The Ohio Supreme Court clarified and limited the scope of Ohio’s Prevailing Wage law by re-affirming its prior 1935 ruling that employees fabricating materials off-site are not entitled to be paid prevailing wages, and by ruling that a union cannot file claims on behalf of any employee that does not provide the union with his or her written consent. The decision was announced on June 17, 2009 in the case of Sheet Metal Workers’ International Assoc., Local Union 33 v. Gene’s Refrigeration, Heating & Air Conditioning, Inc., (Sup. Ct. Oh.), 2009-Ohio-2747.

The first issue in dispute dealt with a portion of R.C. 4115.05, which states that all workers on a public improvement project must be paid prevailing wages where the work performed was “upon any material to be used in or in connection with a public work….The union interpreted this language to mean that prevailing wages should be paid to any worker who performs work on material ultimately used on a public project regardless of where that work was physically performed. That interpretation had been approved by the Ninth District Court of Appeals, even though historically (since a 1935 Ohio Supreme Court decision) shop employees who manufacture materials off-site have not been entitled to be paid prevailing wages even when the materials are to be used on, or in connection with, a public improvement.

The Supreme Court reaffirmed its 1935 interpretation by recognizing that the legislature intended to limit the payment of prevailing wages to work physically being performed on the project site. To support this conclusion, the Court pointed to references throughout the prevailing wage statute such as “upon public works,” “upon any public improvement,” and “construction on any project.” The Court held that these phrases should be taken literally to restrict the statute’s application to work that is physically performed on-site. The Court also acknowledged the “unworkable consequences” of attempting to determine at which point materials made off-site have achieved a significant enough connection to the public project to trigger the prevailing wage requirement.

The second issue the Court addressed was whether a union could sue as an “interested party” on behalf of all employees whose employer had allegedly violated Ohio’s prevailing wage law, where only one of the employees had given the union written consent to sue on his behalf. The Court reasoned that to allow a union to bring a lawsuit on behalf of employees who did not give their consent would eliminate the employees’ right to choose their own legal counsel. Accordingly, the Court ruled that the union could bring suit only on behalf of those employees who gave the union their written consent.

The decision settles two prevailing wage issues which had attracted much attention and controversy. Next up is the Supreme Court's ruling in State ex rel. Associated Builders & Contractors of Central Ohio v. Franklin County Board of Commissioners, et al., (Ohio Sup. Ct. Case No. 2008-1478) argued earlier this month focusing on Franklin County’s rejection of a low bidder based on prevailing wage issues. A decision on that case is likely several months away. Also pending are possible administrative and legislative action on the Ohio Construction Reform Panel’s recommendations and the Governor’s prevailing wage “Guidelines” announced last Fall. Stay tuned!