Prevailing Wage Law – State v. Federal

December 12, 2013 in Construction, Ohio Courts by Brad Council

The Court of Appeals of Ohio recently upheld a Defiance County Common Pleas decision and found that the lower court had correctly interpreted the relevant state statute and applied the facts of the case accordingly. The International Brotherhood of Electrical Workers Local Union No. 8 (the “Union”) had sued the Board of Defiance County Commissioners (the “County”) for violating the Ohio Prevailing Wage Law on a jail building project. As the federal government partially funded the project, the County argued the Ohio statute did not apply. The Common Pleas Court granted summary judgment to the County and the Court of Appeals upheld the decision finding the Union’s interpretation of the applicable statutes to be fundamentally flawed and its remaining arguments to be baseless.

 The case resulted from a dispute over wages on a Defiance County construction project at a local jail. The County financed the project by issuing bonds and the federal government provided funding equal to forty five percent of the interest payable on the bonds. The County solicited bids for the project and stated that the Ohio Prevailing Wage Law would not apply to the project and that the federal Davis-Bacon Act would apply instead. The Union then filed suit to force the County to apply the state law to the project.

The statutes at issue are a state and federal statute governing wages for employees working on public projects. The federal Davis-Bacon Act requires that qualified employees be paid “the prevailing wage rate for their job classification as determined by the Secretary of Labor.” The Act applies to any federally funded construction project. The similar Ohio Prevailing Wage Law requires laborers and mechanics to be paid the “so-called prevailing wage in the locality where the project is to be performed.” The Ohio law would have resulted in a higher wage for the workers on the project. The Ohio law does not apply however, to projects that are wholly or partly funded by the federal government, if there is a federal law that prescribes predetermined minimum wages.

The Union first argued that the Ohio exemption did not apply because the federal government did not fund the project. They posited that the County funded the project through the bond issue and the federal government simply provided funding to help pay the interest on the bonds rather than the project itself. The Court quickly dispensed with this argument finding it was a distinction without a difference. The federal funds were deposited into an account used to pay the bond principal and interest, the federal funds were not restrict or intended to be used solely for interest payments, and financing interest is clearly part of the cost of a project. As such, the federal government funded part of the project and the Davis-Bacon Act applied.

The Union’s second argument is that the federal act should not preempt state law and the County should apply the Ohio Prevailing Wage Law as well. The Union’s position results from a clearly erroneous reading of the Ohio statute and its exception. The Court first pointed out that the federal law was not preempting state law, but rather the state law contained an exemption for projects with federal funding. The exception to the Ohio statute applies when “all or any part” of a project is federally funded and the Union’s argument that the project was not federally funded due to the timing and amount of the federal funding was clearly at odds with the statutory language.

The Court of Appeals found the Union’s arguments to be clear misinterpretations of the Ohio Prevailing Wage Law. Further, the Court found the argument that the project was not federally funded to be clearly illogical and designed to avoid the apparent result of the straightforward reading of the statutes. The case serves as an illustration that a mischaracterization of the facts and creative readings of statutes shouldn’t be used as a basis for a statutory claim.

 

The Full Text of the Opinion May Be Found at: 

http://www.sconet.state.oh.us/rod/docs/pdf/3/2013/2013-ohio-5198.pdf

** Many thanks to William Abbey for his contributions to this article.  William is a law clerk with Slovin & Associates Co., L.P.A. and student at the University of Cincinnati College of Law.  **