Construction Industry Awaits Passage of Prevailing Wage Compromise

in Associations/Columns/News/Opinion

By Kerry Smith, Editor – St. Louis Construction News & Review Magazine

The Missouri Senate and House have passed legislation to modify the state’s prevailing wage law. Unless vetoed by a sitting Missouri governor, HB 1729 will become law and take effect in August, changing and simplifying the way wages are calculated for public works projects – and putting increased onus on contractors and subs to report their hours to the state.

School districts, cities and other governmental entities currently pay more than the state’s minimum wage for maintenance and construction work. As it now stands, the specific amount is determined by the type of work being done as well as the geographical location of the construction project, and there is no minimum threshold for the amount/size of project to which prevailing wage applies.

The bill also signifies a compromise in how prevailing wage will be calculated in rural areas of Missouri. HB 1729 also raises the construction cost threshold that construction projects must reach in order for contractors to be paid prevailing wage.

A consolidation of job classifications in the construction industry is yet another component of the proposed law, according to Associated General Contractors of Missouri (AGCMO) President Len Toenjes.

“This was a real team effort that included members from across our industry,” Toenjes said. “We had been preparing this compromise with the hope that when those (repeal) bills got to the floor, our legislation would be seen as a substitute for the repeal of prevailing wage law in Missouri. We have every reason to expect that the governor will sign it. The feedback that I’m hearing is that we stopped repeal of prevailing wage, which was our overall goal. This is a situation, as with any piece of legislation, where everyone is a little bit unhappy. But we were able to reach a point where we stopped the repeal and we did not negotiate against ourselves. We were realistic and honest in reaching this compromise.”

A key provision of HB 1729 is that it establishes $75,000 as the threshold or minimum project amount that is subject to prevailing wage rates. According to Toenjes, earlier bills advocated for a threshold as high as $500,000. “Under the current prevailing wage law, prevailing wage rates apply to projects from the first dollar on up,” he said. “There was a lot of back and forth debate on what this number should be. Particularly for construction projects occurring in rural areas – such as painting a classroom ceiling or installing a suspended ceiling in a firehouse – that project total is going to total less than $75,000. This threshold is not making rural areas happy, but we knew that ultimately we weren’t going to be able to keep it at zero.”

Increased responsibility for contractors and subcontractors to report their hours to the appropriate departments with the Missouri Dept. of Labor is a provision of the legislation. “Prevailing wage calculations under the new bill will be done solely on the basis of the hours reported to the state by these parties,” Toenjes said. “It’s critical that contractors report their work hours to the state because by law these hours cannot be reported by the unions or associations. The onus is definitely on the contractors and subs.”

In a related component of HB 1729, the number of occupational titles has been reduced to simplify calculating and tallying prevailing wage rates by position within employment sectors. “One of the things the House and Senate wanted to accomplish was to co-simplify the reporting system,” Toenjes said. “We went from 43 occupational titles down to 20.”

For example, where there had been three or four different related occupational classifications for jobs specific to millwrights and carpenters, and multiple categories for laborers, HB 1729 combines several related job classifications for simplicity and fairness.

“Prevailing wage calculations for each county and each occupational classification are going to be based on an average of all the hours that are reported for that occupational classification within the county,” Toenjes said. “If there are fewer than 1,000 hours reported (for a classification and/or a county, there will be a minimum construction wage that represents the average of all the wages reported in that county. The rationale of those who designed this provision is that it establishes construction wages that are consistent with a level of activity occurring in that county.” Prior to the new legislation, Toenjes said it had been a negotiated rate and that wages paid weren’t always reflective of the construction activity that was occurring.

The AGCMO’s next objective is to ensure that the new prevailing wage law, assuming it passes, succeeds in being implemented. “We want to see that it hopefully results in the promulgation of a system that is as fair as possible for everyone concerned, particularly for those who work in construction in rural areas of Missouri,” said Toenjes.

 

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