Type: Law Bulletins
Date: 07/20/2011

Modest Prevailing Wage Changes Included in Ohio Budget Bill

The Ohio Governor’s budget proposal had called for (1) the increase to $5 million of the threshold at which public construction projects (other than “horizontal” road, sewer and ditch projects) must utilize “prevailing wages”, (2) exempted all higher education public construction projects from prevailing wage obligations, and (3) eliminated “interested parties’” right to sue contractors in alleged violation of the requirements (they could only contest in court the determination of the Commerce Department Director that no violation had occurred).  The Ohio House tweaked these proposals, lowering the threshold to $3.5 million and making it optional for universities to utilize prevailing wage if they wished to do so.  The Ohio Senate sharply cut back on the prevailing wage reform proposals, and its work ultimately was adopted in final legislative action on the bill.

The legislative changes focus on three areas:  exemptions from coverage; revision of thresholds at which prevailing wage applies; and administrative procedures.

As to exemptions, prevailing wage is no longer payable on any public improvement undertaken under the auspices of any port authority or on any portion of a public improvement undertaken with donated labor.  In addition, the longstanding exemption by which public school district projects were exempted from prevailing wage requirements was clarified:  school districts and education service centers are now prohibited from using prevailing wage on any school public improvement project, even if only local funds are used.

The monetary thresholds at which prevailing wage becomes payable are unchanged for any road, sewer, ditch, or other “horizontal” construction project.  However, they are raised for all other new construction public improvement projects to $125,000, $200,000, and $250,000 for each of the next three years following the September 29, 2011 effective date of the bill.  The corresponding thresholds for reconstruction on such projects are $38,000, $60,000, and $75,000 over that same three year span.

Several procedural changes were made.  Most notably, the timeline by which the state agency must investigate and determine whether violations occurred increases from 60 to 120 days, with provisions for extension.  Under current law, the short timeline meant as a practical matter that the Commerce Department could not conclude any investigation, and that lawsuits could begin on the 61st day.  By increasing the timeline, the Commerce Department may be able to make better determinations, precluding interested party lawsuits that have proliferated in recent years.  In order to better focus the scope of the investigation, interested parties must now be quite specific in their complaints, using forms furnished by the Department, and including evidence.  Their failure to meet these requirements is license for the Commerce Department Director to refuse to investigate the complaint.  “Interested parties” are now redefined so that unions, employers, and trade associations meet the definition only if they or their members are involved in the specific project that is the subject of the complaint.

Trifling changes were also made to the permitted variance from the apprenticeship ratios, the penalties for violations of less than $1,000, the liability of contractors for their subcontractors’ violations, and the effective date of prevailing wage rate changes. 


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