File No. 449

Senate, April 10, 2006

The Committee on Government Administration and Elections reported through SEN. DEFRONZO of the 6th Dist., Chairperson of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT EXTENDING THE PREVAILING WAGE TO CERTAIN CONSTRUCTION PROJECTS RECEIVING PUBLIC FINANCIAL ASSISTANCE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 31-53 of the 2006 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2006):

(a) For purposes of this section:

(1) "Awarding authority" means the Commissioner of Economic and Community Development, the board of directors of the Connecticut Development Authority, the board of directors of Connecticut Innovations, Incorporated, and the head of any other quasi-public agency, as defined in section 1-120, as amended, any state agency, any political subdivision of the state or any agent of a political subdivision of the state that awards financial assistance for a publicly-financed project;

(2) "Financial assistance" means any grant, loan, loan guarantee or issuance of any tax benefit not of general applicability; and

(3) "Publicly-financed project" means a project for new construction for which financial assistance in an amount of four hundred thousand dollars or more has been awarded by an awarding authority.

[(a)] (b) Each contract for (1) the construction, remodeling, refinishing, refurbishing, rehabilitation, alteration or repair of any public works project by the state or any of its agents, or by any political subdivision of the state or any of its agents, or (2) the construction of any publicly-financed project shall contain the following provision: "The wages paid on an hourly basis to any person performing the work of any mechanic, laborer or worker on the work herein contracted to be done and the amount of payment or contribution paid or payable on behalf of each such person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, shall be at a rate equal to the rate customary or prevailing for the same work in the same trade or occupation in the town in which such public works or publicly-financed project is [being constructed] located. Any contractor who is not obligated by agreement to make payment or contribution on behalf of such persons to any such employee welfare fund shall pay to each mechanic, laborer or worker as part of such person's wages the amount of payment or contribution for such person's classification on each pay day."

[(b)] (c) Any contractor or subcontractor who knowingly or wilfully employs any mechanic, laborer or worker in the construction, remodeling, refinishing, refurbishing, rehabilitation, alteration or repair of any public works project for or on behalf of the state or any of its agents, or any political subdivision of the state or any of its agents, or in the construction of any publicly-financed project at a rate of wage on an hourly basis that is less than the rate customary or prevailing for the same work in the same trade or occupation in the town in which such public works or publicly-financed project is [being constructed, remodeled, refinished, refurbished, rehabilitated, altered or repaired,] located or who fails to pay the amount of payment or contributions paid or payable on behalf of each such person to any employee welfare fund, or in lieu thereof to the person, as provided by subsection (a) of this section, shall be fined not less than two thousand five hundred dollars but not more than five thousand dollars for each offense and (1) for the first violation, shall be disqualified from bidding on contracts with the state or any political subdivision or for any publicly-financed projects until the contractor or subcontractor has made full restitution of the back wages owed to such persons and for an additional six months thereafter, and (2) for subsequent violations, shall be disqualified from bidding on contracts with the state or any political subdivision or for any publicly-financed projects until the contractor or subcontractor has made full restitution of the back wages owed to such persons and for not less than an additional two years thereafter. In addition, if it is found by (A) the contracting officer representing the state or political subdivision of the state for a public works project, or (B) the awarding authority for a publicly-financed project that any mechanic, laborer or worker employed by the contractor or any subcontractor directly on the site for the work covered by the contract has been or is being paid a rate of wages less than the rate of wages required by the contract to be paid as required by this section, the state, [or] contracting political subdivision of the state or awarding authority may [(A)] (i) by written notice to the contractor, terminate such contractor's right to proceed with the work or such part of the work as to which there has been a failure to pay said required wages and to prosecute the work to completion by contract or otherwise, and the contractor and the contractor's sureties shall be liable to the state, [or] the contracting political subdivision or the awarding authority for any excess costs occasioned the state, [or] the contracting political subdivision or the awarding authority thereby, or [(B)] (ii) withhold payment of money to the contractor or subcontractor. The contracting department of the state or the political subdivision of the state or the awarding authority shall, not later than two days after taking such action, notify the Labor Commissioner, in writing, of the name of the contractor or subcontractor, the project involved, the location of the work, the violations involved, the date the contract was terminated, and steps taken to collect the required wages.

[(c)] (d) The Labor Commissioner may make complaint to the proper prosecuting authorities for the violation of any provision of subsection [(b)] (c) of this section.

[(d)] (e) For the purpose of predetermining the prevailing rate of wage on an hourly basis and the amount of payment or contributions paid or payable on behalf of each person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, in each town where such contract is to be performed, the Labor Commissioner shall (1) hold a hearing at any required time to determine the prevailing rate of wages on an hourly basis and the amount of payment or contributions paid or payable on behalf of each person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, upon any public work within any specified area, and shall establish classifications of skilled, semiskilled and ordinary labor, or (2) adopt and use such appropriate and applicable prevailing wage rate determinations as have been made by the Secretary of Labor of the United States under the provisions of the Davis-Bacon Act, as amended.

