Prevailing Wage Liability Conflict
Published: Nov 20, 2017 by Luther LiggettA subcontractor paid federal Davis-Bacon wage rates on a federally-funded project, but was found liable for the difference to state Prevailing Wages.
Lake County owned a housing project, specifying state prevailing wages to be paid. Upon the subcontractor’s final pay application, the County refused to approve the payment due to failure to pay the higher state prevailing wage.
Subsequently, the architect agreed that the federal Davis-Bacon wage applied, not the higher state prevailing wage, and issued a change order.
Nevertheless, the Lake County Court of Appeals held that the subcontract controls. Even though the subcontract erroneously included the higher state prevailing wage, the change order was not retroactive. Reasoning that the subcontract could require any wage rate as long as the minimum is met, the subcontractor owed $7,647.30 to workers.
While the dollar amount seems minimal, the deficit constituted 21% of the subcontract’s total value.
The principle of law is that the contract must control, which relates to bidding fairness, the basic purpose of the Prevailing Wage law. This minimum prevents bidders from obtaining a competitive advantage by underbidding, based on their individual reading of prevailing wage requirements.
SafeAir Contractors v. Alabasi Construction, 11th Dist. Lake, 2017-Ohio-7951.
If you have questions, please do not hesitate to contact attorney Luther L. Liggett of Graff & McGovern at 614-228-5800, x-6.