Tuesday, June 17, 2008

Prevailing Wage Act Applies to Road Milling/Resurfacing

The Commonwealth Court has issued a decision which could significantly impact municipal road budgets. In Borough of Youngwood v. Pennsylvania Prevailing Wage Appeals Board, 983 A.2d 1198 (Pa. Cwlth. 2007) the borough milled and resurfaced five streets at a cost of approximately $183,000.00. Liquid fuels funds paid $71,000.00. The borough believed the resurfacing was "maintenance" and therefore, not subject to the Prevailing Wage Act. It should be noted that the Act defines "public work" as "construction, reconstruction, demolition, alteration, and/or repair, other than maintenance work" that is performed under contract and paid for in whole or in part with public funds at a cost of more than $25,000.00. "Maintenance work" is defined in the Act as "repair of existing facilities when the size, type, or extent of such facilities is not thereby changed or increased."

After the borough had completed the project, the state Department of Labor & Industry's Bureau of Labor Law Compliance concluded that the major portion of the project (the milling and resurfacing) was reconstruction, not maintenance. Thus, the Bureau said the minimum wage requirements of the Prevailing Wage Act applied.

The borough appealed the decision to the Prevailing Wage Appeals Board which upheld the Department's interpretation of the Act. The borough then appealed to the Commonwealth Court. The Commonwealth Court agreed that the work was not maintenance and therefore, would be subject to the prevailing wage requirements.

An appeal to the Pennsylvania Supreme Court has been filed by the borough and the Supreme Court has decided to accept and hear the appeal.

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