[(e)] (f) The Labor Commissioner shall determine the prevailing rate of wages on an hourly basis and the amount of payment or contributions paid or payable on behalf of such person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, in each locality where any such public [work] works project or publicly-financed project is to be constructed, and the agent empowered to let such contract shall contact the Labor Commissioner, at least ten but not more than twenty days prior to the date such contracts will be advertised for bid, to ascertain the proper rate of wages and amount of employee welfare fund payments or contributions and shall include such rate of wage on an hourly basis and the amount of payment or contributions paid or payable on behalf of each person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, or in lieu thereof the amount to be paid directly to each person for such payment or contributions as provided in subsection [(a)] (b) of this section for all classifications of labor in the proposal for the contract. The rate of wage on an hourly basis and the amount of payment or contributions to any employee welfare fund, as defined in subsection [(h)] (i) of this section, or cash in lieu thereof, as provided in subsection [(a)] (b) of this section, shall, at all times, be considered as the minimum rate for the classification for which it was established. Prior to the award of any contract subject to the provisions of this section, such agent shall certify in writing to the Labor Commissioner the total dollar amount of work to be done in connection with such public works project or publicly-financed project, regardless of whether such project consists of one or more contracts. Upon the award of any contract subject to the provisions of this section, the contractor to whom such contract is awarded shall certify, under oath, to the Labor Commissioner the pay scale to be used by such contractor and any of the contractor's subcontractors for work to be performed under such contract.

[(f)] (g) Each employer subject to the provisions of this section or section 31-54 shall (1) keep, maintain and preserve such records relating to the wages and hours worked by each person performing the work of any mechanic, laborer and worker and a schedule of the occupation or work classification at which each person performing the work of any mechanic, laborer or worker on the project is employed during each work day and week in such manner and form as the Labor Commissioner establishes to assure the proper payments due to such persons or employee welfare funds under this section or section 31-54, regardless of any contractual relationship alleged to exist between the contractor and such person, and (2) submit monthly to the contracting agency a certified payroll that shall consist of a complete copy of such records accompanied by a statement signed by the employer that indicates (A) such records are correct; (B) the rate of wages paid to each person performing the work of any mechanic, laborer or worker and the amount of payment or contributions paid or payable on behalf of each such person to any employee welfare fund, as defined in subsection [(h)] (i) of this section, are not less than the prevailing rate of wages and the amount of payment or contributions paid or payable on behalf of each such person to any employee welfare fund, as determined by the Labor Commissioner pursuant to subsection [(d)] (e) of this section, and not less than those required by the contract to be paid; (C) the employer has complied with the provisions of this section and section 31-54; (D) each such person is covered by a workers' compensation insurance policy for the duration of such person's employment, which shall be demonstrated by submitting to the contracting agency the name of the workers' compensation insurance carrier covering each such person, the effective and expiration dates of each policy and each policy number; (E) the employer does not receive kickbacks, as defined in 41 USC 52, from any employee or employee welfare fund; and (F) pursuant to the provisions of section 53a-157a, the employer is aware that filing a certified payroll which the employer knows to be false is a class D felony for which the employer may be fined up to five thousand dollars, imprisoned for up to five years, or both. This subsection shall not be construed to prohibit a general contractor from relying on the certification of a lower tier subcontractor, provided the general contractor shall not be exempted from the provisions of section 53a-157a if the general contractor knowingly relies upon a subcontractor's false certification. Notwithstanding the provisions of section 1-210, as amended, the certified payroll shall be considered a public record and every person shall have the right to inspect and copy such records in accordance with the provisions of section 1-212. The provisions of subsections (a) and (b) of section 31-59 and sections 31-66 and 31-69 that are not inconsistent with the provisions of this section or section 31-54 apply to this section. Failing to file a certified payroll pursuant to subdivision (2) of this subsection is a class D felony for which the employer may be fined up to five thousand dollars, imprisoned for up to five years, or both.

[(g)] (h) The provisions of this section do not apply where the total cost of all work to be performed by all contractors and subcontractors in connection with new construction of any public works project is less than four hundred thousand dollars or where the total cost of all work to be performed by all contractors and subcontractors in connection with any remodeling, refinishing, refurbishing, rehabilitation, alteration or repair of any public works project is less than one hundred thousand dollars.

