Ohio General Assembly
Amended Substitute House Bill 153 (Budget):
Prevailing Wage in Public Construction
The State of Ohio once again has amended its historic Prevailing Wage law for Public Construction, particularly applicable to construction bidders on public works projects. Responding to continued concerns regarding particular applications, the law generally remains applicable for most construction.
Prevailing Wage first became Ohio law during the Great Depression, April 23, 1931, House Bill 3, enacted by the Republican-led 89th General Assembly, to prevent out-of-state incursions against local, small businesses. Similarly, on the federal level (“Davis-Bacon”,) the purpose is to protect construction employers when bidding, including union-signatory and non-union companies:
The Act was "designed to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area." House Committee on Education and Labor, Legislative History of the Davis-Bacon Act, 87th Cong., 2d Sess. 1 (Comm. Print 1962) (Legislative History). Passage of the Act was spurred by the economic conditions of the early 1930's which gave rise to an oversupply of labor and increased the importance of federal building programs, since private construction was limited…. In the words of Representative Bacon, the Act was intended to combat the practice of "certain itinerant, irresponsible contractors, with itinerant, cheap, bootleg labor, [who] have been going around throughout the country 'picking' off a contract here and a contract there." The purpose of the bill was "simply to give local labor and the local contractor a fair opportunity to participate in this building program." 74 Cong. Rec. 6510 (1931).
Universities Research Ass'n, Inc. v. Coutu (1981), 450 U.S. 754, 733-74.
Ohio’s statute has undergone numerous legislative amendments and judicial interpretations since original enactment 80 years ago. Debate continues today on the viability of the provisions. With the latest amendments, Prevailing Wage still applies generally to bidding of public works in Ohio, as in approximately 32 other states.
THE NEW LAW
Effective Date: The amendments to Ohio’s Prevailing Wage law are effective 90 days after enactment (September 28, 2011,) with the exception of returning excess funds from the Prevailing Wage Custodial Fund, O.R.C. §4115.101, §512.70. The Department of Commerce Penalty Enforcement Fund is abolished, creating instead the Labor Operating Fund, O.R.C. §4115.10.
Exemptions to Applicability: The law generally applies to all “public improvements” the same as before, but with increased thresholds, at-or-below which Prevailing Wage does not apply, O.R.C. §4115.03:
New Vertical Construction:
(a) greater than $125,000.00 beginning 9/28/2011 through 9/27/2012;
(b) greater than $200,000.00 beginning 9/28/2012 through 9/27/2013;
(c) greater than $250,000.00 beginning 9/28/2013 through 9/27/2014.
Renovation, Vertical Construction:
(a) greater than $38,000.00 beginning 9/28/2011 through 9/27/2012;
(b) greater than $60,000.00 beginning 9/28/2012 through 9/27/2013;
(c) greater than $75,000.00 beginning 9/28/2013 through 9/27/2014.
Highway Construction Thresholds remain the same:
New Road (Horizontal) Construction: $78,258.00.
Renovation, Road (Horizontal) Construction: $23,447.00.
Road thresholds shall be adjusted for inflation using the United States Department of Commerce, Bureau of the Census implicit price deflator for construction, provided that no increase or decrease for any year shall exceed three per cent (3%) of the threshold level in existence at the time of the adjustment. O.R.C. §4115.034.
In addition, newly exempt from Prevailing Wage are the following projects:
· Port Authority Projects (O.R.C. §§4582.01, 4582.12(D), 4582.21, 4582.37,) O.R.C. §4115.04(B)(6).
· Department of Development Loans, Guarantees, Mortgage Insurance, Job Ready Site Program; O.R.C. §122.452, §122.0818, §166.02(E), §4115.032 repealed.
· Minority Business Enterprise Loans, O.R.C. §122.80, O.R.C. 4115.032 repealed.
· Industrial Development Bonds, O.R.C. §165.031, O.R.C. 4115.032 repealed.
· Energy Resource Development Facility, O.R.C. §1551.13, O.R.C. 4115.032 repealed.
· Community Urban Redevelopment Corporation Projects, O.R.C. §1728.07(K), O.R.C. 4115.032 repealed.
