PREVAILING WAGE BASICS

Many contractors are confused about their obligations to pay the Washington state prevailing wage when contracting to perform work on a public works project.  This attempts to provide contractors with very basic data, and where to find more information if needed.

1.  Public works projects are broadly defined in Washington to include those projects erected at public expense.  A fairly well-known case involving the Performing Arts Center in Wenatchee, Washington held that where any public money or assets are involved, then it is a public work.  Thus, the fact that the greatest bulk of the financing came from a private non-profit did not convert the project into a private work.  The bid packets should say whether the prevailing wage applies, but a careful contractor in doubt will inquire, in writing, to the Industrial Statistician of the Washington State Department of Labor & Industries.

2.  The prevailing wage applies to the scope of the work performed, not the job title.  Accordingly, a contractor may call its crew “laborers” but when they perform work tying iron they must be paid at the rate associated with iron workers.  The job title, or hiring documents, or workers’ experience is irrelevant.  It is the actual work being performed that determines each individual’s pay scale for each specific period during which that work is performed.  The “scopes” are found at RCW 296-27-010, et seq.

3.  If your particular scope does not appear to be addressed, then it is wise to obtain a written determination in advance from the Washington State Department of Labor & Industries, industrial statistician.  There is a case in Washington where the contractor did exactly that, but after the project was completed, the Department issued its “NOV” (notice of violation).  The contractor responded that it had asked specifically about the correct scope and pay, had received a response, had relied upon the response, had paid accordingly.  The court held that the contractor’s payments did violate the prevailing wage law, at RCW 39.12, but that the Department was estopped from issuing its NOV.  The contractor therefore was not required to make up the difference between what it paid and what it should have paid.

4.  The same scenario does not apply if a contractor obtains the opinion of only the local agent for the Department.  Only the industrial statistician has the authority to issue an opinion letter on the topic of scopes.  Accordingly, many contractors have sadly learned that: (a) the local agents often don’t really know; and (b) even if they do, their opinions don’t matter — legally.

5.  The prevailing wage law is found at RCW 39.12.  The contractor or subcontractor(s) must submit “intents” prior to performing public work, which can be found and submitted on-line.  Go to:  http://www.lni.wa.gov and type “prevailing wage” into the search box.

6.  “Affidavits” must be completed after the work is performed.  This is a verification under oath that the correct prevailing wages were actually paid.  Parties should not rely on this, as it is often a task left to lower level employees.  Again, these individuals often do not really know whether the correct wages were paid, and even more often do not know if the correct fringe / benefits were actually paid.

7.  The question of payment of the fringe into a bona fide trust is complicated and should be referred to an attorney or CPA with experience in auditing and accounting for Washington public works projects.  Your Uncle Joe’s CPA is NOT a good source for this information, nor is your Aunt Kathy’s divorce counsel.  I have handled such disputes for both wage claimants and contractors, and have learned that mistakes, fraud, and misinformation are prevalent.  Prudent contractors should not leave intents and affidavits to inexperienced personnel, even if that individual is on the management team and otherwise very capable.