COLUMBUS, Ohio – Contractors might be reluctant to bid on public jobs in the wake of an Ohio Supreme Court ruling yesterday that they must pay a 100 percent penalty if workers aren’t paid union wages, a lawyer for a builders association said.
In a 5-2 decision, justices disagreed with a lower court’s decision that trial courts have discretion on whether to assess the penalties, which are outlined in Ohio law. The penalties must be assessed in all but exceptional cases, the high court said, and it sent the case back to the trial court to reconsider.
Under state law, employers who fail to pay the going union rate – known as the “prevailing wage” – must repay workers the unpaid sum along with a 25 percent penalty, and they must pay the state a 75 percent penalty. The state is to use its share to pay for prevailing-wage enforcement.
In the decision written by Justice Robert R. Cupp, the court said Monarch Construction Co. is required to pay about $368,000 in back wages to 36 workers, plus a penalty of about $368,000. The workers, who helped build student housing at Miami University, sued in 2006.
Attorney Greg Rogers, who represents Monarch, said he had not talked with his client and did not know what steps it will take next.
He said the employees worked for a subcontractor who submitted false payroll information to Monarch.
The subcontractor, Don Salyers Masonry, has gone out of business and cannot make payments, according to the court.
The intent of the law is not to punish contractors but to get workers their back pay, said Alan Ross, a lawyer for the Northern Ohio chapter of Associated Builders & Contractors Inc. and ABC of Ohio Inc.
“Whether you’re a union or nonunion contractor, this makes working on a prevailing-wage job a pretty treacherous undertaking,” said Ross, who filed a brief on behalf of the industry groups in support of Monarch’s position.
“It’s either going to drive the cost of public construction up because everybody now is caught in this ugly situation,” he said. “Or, if it doesn’t drive up the cost, it takes bidders out of the arena. They’re not going to want to bid on the work because it’s just too risky.”
Attorney General Richard Cordray issued a statement saying the penalties help small businesses as well as construction workers.
“Ohio’s hourly workers are struggling to make ends meet in these tough financial times. Our small businesses are fighting to survive and must have a level playing field in the marketplace,” said Cordray, whose office filed a brief on behalf of the state in support of the workers’ position.
“This decision underscores the importance of prevailing-wage laws to construction workers across Ohio and will assist the efforts of the state to continue to protect the wages of these hardworking Ohioans,” he said.
Ohio Department of Commerce spokesman Dennis Ginty said that such penalties were being assessed in most cases in which employees complained to the department, and that they will continue to be assessed.
Employees who feel they have been denied a prevailing wage have the option of filing a complaint with the department or suing.
Messages seeking comment were left with lawyers for the employees and for the Ohio State Building & Construction Trades Council, which filed a brief in support of the employees’ position.
Joining Cupp in the decision were Chief Justice Thomas J. Moyer and Justices Paul E. Pfeifer, Maureen O’Connor and Judith Lanzinger.
Dissenting were Justices Evelyn Lundberg Stratton and Terrence O’Donnell.