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The Basics of Ohio Prevailing Wage Law

Posted in Labor, Ohio

Many employers who infrequently deal with Ohio prevailing wage requirements often ask us how to determine whether Ohio’s prevailing wage will apply to their project. The most practical consideration is to determine whether prevailing wages apply to your project before bidding for work or seeking bids for subcontractors. Oftentimes companies who aren’t thinking about prevailing wages on the front end can have it unexpectedly derail their project budget and/or cause disputes with its subcontractors over the appropriate wages to be paid.

Consistent with this, we thought it helpful to list a few things for employers to think about when they are considering this question.

1. “Public Improvement”
Determine whether your project meets the definition of “public improvement” under Ohio Revised Code Chapter 4115. This includes “all buildings, roads, streets, alleys, sewers, ditches, sewage disposal plants, water works, and all other structures or works” constructed by a public authority or pursuant to a contract with a public authority, such as the state of Ohio, a county, or other political subdivision.

Note that recent interpretations by the Ohio Attorney General have construed this definition broadly. For example, Ohio Attorney General Opinion 2012-029 found that an oil and gas company’s agreement with an Ohio county to maintain the roads was a “public improvement” that required the county to comply with Ohio’s prevailing wage requirements, which in turn required the oil and gas company to pay prevailing wages to the workers who maintained the road. Read more in this recent post. Local governments have required prevailing wages in line with this Attorney General Opinion, such as Jefferson County’s recent decision to require prevailing wages on county and township road improvements associated with construction of an oil pipeline.

For housing projects, a public funding source can also trigger Ohio prevailing wages. Ohio Revised Code § 176.05 states that a “public improvement” includes any “construction, rehabilitation, remodeling or improvement of residential housing … that is financed in whole or in part from state moneys” or other funding sources from counties, cities, including bonds. There are a few exceptions to this particular requirement for housing projects, including thresholds for the number of housing units and whether the developer or sponsor of the project is a for-profit or nonprofit entity.

2. Ohio Cost Thresholds
Even if the definition of “public improvement” is met, the project still must be above Ohio’s cost thresholds. These thresholds are set biennially and depend on the type of construction. The Ohio Department of Commerce explains these thresholds in detail.

For 2013, the new construction threshold is $200,000, and will increase to $250,000 on Sept. 29, 2013. Projects involving reconstruction, enlargement, repair, remodeling, renovation, or painting have a threshold of $60,000, to be adjusted to $75,000 on Sept. 29, 2013.

For the 2012-13 biennium starting Jan. 2, 2012, construction projects involving roads, streets, alleys, sewers, ditches, and other works connected to road or bridge construction are subject to lower thresholds of $82,137 for new construction and $24,609 for reconstruction, enlargement, repair, remodeling, renovation or painting.

3. Contractual Obligations
Consider also whether your funding sources or contracts contain express language requiring Ohio prevailing wages to be paid. The absence of that language does not guarantee that Ohio prevailing wages do not apply, but it can be a trigger to perform your own analysis to confirm that it is the type of project covered by Ohio prevailing wages.

4. Federal Prevailing Wages
If federal funding is involved such that federal prevailing wage requirements apply, those obligations will supersede and replace any Ohio prevailing wage requirements. Note that many funding sources from state and local governments sometimes originate from the federal government, and have federal prevailing wage requirements attached. However, the types of projects in which federal and Ohio prevailing wage are required frequently differ, so even if one set of requirements does not apply, the other may.

5. Exceptions May Apply
Finally, there are several exceptions to Ohio’s prevailing wage requirements found throughout the Ohio Revised Code. Any time the above steps lead to a conclusion that Ohio prevailing wages apply, make sure that these exceptions are examined in detail to ensure the right conclusion was made.