Pennsylvania’s top court has backed a lower court’s decision in a closely watched case involving application of the state’s prevailing wage law.
- The case hinged on conflicting views of the law, which sets a minimum wage for workers on publicly funded projects.
What’s the issue: Whether prevailing wages should be paid on a private-sector project funded by tax-exempt bonds issued by a public authority, a relatively common form of so-called conduit financing.
- An administrative appeals board said prevailing wages should be paid in the context of a $29 million construction project carried out by Ursinus College in Collegeville.
- The project was funded by bonds issued through the Montgomery County Higher Education and Health Authority.
- In short, the appeals board determined that, based on the authority’s role, the project was a “public work” as defined under state law, triggering prevailing-wage requirements.
- Prevailing wages are typically higher than what workers might otherwise earn.
- Ursinus appealed, arguing that the bond funds never entered the authority’s coffers and that its project was not a public work.
What was the verdict: In a 2022 decision, Commonwealth Court sided with the college.
- The ruling was appealed by a Philadelphia-area union, the International Brotherhood of Electrical Workers Local 98.
- The lower court’s ruling was upheld this week by Pennsylvania Supreme Court in a 31-page opinion authored by Justice Kevin Brobson.
- “Ursinus believes that the Pennsylvania Supreme Court reached the correct result by accurately following the plain language of and legislative intent behind the Pennsylvania Prevailing Wage Act,” the college said in a statement.
- A spokesperson for IBEW declined to comment.
Why does it matter: Business groups worried that the administrative board’s reading of the law would drive up costs for projects funded in the same way as the one at Ursinus.
- Indeed, the college’s case drew friend-of-the-court briefs from, among others, the Pennsylvania Chamber of Business and Industry, the Pennsylvania Economic Development Association and Associated Builders and Contractors, a construction industry trade group.
What’s next: The labor union had argued that if the Supreme Court upheld the lower court decision, it would create a “loophole” allowing projects to evade prevailing-wage requirements, according to court filings.
- However, the court said there was no evidence that would happen, and its ruling was rooted in a strict reading of the law and previous cases.
- In essence, the high court’s decision reaffirms the status quo, said Catherine Walters, a partner at Lemoyne-based law firm Bybel Rutledge LLP.
- “No loophole ever existed and it hasn’t been created, either at the Commonwealth Court level or the Supreme Court level,” said Walters, who represented Ursinus.
