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Town Attorney Reviews Prevailing Wage Implications With Council

As a means of educating and updating town officials ahead of a period of expanded capital projects including a new Hook & Ladder fire company headquarters, Parent Connection office, and community center, Town Attorney David Grogins appeared before the Legislative Council February 19 to review the implications of Connecticut’s Prevailing Wage law.

He started his presentation by reminding the council that wage protections for those engaged in government work have been around since the Davis Bacon Act in the 1930s. Since 1977, Connecticut’s Labor Commissioner has adopted and used prevailing wage rate determinations similar to those enacted by the United States Secretary of Labor under the provisions of the Davis-Bacon Act, according to the state Department of Labor (DOL) website.

Mr Grogins explained that for state construction projects, as well as for projects occurring in towns and cities, all applicable laborers and workers on those projects must be paid wages established by the DOL, which are typically equal to what a worker would earn if represented by a labor union.

Prevailing wages must be paid on all new construction projects that are estimated to cost $400,000 or more, and on all projects involving renovation, repair, or alteration exceeding $100,000. Furthermore, all bid documents must advertise projects under which prevailing wages are to be paid, the town attorney added.

“Upon the awarding of a bid, the company submits its wage schedule to the Department of Labor for approval,” Mr Grogins said. “Then, the general contractor must assure both [his or her] workers and subcontractors are paid the prevailing wage.”

The penalty to the general contractor or winning bidder for such projects could be arrest for a Class D felony and significant fines if they are determined to be skirting the Prevailing Wage requirements imposed on their project.

Mr Grogins said several iterations of the prevailing wage law have been applied to Newtown projects over the years. But he said to ensure compliance, officials should follow a simple rule of thumb: “If it is a public project, contractors must provide the prevailing wage.”

The town attorney said it is a generally accepted standard that adding prevailing wage can boost the overall cost of a project’s labor costs by 30 percent, and that labor costs generally equate to about 50 percent of an overall project’s expense.

He said prevailing wages must also be applied to projects involving leases, as well as to projects owned by the municipality. Mr Grogins referenced a parking lot project at Fairfield Hills that was designed to serve the Newtown Youth Academy, which was building its facility on leased land at the town-owned campus.

Mr Grogins said the town did not require prevailing wages on the project because the lot was being installed to serve the lessee, but since others visiting Fairfield Hills for other business were entitled to use that parking, the state initially required the town to pay prevailing wages.

He said the town disputed that ruling and the DOL eventually agreed that Newtown would only be required to pay prevailing wages for part of the project and not the entire installation. The town attorney said the state also permits another wage compensation program under the 2009 Project Labor Agreement Act, which would permit Newtown to adopt project-specific wage requirements for each worker involved.

But Mr Grogins said he has never seen that option used in his many years representing or working with municipalities in the region.

“This type of agreement is designed to be sure projects have a steady and reliable stream of workers, and fosters a strike-free environment,” he said. “It puts all workers on large projects under one labor package.”

Under questioning by Councilman Ryan Knapp regarding applying prevailing wages for projects under the financial cap, Mr Grogins replied that smaller projects involving full or partial state or federal underwriting may come with a requirement to apply the standard, even if they are far below the $400,000 / $100,000 guidelines.

An October 2013 legislative update on the law indicates that Connecticut’s prevailing wage threshold for new construction is the second highest in the nation, behind only Maryland’s $500,000 for all types of public works projects. Connecticut’s remodeling threshold is the third highest in the nation, behind Indiana’s ($350,000) and Kentucky’s ($250,000), both of which apply to all types of public works projects.

Since 2010, four states have increased their thresholds — Alaska, Indiana, and Wisconsin significantly raised their thresholds applying to all public works projects. Ohio increased thresholds for projects that did not involve road or bridge construction, while Vermont lowered its threshold from $250,000 to $100,000, according to the legislative report.

A comparison of prevailing wage rates for six common occupations in Connecticut, Rhode Island, and nearby areas of Massachusetts and New York indicates that Connecticut’s rates are generally in the middle and lower half of the rates paid in the six areas surveyed. In general, Connecticut’s rates are $12.64 to $18.01 per hour lower than the highest rates paid to a particular occupation (usually in New York’s bordering counties).

The General Assembly had not made any major amendments to the prevailing wage law over the preceding five years.

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