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NYC Prevailing Wage Law Struck Down by State Supreme Court

Less than a month after a federal court judge in Manhattan ruled that New York City Mayor Michael Bloomberg had no standing to challenge New York City’s Living Wage Law, the state supreme court struck down prevailing wage measures.
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The decision was hailed as a victory for Bloomberg, who had attempted to veto the legislation when it was first passed by the City Council last year. The measure would have raised wages for janitors, security guards and other building workers in structures that receive substantial government subsidies or where in the city is a major tenant.

Bloomberg has said the measure will deter businesses from entering the city, but Council overrode his veto. Still, enforcement of the measure was delayed pending appeals.

Council had also overridden Bloomberg’s veto of the city’s living wage law, which would have bolstered the pay of a broader range of workers employed by firms that receive city government subsidies.

The mayor’s office sued the city in federal court over the living wage law and in state court over the prevailing wage law.

Following the federal judge’s ruling regarding the living wage law last month, the mayor’s office vowed to refile the case with the state court. That measure calls for a mandated wage of $10 hourly with benefits or $11.50 hourly without benefits. Standard state minimum wage is currently $7.25, though a law has passed to boost it to $9 hourly by 2016.

Prevailing wage, meanwhile, is a standard set by the city comptroller for certain public work projects. Those wages vary depending on the employee’s occupation, and they are supposed to reflect rates that are in line with what a union charges. Most workers were already paid those rates, but the prevailing wage law made it official. It was strongly backed by Local 32BJ of the Service Employees International Union.

Applicable entities included those who received $1 million or more in city tax abatements or low-interest financing in buildings that are leased by the city. Exempted organizations included non-profits, smaller companies, manufacturing plants and health care facilities.

The bill formally took effect last fall.

However, now the state supreme court has ruled in Mayor of the City of New York v. New York City Council that the city’s prevailing wage law is invalid because it is preempted by the state’s minimum wage law.

Those who supported the measure say this ruling may be a victory for Bloomberg, but it’s a loss for low-wage earners in the city. Even the judge who rendered the decision expressed regret about it, saying that while the decision was reached strictly in accordance with the law, he failed to see the wisdom in attracting businesses to the city that sought to pay employees less than the prevailing wage rates. The justice said his decision came with “great compunction.”

City council leaders have said they intend to appeal the decision.

The Law Offices of Ira S. Newman provides prevailing wage law representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Court Strikes Down New York City’s ‘Prevailing Wage’ Law, Aug. 5, 2013, By Kate Taylor, The New York Times
More Blog Entries:
New York City’s ‘Living Wage’ Law Withstands Mayoral Challenge, Aug. 8, 2013, New York City Prevailing Wage Lawyer Blog