Broadens scope of prevailing wage requirements for service employees and establishes criminal penalties for violations

Summary of specific provisions

The bill renames Article 9 of the Labor Law "Prevailing Wage for Service Employees" and makes changes in two basic areas:

A. Definitions in §231 are clarified to ensure that they clearly apply to all appropriate categories of service work for public agencies:

(1) The terms "building service employee" and "building service work" are changed to "service employee" and "service work" throughout the article, in order to more accurately reflect the types of service work commonly required by public agencies. The definition of "service employee" is clarified to reflect the fact that service work often is not restricted to building interiors, but can also include care, maintenance and patrolling of outdoor areas, such as parking lots, grounds and other outdoor work sites.

(2) The definition of "service work" is amended to delete the exemption for public utility services, and to explicitly include service work performed under a contract with any third party person or entity acting in place of, on behalf of and for the benefit of a public agency pursuant to a lease or other agreement. The definition of "public agency" is amended to include public utility services provided by a public authority or by a public utility selling gas, electric or steam services at retail rates under a franchise granted by the Public Service Commission (including any substantially-owned entity affiliated with the public utility) .

(3) The definition of "person" (from Article 8) is added to ensure the law is enforceable against partnerships, joint ventures and other forms of organization.

B. Safeguards against abuse are added and time-tested enforcement tools are borrowed from Labor Law Article 8 (prevailing wages for public work) to ensure compliance:

(1) A new subdivision 8 is added to §231 to clarify that prevailing wage requirements cannot be evaded by any lease or other agreement

with a public agency and a third party person or entity, and that in any such arrangement the third party acts as the agent of the public agency. Any such arrangement must be predicated on the filing of an agreement delineating the respective responsibilities of the public agency and the third party with respect to reporting, filing and retention of payrolls and other requirements imposed by Article 9, and receipt of a written acknowledgment from such person or entity affirming such person or entity's non-delegable obligation to ensure payment of prevailing wages. The subdivision also provides that no such agreement shall be deemed to relieve the public agency of its responsibilities to ensure compliance with this article, that any lease or agreement purporting to do so shall be void as a matter of public policy, and that the appropriate fiscal officer may take all actions to ensure compliance with the statute by both the public agency and any third party entity.

(2) A new §235(2) (g) is added to apply enforcement tools that have long been a part of Article 8. Specifically, this paragraph empowers the fiscal officer to request and receive payroll records from the person or entity who is responsible for paying the service employees, and authorizes partial (up to 25%) withholding of payments to any such person or entity that fails to produce the records.

(3) Section 237 is amended to import other enforcement tools from Article 8 that make willful failure to file payroll records with the public agency a class E felony, and that require public agencies to designate an individual responsible for the receipt, collection and review for facial validity of contractors' certified payroll statements before payment is made.

(4) Amendments to §238(2) increase the criminal penalties for failure to pay service work prevailing wages to a misdemeanor and the greater of $2,500 or double the amount of underpayments for a first violation and a class E felony and the greater of five thousand dollars or three times the amount of underpayment, and forfeiture of a contract, for a second or subsequent relation.

Summary of amendments

Amendments made in -C print:

(1) The bill originally included any third party person or entity that arranges for the performance of service work on behalf of a public agency within the law's definition of "public agency" - this may have made it more difficult for the fiscal officer to initiate an investigation or enforcement action in some cases. The amendments provide that covered service work includes not only work performed directly under contract with a public agency, but also service work contracted for by a third party person or entity (e.g., a building management company) that arranges for the performance of service work for the

benefit of the public agency. The bill also adds language to new §231(8) to clarify that any such third party shall act as the agent of the public agency, to provide for a clear delineation of the respective responsibilities of the third party and the public agency, and to ensure that the appropriate fiscal officer may proceed against either or both to ensure compliance with Article 9. These changes are intended to ensure that there are no loopholes that would frustrate the statutory requirement that service employees performing work for the benefit of a public agency receive not less than the prevailing wage for such work.

(2) The language including certain public utilities within the definition of "public agency" is amended to clarify that the bill applies to those utilities that distribute and sell energy-related services at retail pursuant to franchises granted under §§ 68 or 81 of the Public Service Law. Such awards by New York State of exclusive service territories confer substantial public benefits on the franchisees, which should be accompanied by responsible business practices including the payment of prevailing wages to service employees. The bill also extends this requirement to substantially-owned affiliated entities of such utilities, to ensure that (as with third party entities) prevailing wage requirements are not avoided through corporate sleight of hand.

(3) The amendments delete an exemption in the original bill for food service concessions. Such arrangements will be subject to prevailing wages on the same basis as other service work - i.e., whether the work is covered service work that is performed for the benefit of the public agency.

(4) The payroll reporting requirement in §237(2) is amended to provide that the payroll records must be filed within 90 days after "any" labor is performed, to clarify that this is a rolling reporting requirement.

Amendments made in -B print:

(5) The bill is further amended to clarify that the provisions of Article 9 do not apply to business improvement districts.

Amendments made in -C print:

(1) The -C print amendments provide that the requirement to pay prevailing wages for service work in mixed private and public buildings shall not apply in to public entities which lease less than 10,000 square feet in such building.

(2) The -C print amendments would provide clarify that the service work contracts between public entities and third parties for the provision of building and property maintenance and related services are covered contracts for the purposes of Article 9.

(3) The -C print amendments would increase the threshold above which service work contracts must provide for the payment of prevailing wage from $1,500 under current law to $10,000 or more.

(4) The -C print amendments adjusted the penalties for underpayment of the service work prevailing wage to a misdemeanor and the greater of $2,500 or double the amount of underpayments for a first violation and a class E felony and the greater of five thousand dollars or three times the amount of underpayment, and forfeiture of a contract, for a second or subsequent relation.

-D Print Amendments

The amendments to the -D print of this bill would remove food services workers from the bill's provisions.

Effects of present law which this bill would alter

Currently, the prevailing wage law for service employees lacks many of the procedural safeguards and enforcement tools that have long been incorporated into Article 8. Combined with some ambiguous or outdated definitions, this has left the door open for efforts to avoid paying prevailing wages for service work performed for public agencies. This bill would bolster the ability of enforcement agencies to ensure that service employees receive the prevailing wages to which they are entitled.

Justification

For almost forty years, Article 9 of the Labor Law has promoted the public policy that workers who perform service work on behalf of public agencies should be paid the prevailing wage for such employment in their communities. Over that time, substantial experience has been gained over what provisions of the law require strengthening to prevent abuses. This bill clarifies the definitions and applicability of Article 9 and adds provisions that are analogous to several enforcement tools that have long been a part of Article 8, in order to ensure that prevailing wages are paid for all appropriate service work.

Prior legislative history

New bill.

Fiscal implications for state and local governments

Any fiscal implications are completely dependent on specific agency/worksite circumstances, including when current contracts or agreements expire or are up for renewal and what terms are negotiated in the future.

Effective date

Ninetieth day after enactment, to apply to all contracts or other agreements entered into, renewed, or extended on or after such date.