction project. For example, the department says that if the state of Ohio pays for a rail spur from the main rail line onto the property of X Corp, then X Corp constructs a warehouse within six months of the rail spur, PW applies to the entire warehouse construction. Another common example in which PW applies under the recent guidance is when private construction takes place on land that has been remediated of environmental hazards via public funds. PW will apply when public funds are used to support remediation of environmental hazards when a developer or end-user has been identified. However, if no developer or end-user has been identified at the time of remediation, then any privately funded construction on the remediated land will not be subject to PW.
Further, under the new guidelines, when public funds are used to support machinery and/or equipment being installed in a newly constructed or remolded private structure, PW presumptively applies. If the state provides cash for the installation of the machinery into a newly constructed plant, PW would be triggered for the entire project.
The next principle to be applied states that the primary purpose of publicly supported construction will be presumptively established by the facts and circumstances at the time the funds are committed. The department recognizes that the application of the PW is inherently fact-specific and will issue an early determination to any public authority whether or not PW applies to the particular project. The project developer may rely on the department’s determination as long as there are no fundamental substantive changes.
An Attempt to Kill Prevailing Wage
House Bill 243 has been drafted to amend the Ohio Revised Code in order to repeal the PW law. The bill is sponsored by Rep. Brinkman and cosponsored by Reps. John Adams, Lynn R. Wachtmann and Bruce R. Goodwin. If passed as introduced, the bill appears to repeal the PW law entirely.
In effect, the bill seeks to amend the Revised Code in a manner that would allow business to carry on as if PW is nonexistent. The PW repeal bill was introduced in the House May 30, 2007, and has not yet been voted on or introduced in the Senate. Currently there is no bill analysis or other available information to determine the support of the bill in the House or the Senate. The status of the bill can be checked at http://www.legislature.state.oh.us