By: Melissa Angeline
The Supreme Court of Pennsylvania recently limited application of the prevailing wage law to multi-phase construction projects involving a mix of private and public funding. In 500 James Hance Ct. v. Pa. Prevailing Wage Appeals Bd., 33 A.3d 555 (Pa. 2011), the project was bifurcated into two phases, with private funding for the “shell” phase, and public funding for the interior “fit out” of the building. The Prevailing Wage Appeals Board held that prevailing wages were required for both phases of construction. The Commonwealth Court later reversed the Board’s decision, holding that splitting the project into “shell” and “fit out” phases was not an unlawful evasion of prevailing wage rates. The Supreme Court agreed, and ruled that where a bifurcated construction project is financed by private and public funding, and at least one phase is financed entirely by private funds, prevailing wages need only be paid on those phases that receive public funding.
The Court also rejected the Board’s current test for screening out “artful drafting of contracts to evade” payment of prevailing wage rates. Instead, the Court held that “risk allocation” should be a prominent consideration under the Prevailing Wage Act.
Melissa C. Angeline is senior counsel in the Labor & Employment Group of Cohen Seglias Pallas Greenhall & Furman PC. She concentrates her practice on representing and counseling employers in all aspects of employment law.