Sunday, October 25, 2009

More on Prevailing Wage

Last week I talked about prevailing wage - what it is and why unions support it. This is an important issue that is in the news quite a bit lately so I think it deserves a little more time. As I said before, unions push hard for prevailing wage to be required as often as possible. If a contract requires prevailing wage, unions have a much better chance of winning the contract because the non-union merit shops are forced to pay union wages. Unions say that prevailing wage laws are necessary to level the playing field because union shops always have to pay union rates but non-union shops do not. They say that in order to be competitive, requirements to pay prevailing wages are necessary. So, ok we have prevailing wage laws. But that isn't enough. Too many non-union companies were still coming in with lower bids and winning large construction contracts. So the unions hired attorneys to start suing non-union shops for alleged violations of the prevailing wage laws.

One thing you have to understand about Ohio's Prevailing Wage laws is that the law itself it very detailed and complicated. It is almost impossible for any company, union or non-union, to work a prevailing wage job and complete all of the necessary paperwork without any mistakes or violations. The mistakes can be in actual pay rates or they can be simply paperwork errors. In addition, the law says that if there are errors in what a company pays an employee, the company must not only pay the back pay, but also must pay a fine to both the employee and the State of Ohio. Well I guess that seems fair. If a company doesn't pay the correct wages they should have to correct it. So here is the problem - the law allows an "interested party" to file a complaint with the State of Ohio's Department of Commerce, who oversees prevailing wage, whenever they have reason to believe a company is violating the law. The Department of Commerce begins an investigation but if the investigation is not complete within 60 days, the interested party can file a lawsuit on the 61st day. Maybe the most devastating part of this is that the law also says that the losing party in that lawsuit is responsible for all attorney's fees for both sides.

The unions began suing and in many cases violations of only hundreds of dollars would end up costing the non-union defendants tens of thousands of dollars, mostly in attorney's fees. This was a serious issue for many of these smaller non-union companies. Unions were getting what they wanted - either forcing non-union companies to stop bidding on prevailing wage jobs or put the companies out of business all together. Last year a representative of non-union construction firms, Associated Builders and Contractors, Inc. Ohio Valley Chapter, began fighting back by filing lawsuits against union companies for the same violations of prevailing wage laws. A recent article in a Cincinnati newspaper discusses some of these lawsuits, 69 filed in Butler county and 19 filed in Hamilton county.

The unfortunate part of what the article calls "an escalating battle between construction unions and nonunion contractors" is the defendants are all individual companies in Ohio. Are these companies really the problem? No, they're not. However, this may be the only way to truly make a difference. Associated Builders and Contractor's goal is to get the law changed. Unfortunately, all previous attempts to get the legislature to make those changes have failed. Once again, union influence has prevented these changes. The hope now is that by fighting back it can gain the cooperation of the unions in lobbying the state legislature to make the needed revisions to the prevailing wage laws. At minimum they want to change the part of the law that requires the loser to pay all legal costs.

Sources: 3

1 comment:

  1. Kelli -

    A very serious blog about a very important topic. You shed light on the role of unions in modern business that few people probably know.

    Keep up the good work.