UPDATE: Ohio Budget Bill Changes Prevailing Wage Requirements

Last week, Governor Kasich (R) signed Ohio’s biennial budget bill.  Among other items contained in the bill were changes to the state’s prevailing wage law. 

At the outset of the legislative process, the Ohio House of Representatives proposed substantial changes to the prevailing wage law.  Those were summarized on this blog earlier this year.   While significant changes survived to the final bill, they are not as substantial as originally proposed. 

For example, while the monetary threshold at which prevailing wage applies is increased, it increases far less than the House’s version, and then only incrementally.  Thus, the threshold for new construction rises to $125,000 on the effective date of the statute, then to $200,000 one year after the effective date, before reaching $250,000 two years after the effective date.  When first introduced, H.B. 153 called for a $5 million threshold for new construction of public improvements.

Another key area where the bill changed relates to "public/private partnership" projects.  These projects usually involve a private entity building a project of some type, but with the assistance of public funds, typically from government economic development programs.  As proposed, H.B. 153 not only deleted prevailing wage requirements applicable to certain Ohio economic development programs, but it also added language that would have likely excluded many projects supported by these programs from the law’s definition of "public improvement."  The final version maintains language that exempts certain economic development programs from the prevailing wage requirement, but does not include the changed definition of public improvement.

The bill Governor Kasich signed last week also, among other things:

• Carves out projects relating to streets, roads, sewers, and the like, and makes them subject to a lower monetary threshold ($78,258, adjusted biennially by the Director of the Department of Commerce) than other public improvements;
• Deletes the requirement for prevailing wage on public improvements undertaken by, or under contract for, a port authority;
• Provides that prevailing wage need not be paid on any portion of a public improvement undertaken by a contractor that donates labor and materials for the construction of that portion of the public improvement;
• Limits liability in certain instances when a contractor exceeds the permitted apprentice-to-skilled worker ratio contained in a prevailing wage determination;
• Requires that, for purposes of establishing the prevailing wage rate, unions must file with the Department of Commerce the "relevant portions" of any union contract;
• Limits the liability of a contractor for the unpaid wages owed by its subcontractor, provided that the contractor made a good faith effort to ensure that its subcontractor paid prevailing wages; and
• Changes the enforcement provisions of the law by, for example, narrowing who may file a complaint and extending the period of time the Department of Commerce has to investigate the complaint.

For the labor professional, the changes to Ohio prevailing wage law will require close examination.  Particularly for those involved in public/private partnership efforts, the law contains material changes that may impact the cost of the project and the assessment of whether to accept offers of certain government incentives.  Contractors, developers, and other interested parties should consult with their counsel on how the new law could impact projects in which they are involved.