Prevailing wage in New York: a comprehensive guide

Posted by National Alliance for Fair Contracting on

Jacob Maslow
July 30, 2023

Prevailing wage is a crucial aspect of the construction industry in New York, as it ensures that workers receive fair compensation on public works projects. In essence, the prevailing wage is the pay contractors and subcontractors in New York must pay their employees when working on public works sites. This rate is higher than the standard minimum wage, based on hourly rates paid by unions to specific workers in a given market.

The New York State Department of Labor issues prevailing wage schedules for general and residential construction projects on a county-by-county basis. General construction rates apply to buildings, heavy and highway, tunnel, and water and sewer work. Contractors and subcontractors must adhere to these wage schedules to comply with state regulations.

Key Takeaways
Prevailing wage is critical in the New York construction industry, ensuring fair pay for workers on public works projects.
The New York State Department of Labor establishes wage schedules for general and residential construction on a county-by-county basis.
Contractors and subcontractors must adhere to these prevailing wage schedules to maintain compliance with state regulations.

Understanding Prevailing Wage
Article 8

In New York State, the prevailing hourly wage and usual benefits and overtime are paid to most workers, laborers, and mechanics within a given area. New York’s prevailing wage law is regulated under Article 8, which focuses on public construction projects. Prevailing wages are usually equivalent to the union wage. They can vary by location, as they are determined based on the average wages earned by professionals in similar roles in the area.

Article 8 of the New York State Labor Law ensures that contractors and subcontractors on public works projects pay their employees the appropriate prevailing wage, as established by the Department of Labor (DOL). These requirements apply to all parties involved in a public work contract, regardless of whether they have a direct contractual relationship with the public entity.

Public Work

Public work refers to any construction, maintenance, or improvement project funded and executed by a public entity, such as federal, state, or local government. These projects typically include building and renovating schools, hospitals, transportation infrastructure, and other public facilities. Regarding prevailing wages, contractors and subcontractors must know the specific rates applicable to their work locality and trade.

The New York State Department of Labor issues prevailing wage schedules for “General Construction Projects” and “Residential Construction Projects” on a county-by-county basis. General construction rates apply to buildings, heavy and highway construction, tunnels, water, and sewer. Employers with government contracts or foreign workers must pay their employees the prevailing wages to comply with the law and ensure fair compensation for their labor.

Understanding prevailing wage laws in New York, specifically under Article 8 and public work projects, is essential for contractors, subcontractors, and employees. Compliance with these laws protects workers’ rights and helps maintain a fair and competitive labor market.

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Governor Hochul Announces Major Crackdown to Combat Wage Theft

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Office of Gov. Hochul – July 20, 2022

Wage Theft Task Force Recovers Nearly $3 Million in Restitution Owed to Workers and New York State

Launches New Hotline to Report Wage Theft and Recover Stolen Wages – 833-910-4378 – and Develops Online Wage Theft Reporting and Tracking Tool

Governor Kathy Hochul today announced major actions to combat wage theft and protect the paychecks of hardworking New Yorkers. The Governor announced that the Wage Theft Task Force, a coordinated effort between the New York State Department of Labor, the New York State Attorney General, and District Attorneys, has recently secured felony convictions and agreements from more than a dozen businesses and 265 individuals to pay nearly $3 million in wage restitution and contributions owed to New York State since the beginning of the COVID-19 pandemic. The Governor also announced new efforts to double down on the success of the Task Force, launching a new hotline and developing a state-of-the-art online wage theft reporting system to create more opportunities for workers to report wage theft and receive what they are owed while protecting their privacy and safety.

Starting today, New Yorkers can report wage theft directly to the New York State Department of Labor by calling the new hotline at 833-910-4378, which has interpretation services available. The online reporting system will give New Yorkers the ability to report wage theft online in a variety of languages while improving the Department’s ability to track complaints and identify trends.

…

“Wage theft is a serious issue and I join the Governor, Attorney General and the Department of Labor in saying that New York will not tolerate the theft of hardworking New Yorker’s livelihoods,” said Lieutenant Governor Antonio Delgado. “The measures announced today will help us combat this issue and bring restitution to these victims.”

To further empower New Yorkers to report theft, NYSDOL has also begun developing a new, state-of-the-art Worker Protection Management System, where New Yorkers can report claims online in multiple languages and receive updates in real time about the status of their claim. The $10 million project, set to be complete in 2023, will also provide the Department with real time data, enhancing its ability to analyze and identify violation trends. This builds on the Governor’s ongoing efforts to improve transparency and increase accountability in State government.

