New York construction - State budget bill expands prevailing wage laws

The FY2021 New York State budget was approved by Governor Cuomo. The approval of this budget comes with multiple changes and amendments to state law. One change that is particularly relevant to the construction industry is the expansion of protection under the prevailing wage laws.

Get lien stories and legal alerts
delivered to your inbox

New York prevailing wage laws

A fair number of states across the country have enacted prevailing wage laws. These are sets of statutes that ensure that workers and laborers in construction are paid fairly based on their job type and geographical location. Depending on the state, these regulations can apply to public jobs, private jobs, or both.

In New York, the prevailing wage laws are found under N.Y. Lab. Law Article 8 & Article 9. The prevailing wage rate and other requirements, such as certified payrolls, record-keeping requirements, and others, only apply to public works projects.

However, Governor Cuomo recently approved the FY2021 State budget, which contained a provision that will expand the prevailing wage protection to cover more types of construction projects. View all of the changes in the full New York Budget Bill.

Changes under NY’s new prevailing wage laws

This is big news for the construction industry. Many New York tradesmen and contractors are looking forward to wage protection on more types of construction projects. The new legislation isn’t set to go into effect until January 1, 2022. But let’s take a look at what changes to expect for construction projects within the State of New York.

Expanded prevailing wage coverage

The most significant change to the prevailing wage laws is the expansion of protection. Under the new legislation, these rules will apply to any projects included under the term “covered projects.”

The bill defines covered projects as construction work, done under contract, which is:

  • paid in whole or in part out of public funds, which when aggregated, is at least 30% of the total project costs, and
  • the total project cost is over $5M.

The bill breaks this definition down even further, by defining public funds and public entities.

Public funds

The legislation states that the prevailing wage laws apply to projects that are paid (in whole or in part) by government funds. This seems relatively straightforward, but this term incorporates more than what one might think. Obviously, this applies to money paid by a public entity either directly to the project that isn’t subject to repayment.

This also covers any type of savings that the project benefitted from, such as savings from public loans, tax credits and abatements, “payments in lieu of tax” agreements, and others. Additionally, “public funds” also includes money loaned by public entities on a contingent basis and any credits applied against repayment obligations.

Public entity

The new legislation will also expand the types of public entities that are encompassed in the definition of “covered projects.” Besides the typical state, county, or municipal entities, this also includes local and municipal development corporations, industrial development authorities, and any trusts created by these entities.

Exceptions

While the scope of protection under the prevailing wage requirements is expanded, there are also a lot of specific types of projects that will not be considered “covered projects.” These include small residential projects, school construction, work performed for not-for-profit corporations, those with project labor agreements, and more.

Creation of a Public Subsidy Board

Another major change to the prevailing wage statutes is the creation of the Public Subsidiary Board (PSB). This is a 13-member board appointed by the Governor. The purpose of this board is to examine the impact of the legislation along with making recommendations and changes on the implementation of these new regulations.

How New York’s change could impact your next project

Once New York’s new prevailing wage legislation is in effect, owners, developers, and general contractors should all be aware if and when these requirements affect their projects.

First and foremost, the owner or developer will need to certify that the project is subject to these prevailing wage provisions within 5 days of commencement of the work. If at any point they are unsure, not only do the public entities need to identify whether the funds are covered under the new legislation, but the PSB can also provide guidance as well.

Besides paying the prevailing wage required for the specific type of worker, there are other requirements that must be met. This includes things such as submitting certified payrolls, retention of payroll records (6 years from project completion), and other requirements.