· Air Quality Development Authority Loans and Grants, O.R.C. §3706.042, O.R.C. 4115.032 repealed.
· Ohio Rail Development Commission Bonds, O.R.C. §4981.23 repealed.
· Any portion of a public improvement undertaken and completed solely with Labor Donated by the individuals performing the labor, by a labor organization and its members, or by a contractor or subcontractor that donates all labor and materials for that portion of the public improvement project. O.R.C. §4115.04(B)(7).
Reacting to the prior administration’s Ohio School Facilities Commission interpretation that exempt Schools might choose to include a Prevailing Wage requirement, the law now provides that, “Under no circumstances shall a public authority apply the prevailing wage requirements of this chapter” to an exempt public improvement by a board of education of any School District or the governing board of any Educational Service Center. O.R.C. §4115.04(C).
Enforcement Safe Harbors: Of significance to Construction Employers, the new law adds minimal exemptions from compliance enforcement, as a direct result of numerous vague or de minimis complaints filed with the State. While an employer remains liable for compliance, enforcement will not proceed in the following instances:
· Apprentice Ratio: A contractor that exceeds the permissible ratio of apprentices to skilled workers by two (2) or fewer apprentices for not more than two (2) days in any thirty-day (30-day) period. O.R.C. §4115.05.
· Underpayment: For underpayment to an employee of less than $1,000.00, the contractor is not subject to any further proceedings if the contractor or subcontractor makes full restitution to the affected employee. O.R.C. §4115.13(C).
· Penalties: No contractor or subcontractor shall be responsible for the payment of the penalties resulting from a violation by its subcontractor, provided that the contractor or subcontractor has made a good faith effort to ensure that its subcontractor complied with the requirements. O.R.C. §4115.10(G).
Standing to Sue: Recognizing that the Prevailing Wage law prohibits obtaining a public contract by under-bidding on local wages, prior law intended to allow an unsuccessful contractor to sue the low bidder if that low bid might be based on a Prevailing Wage violation.
Several Courts of Appeals recently ruled that a contractor may sue a competitor merely by bidding on a particular project, even though not bidding unsuccessfully against the low bidder of a particular trade. This broad interpretation encouraged litigation by going beyond the original intent of the law.
The new law restricts complaints only by unsuccessful bidders “with respect to a particular contract for construction of a public improvement.” O.R.C. §4115.03(F).
In addition, any complaint filed with the State must allege a specific violation, accompanied by sufficient evidence, not merely alleging a general violation of the Prevailing Wage law. The State must reject any complaint lacking a specific violation or sufficient evidence to justify a complaint. O.R.C. §4115.16(A).
The State may take 120 days, plus 90 days with notice, or longer with agreement by the parties, to investigate a complaint. No contractor may file a private law suit prior to this investigation period. O.R.C. §4115.16(B).
Filing of Collective Bargaining Agreements: Ohio’s Prevailing Wage remains set by reference to the collective bargaining agreements of each local jurisdiction and trade. Past concerns included a lack of timely notice when a re-negotiated agreement changed a wage rate.
New law requires that the labor union of each agreement, “shall file with the director of commerce all relevant portions of any such agreement,” and within 90 days after executing the agreement. “The labor organization shall certify under penalty of law that the portion of the agreement, contract, or understanding filed under this section contains, in full, all provisions of the agreement, contract, or understanding concerning wages paid to persons and the apprentice to skilled worker ratio under the agreement, contract, or understanding.” O.R.C. §4115.05.
When the State receives a revised agreement, the new wage rate “shall take effect two weeks after the director receives the relevant portions of the agreement,” thus allowing time for the State to transmit the new rate to the local public authority, which has 7 days to transmit the new rate to contractors. O.R.C. §4115.05.
Every legislative session brings a new debate on Prevailing Wage for Public Construction. The latest revision generally preserves the concept, while providing new exemptions to minimize applications of particular concern.
For more information, contact Luther L. Liggett, Jr.
 Curtin, The Ohio Politics Almanac, 2d Ed., 2006, Kent State University.