The Pennsylvania Prevailing Wage Act, 43 Pa.C.S. §165-1, et seq., is a law first enacted in 1961, that was intended to establish a minimum wage for persons working on publicly funded project. The Courts have stated that the Act was enacted to protect workmen employed on public projects from substandard pay, by ensuring that they receive the prevailing minimum wage for work performed on the public project.
As with many laws, the Prevailing Wage Act is driven by the definitions of the key terms of the law. For example, the key terms that defines and guides the application of the Act is "public work." If a project is construed by a contractor as a "public work," then a prevailing wage must be paid to those employed to perform the work.
The term "public work" is defined by the Act as "construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body where the estimated cost of the total project is in excess of twenty-five thousand dollars ($ 25,000), but shall not include work performed under a rehabilitation or manpower training program."
The prevailing wage is established and re-established on a recurring basis, for each class or classification of worker, by the Department of Labor & Industry. The prevailing wage is then advertised in the Pennsylvania Bulletin on a regular basis. The current wage rates, as of March 5, 2011, may be found at 41 Pa.Bulletin, Page 1161, et seq.
The law also establishes procedures for the application of the prevailing wage rates to particular projects, beginning with establishment in every contract for any public work, of the prevailing rates for that project. Section 3 of the Act provides that "[T]he specifications for every contract for any public work to which any public body is a party, shall contain a provision stating the minimum wage rate that must be paid to the workmen employed in the performance of the contract."
The Act goes on to require, in Section 4, that "[I]t shall be the duty of every public body which proposes the making of a contract for any project of public work to determine from the secretary the prevailing minimum wage rates which shall be paid by the contractor to the workmen upon such project. Reference to such prevailing minimum rates shall be published in the notice issued for the purpose of securing bids for such project of public work. Whenever any contract for a project of public work is entered into, the prevailing minimum wages as determined by the secretary shall be incorporated into and made a part of such contract and shall not be altered during the period such contract is in force."
The Act then establishes that not less than the prevailing minimum wages shall be paid to all workers employed on public work. As an enforcement tool, the Act requires that contractors and subcontractors "shall keep an accurate record showing the name, craft and actual hourly rate of wage paid to each workman employed by him in connection with public work, and such record shall be preserved for two years from the date of payment."
The Act appears uncomplicated on its face, but has proven to be extremely complicated in its application. The main difficulty that contractors and subcontractors face is the application of the definition of "public work" to the project. The difficulty arises because not all work performed on or near a work site is defined as "public work." Unfortunately, there is no magic formula or one-size-fits-all definition of "public work," and the definition of the term must necessarily be construed on a case-by-case basis. "When there are questions about the application of the law to a "public work," the advice of an attorney familiar with the law is crucial, because the penalties for violation of the law - even innocent and/or unknowing violation - can be severe.