Relates to reciprocity of debarments imposed under the federal Davis-Bacon act

Summary of provisions

The bill provides that any contractor who has been debarred from federal job sites for having disregarded obligations to employees under the Davis-Bacon Act shall also be debarred under the Labor Law from bidding on or being awarded similar contracts on public work job sites sponsored by the State or any of its political subdivisions.

Justification

Under Article 8 of the Labor Law, contractors or subcontractors who engage in a public work project sponsored by the State of New York or any of its political subdivisions is required to pay their laborers, workers and material men not less than the prevailing rate of wage. This law has a long and venerable history. New York passed its wages- and-hours law in 1894 in response to abuses that emerged during the industrial revolution, when entire families were forced to work long hours under dangerous working conditions for subsistence wages. The rationale behind the law was that American labor markets should provide skilled workers with decent wages so that workers would be able to support their families and their children would be able to pursue an education.

In recent years, New York's prevailing wage law has acquired additional stature as a bulwark against wages-and-hours fraud. Recent studies indi- cate that fraud in the construction industry in New York State has reached epidemic proportions. Dishonest contractors, in an effort to cut corners and save on labor costs, have engaged in a number of schemes to avoid paying workers the wage to which they are statutorily entitled. They include the kickback of wages, dual payrolls and cash-off-the-books schemes.

The practice of paying wages in the form of cash-off-the-books has come to be known as "the underground economy," and it has deleterious and

far-reaching consequences for the individual workers, reputable contrac- tors and society as a whole. Analysts report that one of the most invi- dious effects is that it has a profoundly destabilizing effect on labor markets by destroying the level playing field. Honest employers, who are incurring significant additional operating expenses in the form of unem- ployment insurance tax, administrative costs for the collection of with holding taxes and the high premiums associated with workers compensation insurance are unable to compete for work with their dishonest counter- parts.

Mindful of the crisis in the construction industry, in 2008 the legisla- ture passed, and the governor signed into law, a far-reaching amendment that significantly expanded the criminal penalties for willful violations of the prevailing wage law. (Chapters 7 and 8, L. 2008). But the first line of defense in protecting both workers and honest employ- ers are the debarment provisions set forth in Labor Law

§ 220-b. Under the existing law, a contractor may be debarred from participation in public work projects if the Bureau of Public Works finds that the contractor has knowingly committed two violations of the prevailing wage law within a six-year period, or one violation relating to the falsification of payroll records or the kickback of wages or supplements. Debarments are also imposed when a person or corporation, or any officer or shareholder who owns or controls at least ten percent of the outstanding stock of such corporation has been convicted of any of an enumerated list of felonies for conduct relating to obtaining, performing or attempting to perform a public work contract with the state, any municipal corporation, public benefit corporation or public body (q.v., Labor Law §220-b 3b(2)(ii)).

Its federal counterpart, the Davis-Bacon Act, imposes a similar penalty on contractors who are found to have disregarded their obligations to employees under federal wage-and-hour laws. At the present time, howev- er, New York Labor Law fails to recognize debarments imposed by the United. States Department of Labor under the Davis-Bacon Act. Hence, contractors who have been debarred by the federal government for wage- and-hour violations are permitted to bid on and be awarded public work contracts or subcontracts offered through the State of New York and its political subdivisions.

Working at a public work job site is a privilege, not a right. New York- ers are entitled to expect the highest standard of integrity from contractors who bid on these projects. It is inequitable to allow previ- ously debarred contractors - contractors who have a proven track record of dishonesty - to compete against honest contractors in the bidding process. By strengthening the debarment provisions, this amendment should help to ensure that honest employers and their workers will have an equal opportunity to compete at public work job sites.

Legislative history

New Bill.

Fiscal impact on the state

None.

Effective date

This act shall take effect immediately.