Wage Theft Task Force

The Wage Theft Task Force initially leveraged criminal laws to achieve justice for construction workers in cases involving wage theft, fraud, and safety hazards. The Task Force has recently expanded its scope into other industries and counties in New York State. The Wage Theft Task Force includes NYSDOL, the New York State Attorney General’s Office, the New York State Insurance Fund (NYSIF), the Offices of District Attorneys across the State, and the New York City Department of Investigation. The Task Force works closely with labor unions and community-based organizations as part of efforts to support workers and recover owed wages.

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New York Construction Wage Theft Law: Prime Contractors Responsible for Subcontractor’s Failures

Posted by National Alliance for Fair Contracting on

Friday,  July 1,  2022

The scope for liability related to employee wage claims has changed dramatically for contractors and subcontractors operating in New York under a new law that shifts wage payment obligations to prime contractors.

New York Governor Kathy Hochul signed into law NY State Senate Bill S2766C, which is intended to reduce wage theft claims and amend wage theft prevention and enforcement in the construction industry within the state, on January 25, 2022, and the new law is effective retroactively to January 4, 2022.

The Legislature proposed this amendment to existing wage theft law to increase the likelihood that allegedly exploited workers in the construction industry will be able to secure payment and collect unpaid wages and benefits for work already performed by shifting the ultimate payment obligation to prime contractors.

Prior to the new law, a worker could only bring a private lawsuit for alleged unpaid wages (including overtime and fringe benefits) against their direct employer. The New York State Assembly asserted that this was a major issue in the construction industry and that subcontractors hid assets, changed their corporate identities, or took part in other alleged unscrupulous practices to avoid liability and make themselves judgment-proof from a potential wage theft action.

The New Standards
There are two sections to the new law. Section one pertains to construction industry wage theft and is codified under NY CLS Labor § 198-e. Pursuant to this new section, a construction contractor, as defined within, would assume liability for any unpaid wages, benefits, damages, and attorney’s fees related to a civil or administrative action by a wage claimant or the Department of Labor against a lower tier subcontractor.

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New York Appeals Court Confirms Construction Flaggers Must be Paid Prevailing Wages 

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NEW YORK, April 21, 2022 /PRNewswire/ — A New York appeals court ruled in favor of a class of flaggers who worked for Judlau Contracting Inc., a subsidiary of multi-billion dollar infrastructure contractor OHL Group. The court affirmed that Judlau flaggers who worked on New York public works projects since April 26, 2011 are entitled to recover prevailing wages. The flaggers are represented by Pelton Graham, an employment law firm with offices in New York and California.

This historic decision upholds the rights of not only the hundreds of flaggers who worked on Judlau public works projects but potentially thousands more New York flaggers who have been chronically underpaid. More information on this decision and its implications is available here: https://peltongraham.com/prevailing-wages-for-new-york-flaggers/.

Judlau flaggers worked on a variety of public works construction projects in New York City and upstate New York, including water main, sewer, and other utility repair and maintenance projects requiring street excavation. Even though they worked alongside union construction workers who received prevailing wages, flaggers were often paid just a few dollars over minimum wage rather than the union rate.

Pelton Graham has represented the flaggers since the case was first filed in New York Supreme court in 2017. Even though the flaggers were classified by Judlau as “pedestrian crossing guards,” the flaggers demonstrated that their main responsibility was protecting the safety of the public and construction crews near the job sites and, under the guidelines from the New York City Comptroller, they should be paid as construction laborers.

After years of litigation, the court ruled in favor of the flaggers, finding that the evidence clearly showed that Judlau flaggers worked as safety flaggers and for that reason were eligible for prevailing wages for all of their work performed on New York public works construction sites.

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LI firm pays $1.45M in prevailing wage settlement

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By: David Winzelberg
April 6, 2022

The New York State Department of Labor has reached a $1.45 million settlement with a Long Island contractor for failing to pay prevailing wage for a public works project.

The agreement with Calverton-based Miller Environmental Group stemmed from the company’s contract with PSEG Long Island to address oil spills and soil contamination, conduct clean-up, and perform other work supporting utility installation, according to a DOL statement.

Investigators confirmed that Miller Environmental failed to bid the contract at prevailing wage rates and that PSEG Long Island failed to inform Miller Environmental that this contract involved public work. After discussions on the matter, Miller Environmental agreed to pay 88 employees the full underpayment amount, making those payments in January and February.

Contractors and subcontractors must pay the prevailing rate of wage and supplements to all workers under a public works contract based on the locality where the work is performed, according to state law. Third parties contracted on behalf and for the benefit of a public entity are also subject to the prevailing wage requirements. Because PSEG Long Island operates Long Island Power Authority’s electrical transmission and distribution infrastructure, its contracts are subject to those requirements.

