Kentucky Repeals Its Prevailing Wage Requirements

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By Elliott T. Dube

A stroke of the pen by Kentucky Gov. Matt Bevin (R) repealed the commonwealth’s prevailing wage law, which had been in place since 1940.

Bevin signed legislation Jan. 9 to eliminate the state requirement that construction workers on public projects estimated to cost at least $250,000 had to be paid at least the prevailing wage for the geographic area.

The legislation is “pro-business” and helps set Kentucky “on a course for unparalleled opportunity and prosperity,” Bevin said in a statement upon signing the measure and other bills, including one to make Kentucky a right-to-work state.

But the repeal will hit workers in their wallets, Bill Finn, the state director of the Kentucky State Building & Construction Trades Council, told Bloomberg BNA Jan. 6. Public agencies will be pressured to accept the lowest bids on projects, which will in turn include low pay rates, he said.

Kentucky House, Senate Streamlined Passage

The Kentucky House passed the prevailing wage repeal bill Jan. 5 in a 57-40 vote that was largely along party lines, with six Republican House members voting against the bill and one Democrat voting in favor. Democrats controlled the House for 95 years prior to November’s elections and blocked prior attempts to eliminate the prevailing wage requirements. Republicans, however, emerged from the contests with a 64-36 majority.

The state’s Senate, in which Republicans retained control, passed the repeal on a 25-12 vote during a special session Jan. 7. That day, organized labor held a rally in Frankfort, Ky., to protest what the Kentucky AFL-CIO has called a “war on workers” by state lawmakers. Labor advocates criticized the use of an emergency clause in the repeal bill and other legislation, which limited consideration of the legislation and ensured that it took effect immediately following Bevin’s signature.

There was no emergency surrounding the bills, and the emergency clauses merely helped the bills’ backers push them through to Bevin’s desk as quickly as possible, Joseph Brennan, director of the pro-union Kentucky Labor Institute, told Bloomberg BNA June 5.

Debate Over Now-Repealed Law Continues

Kentucky becomes the 21st state without a prevailing wage law. It’s the third state to repeal its prevailing wage law in the past two years, following two decades during which such state laws remained largely intact across the country. West Virginia in 2016 and Indiana in 2015 eliminated their prevailing wage laws.

Supporters of prevailing wage requirements argue that they attract a higher quality of worker. Opponents contend that they increase construction costs without also boosting quality and that prevailing wages don’t accurately reflect local wages.

Studies have shown that prevailing wage requirements can increase a project’s cost of construction by up to 30 percent, Jonathan Steiner, executive director of the Kentucky League of Cities, told Bloomberg BNA Jan. 5. The nonprofit association provides cities and municipal agencies in Kentucky with legislative advocacy and policy development services.

There’s no indication that work quality or efficiency is any better for the extra money being spent, Steiner said. Considering that “dollars are tight” in cities, a “subsidy” for public construction project labor that doesn’t exist in the private sector is a hard sell for taxpayers, he said.

“Why ask a family in a city to pay more in taxes so that a worker on a project gets paid more?” he said.

But the elimination of prevailing wage requirements in West Virginia and Indiana has made out-of-state contractors more competitive in bidding against local contractors, Bill Finn, the state director of the Kentucky State Building & Construction Trades Council, told Bloomberg BNA Jan. 6. The same adverse side-effect will likely develop in Kentucky, he said.

“There may be more people from other states working construction—it just won’t be Kentuckians,” Finn said.

To contact the reporter on this story: Elliott T. Dube in Washington at edube@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

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Text of H.B. 3 is available at http://src.bna.com/laY.

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