Home

Legislative Memo

Heather C. Briccetti, Esq.
Acting President & CEO
T 518.465.7517 x201
www.bcnys.org

BILL:

A.7472 (Bing)

Support

SUBJECT:

Prevailing Wage for Service Workers

 

DATE:

May 18, 2011

 

The Business Council strongly opposes this legislation that would extend the state’s public sector prevailing wage requirements to certain private sector service employees and subject them to increased criminal penalties for violations. 

This legislation alters existing labor law provisions that were created to establish wage requirements for public sector building service employees to apply to broad new categories of employees including service work for private sector utility companies, and additional other categories not contemplated by the original legislation.  In fact, service work for utility companies was explicitly and intentionally excluded from the original legislation in recognition that the extension of wage requirements to such workers would be inappropriate and result in increased cost to utility ratepayers.  Estimates from just three of the State’s utility companies are that the added costs to ratepayers would exceed $37 million annually.

There is no rationale offered by the sponsors to support expanding prevailing wage mandates to the private sector for non-public works.  

New York has some of the highest energy prices in the nation, in part driven by numerous state-imposed costs. New York’s power industry paid an estimated $6.4 billion in state and local taxes, assessments and fees in 2009. The figure is $853 million higher than the total the industry paid in 2008, an increase of more than 15% in just one calendar year. 

The section of law that expanded prevailing wage to service workers did so in the context of the service being provided to a public entity.  This was an expansion of the applicability of prevailing wage beyond the “laborers, workmen, or mechanics” set forth is Labor Law Section 220 to include “service workers” where the entity employing the individuals was a governmental entity.  To attempt to extend prevailing wage to these individuals outside of the context of public works is inconsistent with longstanding state policy and caselaw. 

In the instance of the provision of utility services by privately-owned utility companies, one cannot argue that prevailing wage mandates are justified by the expenditure of state monies.  The expenditures of the utilities in sub-contracting for service work are inarguably private sector funds.  The utilities are investor-owned, and the entity has a fiduciary responsibility to the shareholders to ensure that the services contracted for are competitively priced.

The imposition of wage mandates on these industries, already struggling with additional costs imposed by the State, including the 18-a surcharge in the 2009-2010 Executive Budget and the MTA payroll tax in the MTA region, is ill-timed and will only further burden both the employers and the consumers. 

For the foregoing reasons, the Business Council opposes this legislation and urges that it be held in committee.