Bath Volunteer Fire Department not a public agency forthe purpose of contractor's paying prevailing wages pursuant to Labor Law §220*
M.G.M. Insulation, Inc. v Gardner, 2013 NY Slip Op 01017, Court ofAppeals
The Bath Volunteer Fire Department [BVFD], a not-for-profitfire corporation under Not-for-Profit Corporation Law §1402, historicallyoperated from a building owned by the Village of Bath.
After BVFD determined that the facility was no longer adequate for its needsand the Village declined to build it a new firehouse, BVFD commissioned afeasibility study and obtained its own financing for the construction of a newfacility. Ultimately BVFD acquired land and in 2006 employed R-J Taylor GeneralContractors, Inc. (Taylor) as the general contractor to build the facility.Taylor subsequently hired a number of subcontractors to construct the variousportions of the firehouse.
Following an investigation, the Department of Labor (DOL)issued an opinion letter, concluding that the firehouse project was a publicwork subject to the prevailing wage law and ultimately an administrativehearing was held on the question of the applicability of the prevailing wagelaw to the firehouse project.**
A DOL Hearing Officer subsequently determined that the project wassubject to the prevailing wage law, concluding that the firehouse projectsatisfied both prongs of the so-called Erie County testfor prevailing wage law applicability, (see Matter of Erie County Indus. Dev.Agency v Roberts, 94 AD2d 532, affd 63 NY2d 810), holding that volunteer firecorporations such as BVFD are the "functional equivalent[s]" ofmunicipal corporations and are therefore "covered entities" underLabor Law §220.
In the alternative, the Hearing Officer said that even if avolunteer fire corporation did not generally satisfy the public entity test,the protection services agreement between BVFD and the Village of Bathsatisfied the first prong of the test and, because the Village authorized andsupported the firehouse project, and the object of the project entailedprovision of fire protection services for the community, the project satisfiedthe "public works" requirement.
The Court of Appeals disagreed with the Hearing Officer’sdetermination on both theories, holding that BVDFwas not a public agency as contemplated by the statute nor was any other publicentity a party to the 2006 contract. Accordingly, said the court, the prevailingwage law did not apply with respect to this project.
Had the Legislature intended to include volunteer firecorporations under the statute, said the court, it could easily have done so, explaining that in 2007, the Legislature expanded the statute's coverage to include contractsinvolving other types of entities [see Labor Law § 220(2)], but only when it can be shown they wereacting on behalf of the public entity, citing New York Charter School Association v Smith, 15 NY3d 403, at 410.
** Once the subcontractors learned of the DOL'sdetermination, work on the project halted. In December 2006, BVFD agreed toindemnify Taylor and its subcontractors against any liability resulting fromtheir failure to pay the prevailing wages, and construction resumed and theproject was completed.
The decision is posted on the Internet at: http://www.courts.state.ny.us/reporter/3dseries/2013/2013_01017.htm