Under New York State Labor Law, contractors pay the prevailing wage rate (wage and benefits) to workers under a public contract. Effective January 1, 2022, certain private projects could fall under prevailing wage laws. Section 224-A – “Prevailing wage requirements applicable to construction projects performed under private contract” was signed into law in April 2020. The new law requires construction workers to be paid a prevailing wage if the project is determined to be a covered project, e.g., the project costs are larger than $5 million and 30% or more of the financing for the construction costs was obtained from public sources (such as grants, industrial development agencies (IDA) financing, tax abatements and credits). The law has certain exemptions, such as certain affordable housing projects, historic rehabilitation projects and renewable energy projects. The law also has public fund exemptions such as tax benefits related to brownfield remediation or brownfield redevelopment and tax benefits where the length or value is unknown at the time the work is to be performed.
When a project is determined to be a covered project, the owner or developer of the project is to certify as such within five days of commencement of construction. Further, each owner or developer subject to these requirements must also comply with the objectives of minority and women-owned business enterprises and service-disabled veteran-owned businesses.
The law also includes the creation of a 13-member board appointed by the governor to study the economic impact, recommend adjustments, and even delay the implementation beyond January 1, 2022. Owners or developers may seek guidance from the board.
To comply with the new law, parties related to the contract should first determine if the project is subject to the prevailing wage requirement and seek help when the answer is unknown.
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