Public works are defined, generally, as construction and related work executed in the public interest and funded with government money. There are circumstances where the public interest is served via private investment. When the two meet, do prevailing wage requirements apply?
Yes, it is possible and happens.
There are some conditions attendant, though, which are outlined in the California labor code at section 1720 et seq.. Of particular note is this: 1720 (c)(2) If the state or a political subdivision requires a private developer to perform construction, alteration, demolition, installation, or repair work on a public work of improvement as a condition of regulatory approval of an otherwise private development project, and the state or political subdivision contributes no more money, or the equivalent of money, to the overall project than is required to perform this public improvement work, and the state or political subdivision maintains no proprietary interest in the overall project, then only the public improvement work shall thereby become subject to this chapter.
The federal Davis-Bacon Act and the Davis-Bacon Related Acts (DBA/DBRA) also support such funding arrangements. In the LinkedIn group, Prevailing Wages Gurus and Geeks, Leslie Stout-Tabackman, a partner with Jackson Lewis LLP, in Washington DC, commented, “Under the DBA/DBRA acts this is possible where the government owns the land and has some sort of control or authority with respect to the construction process and/or building- even where the funding is 100% private.”
But prevailing wages do not always apply. Butch Garrett, prevailing wage coordinator for the University of Missouri, advised, “First, read your contract / bid documents and discuss with…enforcement, Wage and Hour. Find out up front! “
Garrett added, “I had this situation occur on a Missouri project where two wealthy individuals built and paid for a public works project, new reptile exhibit for a City owned zoo. The court decided it wasn't subject to the state's (prevailing wage) requirements. Surprised me.”
B. Kwaku Duren, a prominent public interest attorney practicing in Compton, California, offered, “First: Contact the local enforcement agency in writing and request a coverage determination. In California, that would be the Department of Industrial Relations (DIR) for state- or locally-owned projects. If necessary, follow that up by consulting with your counsel.”
“The offer document for the contract/bid should say whether and what prevailing wage obligations apply. Fighting that designation might/would likely be an uphill battle,” shared David Phippen, counsel with Constangy, Brooks & Smith LLP, in Washington DC.
“Typically for federal Davis-Bacon purposes, federal government participation or ownership in or of the construction project/contract, or federal project funding with a tie to the Davis-Bacon requirements, makes it public and subject to the prevailing wage and other requirements of the law,” Phippen cautioned, adding, “You may want to seek legal/enforcement guidance.”
The question was put to Ivory J. Anderson, Jr., an employment law mediator and former DIR investigator with 17 years of experience, who responded, “Well it depends…”
"My recommendation for any stakeholder (owner) with construction project (s), or scope of work, which is not perfectly aligned with California labor code at section 1720 et seq., definition of covered work; in my opinion, that stake holder should request a coverage determination by the Office of the Director of Industrial Relations (DIR).
“This request will be pursuant to California Code of Regulations (CCR) §16001. Public Works Subject to Prevailing Wage Law.”
After some reflection, Anderson added, “Again, I say “it depends,” because I have seen scenarios such as the ones listed in the following:
“For example (s):
“Single-family homes and apartments up to and including four (4) stories are defined as
residential projects and are subject to payment of prevailing wages when they are paid
for in whole or in part with public funds, including federally-funded, or assisted residential
projects controlled or carried out by an awarding public agency. Commercial projects
are defined as all non-residential construction projects including new work, additions,
alterations, reconstruction and repairs, and residential projects over four (4) stories.
“Wherein the Awarding body leases out the property, thinking it is not covered work; but it is determined at later time that because the awarding agency completed the site utilities with public funds, the project was covered by prevailing wage requirements.”
The bottom line? Don’t guess. If there is any doubt or question, request a coverage determination from the awarding body or the enforcement agency. Get the determination in writing.