Bath Volunteer Fire Department not a public agency for the purpose of contractor's paying prevailing wages pursuant to Labor Law §220

Bath Volunteer Fire Department not a public agency for the purpose of contractor's paying prevailing wages pursuant to Labor Law §220*
M.G.M. Insulation, Inc. v Gardner, 2013 NY Slip Op 01017, Court of Appeals

The Bath Volunteer Fire Department [BVFD], a not-for-profit fire corporation under Not-for-Profit Corporation Law §1402, historically operated from a building owned by the Village of Bath.

After BVFD determined that the facility was no longer adequate for its needs and the Village declined to build it a new firehouse, BVFD commissioned a feasibility study and obtained its own financing for the construction of a new facility. Ultimately BVFD acquired land and in 2006 employed R-J Taylor General Contractors, Inc. (Taylor) as the general contractor to build the facility. Taylor subsequently hired a number of subcontractors to construct the various portions of the firehouse.

Following an investigation, the Department of Labor (DOL) issued an opinion letter, concluding that the firehouse project was a public work subject to the prevailing wage law and ultimately an administrative hearing was held on the question of the applicability of the prevailing wage law to the firehouse project.**

A DOL Hearing Officer subsequently determined that the project was subject to the prevailing wage law, concluding that the firehouse project satisfied both prongs of the so-called Erie County test for prevailing wage law applicability, (see Matter of Erie County Indus. Dev. Agency v Roberts, 94 AD2d 532, affd 63 NY2d 810), holding that volunteer fire corporations such as BVFD are the "functional equivalent[s]" of municipal corporations and are therefore "covered entities" under Labor Law §220.

In the alternative, the Hearing Officer said that even if a volunteer fire corporation did not generally satisfy the public entity test, the protection services agreement between BVFD and the Village of Bath satisfied the first prong of the test and, because the Village authorized and supported the firehouse project, and the object of the project entailed provision of fire protection services for the community, the project satisfied the "public works" requirement.

The Court of Appeals disagreed with the Hearing Officer’s determination on both theories, holding that BVDF was not a public agency as contemplated by the statute nor was any other public entity a party to the 2006 contract. Accordingly, said the court, the prevailing wage law did not apply with respect to this project.

Had the Legislature intended to include volunteer fire corporations under the statute, said the court, it could easily have done so, explaining that in 2007, the Legislature expanded the statute's coverage to include contracts involving other types of entities [see Labor Law § 220(2)], but only when it can be shown they were acting on behalf of the public entity, citing New York Charter School Association v Smith, 15 NY3d 403, at 410.

  

* N.B. The court said that “Indeed, certain volunteer fire department contracts may fall under the prevailing wage law based on the 2007 “amendment language” of Labor Law §220(2) but at the time of contract relevant in this litigation, i.e., 2006, “the 2007 amendment of the prevailing wage law did not exist.”

** Once the subcontractors learned of the DOL's determination, work on the project halted. In December 2006, BVFD agreed to indemnify Taylor and its subcontractors against any liability resulting from their failure to pay the prevailing wages, and construction resumed and the project was completed.

The decision is posted on the Internet at: 

http://www.courts.state.ny.us/reporter/3dseries/2013/2013_01017.htm