Governor Tomblin Vetoes the “Workplace Freedom Act” and the Prevailing Wage Bill
The law setting prevailing wages in West Virginia has been a source of controversy through the years. Some argue that the law inflates the cost of West Virginia public construction contracts. Others argue that the law benefits local workers and companies, evening the playing field with out-of-state contractors. In 2016, the tables turned when the West Virginia Legislature repealed the prevailing wages law. Now, both sides will test their arguments.
Elimination of Prevailing Wages in West Virginia
What Are Prevailing Wages Laws?
A “prevailing wage” is a government contracting term that sets the wage, benefits, and overtime an employer must pay a worker on government-funded projects. The West Virginia prevailing wages law set the wages for all public construction contracts until 2015. Pursuant to that law, the state created a schedule of wages for contractors to use in bidding on and paying workers on public construction contracts.
A 2015 Attempt to Adjust the Prevailing Wages Spending
Those opposed to the prevailing wages law saw their efforts as a way to control government spending, and the 2016 law was not their first attempt.
In 2015, West Virginia legislators passed a law requiring compliance with the prevailing wages law only on projects costing $500,000 or less. The 2015 law also allowed the governor’s administration to adjust how to calculate wages. The administration then in office attempted to restructure the prevailing wages schedule. Apparently, the savings realized were insufficient, leading to the 2016 repeal of the prevailing wages law altogether.
Repeal of the Law Setting Prevailing Wages in West Virginia
In 2016, legislators in the House of Delegates proposed West Virginia House Bill 4005 on the law setting prevailing wages in West Virginia. Specifically, House Bill 4005 was an act designed to repeal the state's prevailing wage law. At the time, the law set the minimum rate of wages for workers on public improvements, such as roads, bridges, sewers, and airports. The rate was based on "the prevailing rate of wages" paid in the applicable region for workers in "the same trade or occupation." The rate was calculated by a state agency based, in part, on data provided by West Virginia University and Marshall University. Critics of the prevailing wage law stated that it artificially inflated the cost of public works projects.
Both chambers of the West Virginia Legislature passed WV HB 4005 in February 2016, but then-Governor Earl Ray Tomblin vetoed the law. The former governor justified his veto of House Bill 4005, stating that the repeal of the prevailing wage law would "lower the wages of West Virginia workers and do little, if anything, to stimulate our economy." The following day, both houses of the legislature voted to override the veto and passed the law.
Impact of the Changes to the WV Prevailing Wages Law
The repeal took effect May 5, 2016, affecting new public construction contracts from that date forward. The law did not affect contracts already in existence on the law’s effective date.
Proponents of the repeal believe that prevailing wages laws set wages artificially high and that market-based wages are both fair and a good way to save taxpayer dollars. Even though the law applied equally to union and non-union workers, unions were staunch opponents of the repeal.
Whether the law bears out the hopes or fears of the parties for and against it remains to be seen.
For more information, call the attorneys of Jenkins Fenstermaker at (304) 523-2100.