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25 Jan

New York Expands Application of Prevailing Wage Requirements

Posted at

8:51pm

in

Update Applicable to:
All employers of construction contractors in the state of New York.

What happened?
On January 1, 2022, an expansion of the prevailing wage law in New York will become effective. The new law will significantly increase the universe of construction projects subject to general wage requirements.

What are the details?
Effective January 4, 2022, under the Budget Bill, S.7508-B A.9508-B, signed into law by former Governor Cuomo on April 3, 2020, workers must be paid prevailing wages on “covered projects,” which refer to “construction work done under a contract which is paid for in whole or in part out of public funds where the amount of all such public funds, when aggregated, is at least thirty percent of the total construction project costs” and “where such project costs are over five million.”

The law broadens the definition of “public funds” from the traditional definition of direct public investment. “Paid for in whole or in part out of public funds” refers to money from the following sources:

  1. “The payment of money, by a public entity, or a third party acting on behalf of and for the benefit of a public entity, directly to or on behalf of the contractor, subcontractor, developer or owner that is not subject to repayment;”
  1. “The savings achieved from fees, rents, interest rates, or other loan costs, or insurance costs that are lower than market rate costs; savings from reduced taxes as a result of tax credits, tax abatements, tax exemptions or tax increment financing; savings from payments in lieu of taxes; and any other savings from reduced, waived, or forgiven costs that would have otherwise been at a higher or market rate but for the involvement of the public entity;”
  1. “Money loaned by the public entity that is to be repaid on a contingent basis; or”
  1. “Credits that are applied by the public entity against repayment of obligations to the public entity.”

Under the new law, the definition of “public entity” is broadened to include “the state,” “a local development corporation,” “a municipal corporation,” “an industrial development agency,” “any state, local or interstate or international authorities,” and “any trust created by any such entities.”

Additionally, the law imposes new responsibilities on owners and developers regarding prevailing wages. These responsibilities include (1) certifying under penalty of perjury that prevailing wages are required on the project; (2) retention of original payroll records after completion of the project, which will be subject to inspection by the Commissioner of Labor upon demand; and (3) compliance with the objectives and goals of the Minority- and Women-Owned Business Enterprises (MWBE) program pursuant to Executive Law Art. 15-A, and the Service-Disabled Veteran-Owned Businesses program pursuant to Executive Law Art. 17-B.

While the law requires payment of prevailing wage where “total project costs” exceed $5,000,000, it does not define “total project costs” or “construction project costs.” Therefore, there is some uncertainty as to which costs fall into this category and accordingly which projects are subject to the prevailing wage requirements.

For more information, please see the links below:

Budget Bill S.7508-B

Article

What do employers need to do?
Employers should review the links provided above and begin determining if relevant construction projects are subject to the new prevailing wage requirements, and if so, ensure they follow the guidelines for certified payroll records and retention of same.

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