What is prevailing wage?

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Kentucky's prevailing wage law requires construction workers on certain public projects be paid the prevailing wage of the region in which the project is being built. Prevailing wage is predominately union scale wages applied to union classifications and jurisdictions for laborers, workmen, mechanics, etc. Prevailing wages must be paid on all public construction projects estimated to cost $250,000 or more. Public construction projects include projects for the state, local governments, and school districts. [1]

Historical reference

Kentucky's first prevailing wage law was passed in 1940 and has gone through a number of changes since its inception. Kentucky's Labor Cabinet has unchecked authority for determination and enforcement of these laws.

Kentucky laws and administrative regulations

The following links provide law and administrative regulation language that is interpreted by Kentucky Labor Cabinet personnel:

  • KRS 337.505 provides a definition of prevailing wage
  • KRS 337.530 delineates the contractor's responsibility to pay rates, post rates, and maintain records
  • KRS 337.540 addresses limitation of hours worked and overtime
  • 803 KAR 1:145 deals with payment of prevailing wage rates
  • 803 KAR 1:055 addresses the applicability of prevailing wage rates
  • 803 KAR 1:085 addresses fringe benefits

Understanding Prevailing Wage in Kentucky

This summary provides a general overview on Kentucky's prevailing wage laws.

The Bluegrass Institute For Public Policy Solutions issued a Policy Point[2] Kentucky's prevailing-wage policy: Plan B, in April 2007, written by Paul Kersey, J.D., senior labor policy analyst at the Mackinac Center for Public Policy in Michigan.

Greenebaum Doll & McDonald PLLC wrote an article in October 2006 entitled "Everything you ever wanted to know about prevailing wages in Kentucky". This article was published in the Kentucky Employment Law Letter, Volume 17, Issue 1, M. Lee Smith Publishers LLC.

Legislative Research Commission Report #304, December 2001 - An Analysis of Kentucky's Prevailing Wage Laws and Procedures, December 2001

Arguments that support continuation of Kentucky's Prevailing Wage

  • Prevailing wage legislation generates a higher-than-normal wage for workers and a generous benefits package.
  • Higher wages and benefits attract higher-skilled workers who produce noticeably higher-quality construction work.
  • Many contractors support prevailing wage legislation that enables their workers to earn more than they would on private projects.
  • Peter Philips' "Kentucky's Prevailing Wage Law" makes several points that support Kentucky's present prevailing wage legislation.

Arguments that support terminating Kentucky's Prevailing Wage

Source: Union Membership and Earnings Data Book
  • The laws governing prevailing wage projects can be confusing and sometimes conflicting based on determinations and enforcement approaches by the Kentucky Labor Cabinet.
  • The laws and the bureaucracy created as a result of the laws are not needed for the majority of construction in Kentucky - only applicable public projects funded by tax payers.
  • The Kentucky prevailing wage laws restrict competition and stymie innovative options to continuously improve construction approaches to increase best value performance on covered public projects.
  • Kentucky prevailing wage laws do not apply to any construction in the state except for public projects falling under the jurisdiction of the laws and administrative regulations as interpreted by Kentucky Labor Cabinet personnel.
  • Looking at requirements of the laws and administrative regulations it is possible for a contractor to be forced to apply different rates, different benefits, and different classifications, with associated work rule restrictions, to an employee working on a prevailing wage project and a non-prevailing wage project at the same time.

This table shows the declining trend of union membership: As the table shows, union membership is on the decline. However, at the same time organized labor is pressing to expand coverage of prevailing wage in states where the unions hold political power - Kentucky. The following exerts from the Heartland Institute article demonstrate the stress on the political and economic system. Kentucky is not exempt from these type stresses.




Heartland Institute article on Prevailing Wage Expansion

The Heartland Institute issued an article July 2008 titled "Backlash Brewing Against Prevailing Wage Expansion".

An Example of Kentucky Labor Cabinet Enforcement

There is no administrative remedy for a contractor who wishes to dispute the Kentucky Labor Cabinet's findings and enforcements. Disputes must be argued by attorneys at the Franklin Circuit Court.

Joe Norsworthy, Secretary of Labor, Commonwealth of Kentucky v. Clay County Fiscal Court and James Vincent Adams, Third-Party Defendant, Commonwealth of Kentucky Court of Appeals NO. 2004-CA-001841-MR an Appeal form Clay Circuit Court Honorable R. Cletus Maricle, Judge, Action NO. 03-CI-00122 demonstrates how the Kentucky Labor Cabinet can force legal costs onto another party by the interpretations made by Kentucky Labor Cabinet personnel on any project.

In this case the work was not subject to prevailing wage law provisions because the work did not meet the $250,000 threshold. However, the Kentucky Labor Cabinet personnel combined two separate projects, bid separately and being performed separately, into one project. The Court of Appeals affirmed the summary judgement of the Clay Circuit Court to dismiss the Commonwealth's Secretary of Labor appeal to enforce prevailing wage rate provisions.

Reading the document underscores the jeopardy contractors are placed in by the Kentucky Labor Cabinet's enforcement options.

See Also

Links

References

  1. An Analysis of Kentucky's Prevailing Wage Laws and Proceduresaccessed August 18, 2008
  2. Bluegrass Institute: Kentucky's Prevailing Wage Policy: Plan B