“In New York State, we believe workers deserve a fair wage for a fair day’s work,” DOL Commissioner Roberta Reardon said in the statement. “Protecting workers is a top priority to the New York State Department of Labor. We remain vigilant to ensure that employers are properly compensating employees for the work that they do. We will never stop protecting the paychecks of hard-working New Yorkers.”

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Attorney General James and DOI Commissioner Strauber Deliver $900,000 to 200 NYCHA Construction Workers Denied Fair Pay

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Office of NY Attorney General Leticia James
Press Release – April 4, 2022

Lintech Electric Failed to Pay Employees the Prevailing Wage Rate on NYCHA Projects

NEW YORK – New York Attorney General Letitia James and New York City Department of Investigation (DOI) Commissioner Jocelyn E. Strauber today announced their joint efforts to combat wage theft by securing nearly $900,000 for more than 200 workers who were underpaid by Lintech Electric (Lintech). An investigation found that over the course of three years, Lintech disregarded the prevailing wage rate and underpaid its employees by almost $900,000 on multiple New York City Housing Authority (NYCHA) projects in all five boroughs. As a part of the agreement, Lintech will repay the impacted workers the money they were cheated plus interest and will be banned from public works projects in New York for five years.

“Every worker deserves fair pay for their hard work,” said Attorney General James. “The prevailing wage was established for a reason — to protect the hardworking New Yorkers who built our city and keep it functioning. No employee should fear that they will be cheated at the hands of greedy employers, especially at the expense of the public good. I am proud to finally return the money owed to these dedicated workers and I will do everything in my power to ensure that Lintech does not deceive or exploit any more workers.”

“Lintech, a subcontractor for general contractors hired by NYCHA through its guarantors, agreed to pay almost $900,000 to workers that it underpaid for over three years, in violation of New York’s Prevailing Wage Law,” said DOI Commissioner Jocelyn E. Strauber. “I applaud the workers who alerted DOI of this underpayment, prompting an audit that exposed this wrongful conduct. As a result of this joint investigation by DOI and Attorney General James’ office, Lintech will also be banned from New York public works projects for five years. DOI and its law enforcement partners will pursue and hold accountable employers that seek to cheat workers of their rightful wages, and we will ensure that those victims are made whole. I thank the state attorney general and NYCHA for their partnership on this important investigation.”

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Concrete contractor backpay order approaches $1 million

Posted by National Alliance for Fair Contracting on

February 11, 2022
Concrete News

A judgment in the U.S. District Court for the Eastern District of New York orders Macedo Construction Inc., Macedo Contracting Services Inc., Odecam Concrete Supply Corp. and Manuel Macedo. to pay 99 workers a total of $987,591 in back wages and liquidated damages, plus $53,249 in civil penalties to the Department of Labor (DOL).

The action settles charges of willful Fair Labor Standards Act (FSLA) violations identified in a DOL Wage and Hour Division investigation. It found Manuel Macedo and his Bellport, N.Y. companies failed to combine the hours laborers worked at the three commonly owned businesses, and paid them with multiple checks to evade overtime requirements. Each separate check showed the employees logged less than 40 hours per workweek when they actually worked a combined total of up to 48 hours per week. The companies also neglected to pay employees for time spent traveling from work yards to jobsites, and retain accurate records of the employees’ work hours and pay rates.

“The scheme by Macedo Construction, Macedo Contracting Services, Odecam Concrete Supply Corp. and Manuel Macedo deprived their employees of nearly $491,000 in hard-earned wages over three years,” says WHD District Director David An. “In addition to the back wages, the employer must pay these workers an equal amount in liquidated damages, plus interest. We encourage other employers to consider this investigation’s outcome, review their own pay practices and contact the Wage and Hour Division to avoid similar violations. The consequences of noncompliance with federal labor laws can be serious and expensive.”

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New York Significantly Expands Application of Prevailing Wage Requirements

Posted by National Alliance for Fair Contracting on

December 27, 2021
Cole Schotz

On January 1, 2022, an expansion of prevailing wage law in New York will become effective. The new law will significantly increase the universe of construction projects subject to prevailing wage requirements.

In brief, when a project is subject to prevailing wage requirements, workers must be paid set hourly wage rates and hourly benefit amounts as determined by the fiscal officer of each New York county. These rates are substantially higher than minimum wage and also traditionally far greater than average non-union rates largely due to the added benefits amount.

Under the Budget Bill, S.7508-B A.9508-B, signed into law by former Governor Cuomo on April 3, 2020, workers must be paid prevailing wages on “covered projects,” which refer to “construction work done under contract which is paid for in whole or in part out of public funds where the amount of all such public funds, when aggregated, is at least thirty percent of the total construction project costs” and “where such project costs are over five million.”

