Request By:
Elmer Cunnagin, Jr., Esq.
Laurel County Attorney
Laurel County Courthouse
London, Kentucky 40741
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question concerning the liability and responsibility of a public authority in connection with KRS 337.505 to 337.550 (The Prevailing Wage Law) and the construction of public works.
The Laurel County Fiscal Court employed an architect to perform architectural services relative to the construction of a metal fire and rescue building in the county. Plans and specifications were prepared and an advertisement for bids was published in several newspapers. A Somerset, Kentucky firm submitted the low bid and a contract was entered into by the county and that construction company for the construction of the building.
After construction had begun, the fiscal court was notified by the Kentucky Department of Labor that the county had not complied with the provisions of KRS 337.510. That statute requires the public authority to obtain a schedule of the prevailing wage rates from the Department of Labor and to insert a provision in the proposal and contract that not less than the prevailing hourly rate of wages shall be paid to all persons performing work under the contract.
The fiscal court has been advised by the architect that the county is responsible for paying to the contractor the difference in the prevailing wage rate as determined by the Commissioner of Labor and the amount of wages actually paid by the contractor and subcontractors. In your opinion, since the primary purpose of a prevailing wage law is to require contractors and employers to pay at least the prevailing wage rate when dealing with public works, the contractor is primarily liable for the difference in the wages actually paid and the prevailing wage rate. There is a final payment of about $34,000 due the contractor and the fiscal court has refused to make the final payment until the contractor settles his prevailing wage rate problem with the Department of Labor and all employes.
Your specific question is whether Laurel County has the ultimate liability and responsibility to those construction workers who were paid less than the prevailing wage rate as determined by the Commissioner of Labor pursuant to KRS 337.510 to 337.550 or whether such liability and responsibility is incurred by the contractors and subcontractors for whom the persons worked.
The Prevailing Wage Law is set forth in KRS 337.505 to 337.550 and the penalty provisions applicable thereto are included in KRS 337.990. The law pertains to each classification of laborers, workmen and mechanics engaged in the construction of public works within the Commonwealth. As set forth in KRS 337.505, "prevailing wage" means in part the basic hourly rate paid or being paid subsequent to the labor commissioner's most recent determination to the majority of laborers, workmen and mechanics employed in each classification of construction upon reasonably comparable construction in the locality where the work is to be performed. The statute also recognizes fringe benefits as part of the prevailing wage rate where made in accordance with the statute.
KRS 337.510(1) requires that before advertising for bids or entering into any contract for construction of public works, every public authority shall notify the Department of Labor in writing of the specific public work to be constructed, and shall ascertain from the department the prevailing rates for each classification of laborers, workmen and mechanics for the class of work called for in the construction of such public works in the locality where the work is to be performed. This schedule of the prevailing rate of wages shall include a statement that it has been determined in accordance with the provisions of KRS 337.505 to 337.550 and shall be attached to and made a part of the specifications for the work and shall be printed on the bidding blanks and made a part of every contract for the construction of public works.
KRS 337.510(2) provides in part that the public authority advertising and awarding the contract shall cause to be inserted in the proposal and contract a stipulation to the effect that not less than the prevailing hourly rate of wages as determined by the commissioner shall be paid to all laborers, workmen and mechanics performing work under the contract. In addition, the public authority shall require in all the contractor's bonds that the contractor include such provisions as will guarantee the faithful performance of the prevailing hourly wage clause as provided by contract.
KRS 337.512 states that no public official, authorized to contract for or construct public works, shall fail, before advertising for bids or undertaking such construction, to ascertain from the Commissioner of Labor the prevailing wage rates as provided in KRS 337.505 to 337.550. Furthermore, no member of a public authority authorized to contract for or construct public works shall vote for the award of any contract for the construction of such public works, or vote for the disbursement of any funds for the construction of such public works, unless the public authority has first ascertained from the Commissioner of Labor the applicable prevailing wage rates and the determination of prevailing wages has been made a part of the proposal specifications and contract for such public works.
KRS 337.520(4) provides that the wage rates to be used by the public authority in a contract for the construction of public works shall be the prevailing wage as of the date the public project is advertised and offered for bid. The schedule or scale of prevailing wages shall be incorporated in and made a part of each contract.
The statutes clearly require the public authority (the fiscal court in the situation you have presented) to obtain from the Commissioner of Labor the prevailing wage rates prior to advertising for bids or entering into any contract for the construction of public works. The public authority must insert into the proposal and contract a stipulation that the prevailing wage rates will be paid. No public official is permitted to vote on a contract for public works until the prevailing wage rates have been obtained from the Commissioner of Labor by the public authority and made a part of the proposal specifications and the contract for public works. KRS 337.510 and 337.512 mandate that the fiscal court follow certain procedures in connection with contracts for public works and those procedures have not been followed.
Perhaps the contractors should have known, as you state at one point in your letter, that the prevailing wage provisions were applicable. The fact remains, however, that the statutes place the burden of obtaining prevailing wage rate schedules on the public authority and it is the public authority who is to place those provisions in the bid specifications and in the contract. The contractor bid on the basis of the specifications, descriptions and requirements established by the public authority which, in this case, did not contain the required information relative to prevailing wage rate schedules. The primary cause for failure to pay pursuant to the prevailing wage provisions was the fiscal court's failure to observe the statutory requirements of KRS 337.505 to 337.550.
If the fiscal court persists in its refusal to pay what is required under the applicable prevailing wage rate schedules, both the contractors and their employes have a potential cause of action against the fiscal court and its members. Note what is contained in part in KRS 337.990(9):
". . . Where a public authority, public official or member of a public authority willfully or negligently fails to comply with KRS 337.505 to 337.550 and such failure results in damages, injury or loss to any person, such public authority, public official, or member of a public authority may be held liable therefor in a civil action."
Thus, in conclusion, it is our opinion that the primary factor in the failure to pay pursuant to the prevailing wage rate provisions for the public works project was the fiscal court's failure to observe the mandatory requirements of KRS 337.510 and 337.512. The fiscal court failed to obtain the prevailing wage rate schedules and to incorporate them into the bid specifications and the contract. Not only is the fiscal court responsible for making sufficient payments to the contractors and their employes to comply with the applicable prevailing wage provisions, but the fiscal court and its members face a potential liability for damages, injury or loss sustained by any person as a result of their negligence in failing to comply with the requirements of KRS 337.505 to 337.550.