[(h)] (i) As used in this section, section 31-54 and section 31-89a, "employee welfare fund" means any trust fund established by one or more employers and one or more labor organizations or one or more other third parties not affiliated with the employers to provide from moneys in the fund, whether through the purchase of insurance or annuity contracts or otherwise, benefits under an employee welfare plan; provided such term shall not include any such fund where the trustee, or all of the trustees, are subject to supervision by the Banking Commissioner of this state or any other state or the Comptroller of the Currency of the United States or the Board of Governors of the Federal Reserve System, and "benefits under an employee welfare plan" means one or more benefits or services under any plan established or maintained for persons performing the work of any mechanics, laborers or workers or their families or dependents, or for both, including, but not limited to, medical, surgical or hospital care benefits; benefits in the event of sickness, accident, disability or death; benefits in the event of unemployment, or retirement benefits. A summary of the provisions of each employee welfare fund to which an employer subject to the provisions of this section is required to make payments or contributions on behalf of such employer's employees shall be filed in writing with the Labor Department on or before the date construction begins on the public works or publicly-financed project.

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either House thereof for any purpose:

OFA Fiscal Note

State Impact:

Note: SF=Special Fund (Non-appropriated)

Municipal Impact: None

Explanation

To the extent that the extension of the prevailing wage requirements reduces the number of applicants that apply for financial assistance through the Department of Economic and Community Development, the Connecticut Development Authority, and any other quasi-public agency, there could be a cost savings to the state's financial assistance programs. The exact impact is indeterminate.

If passage of the bill makes construction projects for the Capital City Economic Development Authority (CCEDA) more expensive, additional costs will result. 

The Out Years

The fiscal impact identified above would continue into the future subject to inflation.



OLR Bill Analysis

sSB 560

AN ACT EXTENDING THE PREVAILING WAGE TO CERTAIN CONSTRUCTION PROJECTS RECEIVING PUBLIC FINANCIAL ASSISTANCE.

SUMMARY:

This bill extends existing prevailing wage law requirements to any publicly-financed project that receives $400,000 or more in financial assistance from any state agency, any state quasi-public agency (e.g., the Connecticut Development Authority (CDA)), any political subdivision of the state, including municipalities, or any agent of a political subdivision of the state. The bill defines financial assistance as any grant, loan, loan guarantee or tax benefit not of general applicability.

Under the law, contractors must pay the prevailing wage, as determined by the labor department, to all employees working on state and municipal construction projects that are more than $400,000 for new construction or $100,000 for repair or remodeling. The law also requires contractors to keep payroll records and imposes various penalties on violators.

The bill also makes an exception to the prevailing wage requirements for publicly-financed projects. It does not require the assistance recipients to submit payroll records to the agency providing the aid.

The bill also creates a new requirement that when an employee welfare fund is established under the law the contractor must give the Labor Department a summary of the fund's provisions on or before the date construction begins.

EFFECTIVE DATE: October 1, 2006

PUBLICLY-FINANCED PROJECT

The bill defines “publicly-financed project” as a project for new construction with at least $400,000 in assistance provided by an awarding authority.

AWARDING AUTHORITY

The bill defines “awarding authority” as any state agency, any state quasi-public agency, as defined in statute, any political subdivision of the state, including municipalities, or any agent of a political subdivision of the state that awards assistance for a publicly-financed project. Quasi-public agency means CDA, Connecticut Innovations, Incorporated, Connecticut Health and Educational Facilities Authority, Connecticut Higher Education Supplemental Loan Authority, Connecticut Housing Finance Authority, Connecticut Housing Authority, Connecticut Resources Recovery Authority, Connecticut Hazardous Waste Management Service, Capital City Economic Development Authority and Connecticut Lottery Corporation.

PREVAILING WAGE REQUIREMENTS

The bill requires contractors on all publicly-financed projects to:

1. pay mechanics, laborers, workers, or anyone doing such work the prevailing wage that is customary or prevailing for that occupation as determined by the Labor Department;

2. make the required contribution to an employee welfare fund for covered employees or, if there is none, pay the contribution directly to the employees; and

3. maintain and keep payroll and work schedule records for the project.

The bill also applies existing penalties to violators, including (1) fines, (2) contract termination, (3) withholding of payments, (4) restitution of back pay, and (5) suspension from bidding on future public projects (i.e., debarment). B law, a contractor that knowingly fails to pay a covered employee the prevailing rate is fined between $2,500 and $5,000 for each offense and (1) for the first violation is debarred from bidding on similar contracts until restitution for back wages is made and for an additional six months following or (2) for subsequent violations debarred until restitution is made and for an additional two years afterwards.

The bill does not apply the prevailing wage law requirement to submit certified payroll records to the contracting agency. In economic assistance projects covered by the bill, a private entity, but not the state or any of its agencies or political subdivisions, may be the contracting entity. Under prevailing wage law, a contractor that fails to provide the contracting agency with the certified payroll commits a class D felony.

COMMITTEE ACTION

Labor and Public Employees Committee

Joint Favorable Substitute Change of Reference

Government Administration and Elections Committee

Joint Favorable