Monday, April 21, 2014

Prevailing Wage Dispute in Central Washington

Should prevailing wages have been paid to workers for the construction of a privately-funded $960,000 building that the private owners have leased to a public agency, the Mid-Columbia Libraries, for the west Pasco branch of the library?  The new library opened in April 2013.

Wage compliant filed:  A complaint was filed with the State Department of Labor and Industries arguing that prevailing wages should have been paid, something that the private owners of the building suggest may cost them an additional $25,000.  The private owner argues that "this is not a public works project.  This is privately owned by my wife and I and built for investment purposes."  The library district and their attorneys have stated that prevailing wages do not apply for the construction of the building.

Is the project a public work?  In Washington state, prevailing wages apply for projects that meet the definition of a public work: "work, construction, alteration, repair, or improvement...executed at the cost of the state or of any municipality." (emphasis added) (RCW 39.04.010)  In this particular instances, the building does not appear to have been constructed at the cost of the library district, and thus, based on this definition alone, it would appear that prevailing wages did not need to be paid.

Is the project a lease back project?  Even when a project is not "executed at the cost" of a public agency, RCW 39.04.260 requires that prevailing wages must be paid on any "work, construction, alteration, repair, or improvement" that a public agency "causes to be performed by a private party through a contract to rent, lease, or purchase at least fifty percent of the project."  While the private construction of the library building is part of a larger private development, there was apparently a separate contract for the library building.  Thus, the argument can be made that 100% of the "project" is being leased by the library district, which would then make the project subject to prevailing wages.  Is the "project" just the library building or the larger planned development? 

Public-private partnerships:  Public-private partnerships raise a variety of questions, including payment of prevailing wages.  Parties entering into public-private partnerships need to carefully investigate all of the potential ramifications of the agreement before moving forward. 

Additional information:  Additional information about the Pasco prevailing wage dispute may be found in an April 5, 2014 article published by the Tri-City Herald: "State looking into Pasco library worker's wage dispute."
Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC

1 comment:

Milton Cooper said...

If prevailing wage rate did as the original law stated and insure normal wages, than much of the issue and conflict that occur between L & I, contractors and/or municipalities' would be gone. Labor and Industries is the one that needs the audit. Paying people twice their normal wage was not the intent of law. Forcing cities to pay double the amount of the private sector for the same structure was never the intent of the law.

Milton Cooper