I have handled more than one hundred prevailing wage cases, including dozens where the contractor allegedly violated the New Jersey Prevailing Wage Act (PWA).  Many times, the employer will assert that it was unaware that the law was applicable and thus did not pay the much higher prevailing wage rates, resulting in major liability.  The “prevailing wage” rates are tied to union wage rates for the specific county at issue.  Ordinarily, these rates are set forth in the bid specifications prepared by the developer/owner, i.e. the public entity.

There has been a continuing vagueness, however, over whether the bid submitted by a contractor must be based upon and include the proper prevailing wage rates.  Currently, a contractor does not have to submit a bid based upon labor costs that include payment of prevailing wage rates, although (obviously) if the contractor gets awarded a bid, it must pay those rates, whether it included them or not in its original calculations when preparing and submitting the bid to perform that particular part of the job.  This creates a problem in the bidding/awarding process.

The basic rule is that there are some deficiencies in a bid that mandate its automatic rejection.  There are others that may be cured or waived.  As the Prevailing Wage Act does not require that the bid amount be correlated with prevailing wage rates, the bidder and the owner/developer do not have a clear idea what to do when the bid is not based on PW rates.  The confusion arises when the bid proposal mentions or specifies payment of PW, but does not outline the manner in which those components must be set forth in the bid.  A bidder may use its best business judgment to submit a low, possibly winning, bid, but such a bid is “unbalanced” in the sense it does not accurately account for the unbalanced, i.e. prevailing wages, that must be paid on the job.  There has been no clear legal mandate about rejection of a bid if it does not account for payment of PW wages, although they must be paid.

The fix is that the Legislature has passed P.L. 2021, c. 301.  This law now requires the lowest bidder (by at least 10% lower than the next bid) to certify in a sworn certification on a NJDOL form that the PW rates mandated by the law will be paid.  If the successful bidder fails to provide the certification, then the next lowest and responsible bidder will be awarded the contract.  The law also mandates another attestation by the bidder that the men working on the project will be paid PW rates.  If they are not, then the public body or the General Contractor has the right to terminate that particular contract.

The Takeaway

I think this is a good development.  I am always dealing with clients who tell me the GC never told them it was a PW job (and I do believe them, most of the time).  The onus, however, is always on the contractor, the employer, to ascertain for itself that a certain job is/is not a PW job.  On the bidding issue, many contractors are tempted to submit as low a bid as possible, just to get the work, without perhaps considering the impact of applicability of the prevailing wage law.

Now, they will have to…