As a result of an appeal filed in Zurz v. 770 West Broad AGA LLC, 2011-Ohio-832, the Ohio Supreme Court may soon have the opportunity to determine whether Ohio’s Prevailing Wage Law is an unconstitutional delegation of the General Assembly’s legislative authority.

The case dates back to 2008, when the Department of Administrative Services leased an office building from the company 770 West Broad for use by the Department of Rehabilitation and Correction (DRC). The lease required 770 West Broad to make improvements to the building with its own money before the Department would occupy it. No public funds were used in making these improvements, and prevailing wage was not paid on the project. The Department of Commerce then sued 770 West Broad for failing to pay the prevailing wage.

The trial court, relying exclusively on the Supreme Court’s decision in Northwestern Ohio Bldg & Constr. Trades Council v. Ottawa County Improvement Corp., 2009-Ohio-2957, found that prevailing wage did not apply because no public funds were spent on the project. The 10th District Court of Appeals reversed the trial court and found that prevailing wage did apply for two reasons. First, the trial court incorrectly concluded that Northwestern “broadly holds that a public improvement is not subject to prevailing wage unless public funds are spent on construction.” Second, the construction at issue was a “public improvement” as defined in the Prevailing Wage Law and prior Supreme Court precedent because the project was constructed “pursuant to a contract with a public authority (the lease) and the project was “constructed for a public authority” because the DRC “had a possessory interest in the renovated premises under the lease.” Neither the trial court nor the Court of Appeals addressed the constitutional argument.

In its appeal to the Supreme Court, 770 West Broad argues that the General Assembly is prohibited from delegating its legislative power to others. Despite this, 770 West Broad contends, the Prevailing Wage Law delegates to unions the authority to set the wage rates for public construction projects. The Supreme Court has yet to decide whether it will accept jurisdiction and hear the appeal. If it does, the Court will have the opportunity to strike down the Prevailing Wage Law, as the high courts in Arizona, Illinois, Wisconsin, and Oklahoma have done, on the basis that it represents an unlawful delegation of legislative power.