Possibly the last hurdle to effectuating New York City’s long-stalled prevailing wage law has been surmounted.  On August 8, 2014, a New York court effectively dismissed a challenge to the law’s validity – paving the way for its immediate implementation.

By way of background, the NYC Council passed a bill in March 2012 (the Bill) requiring that a prevailing wage, rather than the New York state minimum wage (currently $8 per hour), be paid to all building service workers, including janitors and security guards.  “Prevailing wage,” as defined in the Bill, is “the rate of wage and supplemental benefits paid in the locality to workers in the same trade or occupation,” and is to be calculated annually by the city comptroller.  With limited exception, the Bill covers three classes of employers: (1) recipients of $1 million or more in economic development aid from the city; (2) contractors and subcontractors of such entities; and (3) entities that enter into a lease with a “contracting agency.”  A copy of the Bill can be found here.

Although Mayor Michael Bloomberg vetoed the Bill in April 2012 – citing concerns that it would drive business from NYC – the City Council overrode his rebuttal.  Bloomberg then sued to block implementation, arguing that the Bill was preempted by state and federal law.  Ultimately, in August 2013, State Court Judge Geoffrey Wright sided with Bloomberg, ruling that the New York State Minimum Wage Law preempted the Bill.

Bloomberg’s victory, however, was short-lived.  Fulfilling a campaign promise, incoming Mayor Bill de Blasio – who disagreed with Bloomberg’s concerns – took legal action, in early June 2014, to overturn Judge Wright’s ruling.  With the support of the City Council and two senior labor union officials, de Blasio asked the court to vacate its earlier ruling.  On August 5, 2014, Judge Frank Nervo obliged, vacating Judge Wright’s ruling and effectively dismissing the legal challenge to the Bill.  Now, without any major courtroom obstacles, de Blasio and the City Council will be free to implement the Bill.

How Does This Affect My Company?

Entities that receive significant city aid and that employ building service workers, as well as companies that contract with such entities, should work with counsel now to prepare for imminent implementation of the Bill and enactment of a prevailing wage law in NYC.

More broadly, this is yet another example of the philosophical differences between the Bloomberg and de Blasio administrations.  NYC employers can and should expect continued efforts from Mayor de Blasio to increase wages and other protections for lower-wage workers in the coming years.