Prevailing Wage Task Force to Examine School Construction Projects

The General Assembly recently appointed a task force to study the applicability of the Maryland Prevailing Wage Law.  While the main focus of the task force is school construction projects, it will also look at Maryland prevailing wage laws compared to other states and the effects of prevailing wage laws on construction costs, community well-being, worker wages, income tax revenue, and state and local budgets.

The task force, appointed pursuant to HB 1098 (Ch. 402, Acts of 2013), has 13 members and is co-chaired by two members of the Maryland Senate, Senators Mac Middleton and Allan Kittleman, and two members of the Maryland House of Delegates, Delegates John Olszewski and Steve Schuh. Other members include representatives from the Public School Construction Program, the AFL-CIO, Washington DC Building and Construction Trades Council, Associated Builders and Contractors, the Maryland Association of Boards of Education, and the Maryland Association of Counties (MACo).  MACo’s representative is Diane George, Finance and Procurement Director, Frederick County.

During the first meeting, task force members received an overview of the prevailing wage unit of the Department of Labor, Licensing, and Regulation; and discussed data to be collected and examined on school construction projects across the state.  To ensure the data being examined is comparable, the task force has agreed to focus only on new school construction projects that have been completed over the past three years.  Specifics issues being examined include:

1) examine the current Prevailing Wage Law and how it applies to school construction projects, including:

(i)the current process as it relates to the Interagency Committee on School Construction procedures;

(ii)the determination of whether a project is bid as a prevailingwage or nonprevailing wage project;

(iii)how the current prevailing wage thresholds apply and affect bids for school construction projects; and

(iv)whether there are differences in the application of the Prevailing Wage Law based on project size and cost;

(2)analyze and examine school construction contracts bid as prevailing wage and nonprevailing wage contracts to determine the effect the following requirements may have on contract costs, including:

(i)overhead costs associated with complying with the Prevailing Wage Law;

(ii)other related contractor overhead costs that may apply;

(iii)fringe benefits provided to workers;

(iv)licensing requirements;

(v)reporting requirements; and

(vi)union requirements that may affect staffing levels;

(3)analyze and examine prevailing wage and nonprevailing wage construction projects through the duration of the project to determine if project quality varies by contract type, accounting for the following:

(i)local school system-driven modifications;

(ii)unforeseen condition modifications; and

(iii)defective workmanship.

The Task Force is required by law to report its findings and recommendations by December 31, 2013.

As introduced, HB 1098 would have lowered the State funding threshold for which prevailing wage would apply to a local public work project from 50 to 25%.As amended by the House, HB 1098 would have require prevailing wage rates to be paid for a local project receiving any amount of State funds. MACo opposed the bill in this posture stating that this “one size fits all” approach would significantly undermine a local government’s ability to fund and manage its capital budget. MACo then worked on amendments with the Senate Finance Committee to establish the task force and dropped its opposition to the bill.