Previously, projects were subject to prevailing wage requirements only if a public entity was a party to a construction project and the purpose of the work was to benefit the public.

The law broadens the definition of “public funds” from the traditional definition of direct public investment. “Paid for in whole or in part out of public funds” refers to money from the following sources:

  1. “The payment of money, by a public entity, or a third party acting on behalf of and for the benefit of a public entity, directly to or on behalf of the contractor, subcontractor, developer or owner that is not subject to repayment;”
  2. “The savings achieved from fees, rents, interest rates, or other loan costs, or insurance costs that are lower than market rate costs; savings from reduced taxes as a result of tax credits, tax abatements, tax exemptions or tax increment financing; savings from payments in lieu of taxes; and any other savings from reduced, waived, or forgiven costs that would have otherwise been at a higher or market rate but for the involvement of the public entity;”
  3. “Money loaned by the public entity that is to be repaid on a contingent basis; or”
  4. “Credits that are applied by the public entity against repayment of obligations to the public entity.”

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Navillus Construction Executives Convicted of Embezzling from Union Benefits Funds

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Department of Justice
U.S. Attorney’s Office
Eastern District of New York
Friday, October 22, 2021

Defendants Engaged in Years-Long Fraud Scheme Designed to Evade Making Required Contributions for Their Employees

Earlier today, in federal court in Brooklyn, a jury returned guilty verdicts against Donal O’Sullivan, the founder, owner and President of Navillus Tile, Inc. d/b/a/ Navillus Contracting (“Navillus”), one of New York City’s largest construction firms, Padraig Naughton, Navillus’s Financial Controller, and Helen O’Sullivan, a Payroll Administrator, on all 11 counts charging wire fraud, mail fraud, embezzlement from employee benefits funds, submission of false remittance reports to union benefits funds, and conspiracy to commit those crimes.   The verdicts followed a three-week trial before United States District Judge Pamela K. Chen.  When sentenced, each of the defendants faces up to 20 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, announced the verdict.

“As found by the jury, the defendants deliberately devised a fraudulent scheme to avoid making required contributions to union benefits funds on behalf of Navillus’s workers, in order to deprive the workers of benefits they had earned and deserved,” stated United States Attorney Peace. “This Office and its law enforcement partners will continue to investigate and prosecute these types of blatant frauds that are harmful to workers.”

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New bill targets wage theft by forcing construction managers to foot the bill (NY)

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The legislation seeks to make it easier for workers to recoup wages

By Kathryn Brenzel
March 12, 2020

A new bill seeks to crack down on construction wage theft in New York by shifting more responsibility to construction managers.

The legislation would leave general contractors on the hook for any outstanding wages or benefits owed to subcontractors on a project. Typically, workers can file a lawsuit against their employer – often a subcontractor – to recoup wages. But state legislators feel this leaves too many opportunities for companies to evade paying their workers.

“This is a major issue in the construction industry where, oftentimes, such direct employer is an unscrupulous subcontractor or labor broker willing to hide assets, change corporate identity and take part in other unscrupulous practices to avoid liability and make themselves judgment proof from a wage theft action,” a memo for the bill states.

The memo adds that making the “prime contractor” of a construction project (the company that inks a contract with the owner of a project) liable for the actions of their subcontractors would allow construction workers to collect unpaid wages more quickly and serve as “an incentive for the construction industry to better self-police itself.”

Sen. Jessica Ramos, who is the prime sponsor of the bill alongside Assembly member Marcos Crespo, said she’s been working with Laborers’ International Union of North America on the bill. She hopes the legislation will help hold companies accountable, given that construction is an industry where the hierarchy of labor can sometimes enable companies to defer responsibility. All too often, she said, companies think of construction workers as “disposable.”

“I want you to know what human beings you are employing,” she said.

In January, Gov. Andrew Cuomo vetoed a bill that would have allowed employees of all industries to place a lien against their employers’ assets while a civil action is pending. The legislation was intended to prevent instances where a company or entity dissolves before an employee is able to recoup their wages through court action.

Instead, the governor signed a bill into law that targeted limited liability companies, making the 10 members with the largest ownership interest in such entities responsible for unpaid wages to employees (but without the lien option). …

At the state level, in 2017, the Department of Labor reclaimed $6 million owed to ironworkers and welders from November 2013 to December 2017, marking the largest monetary recovery of its kind at the time. According to Cuomo’s office, the state has recovered nearly $300 million in stolen wages since 2011. The U.S. Department of Labor estimates that $1 billion in wages, across various industries, are stolen each year in New York.

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