General Contractors are Liable for Underpayments by Subcontractors on Prevailing Wage Projects
By James E. Murphy
For decades, it has been the law in New York that when a subcontractor on a public works project underpays its workers, the general contractor on that project has to pay for any underpayments.
However, while this has been the clear law of the State, no appellate court had clearly addressed that specific issue, causing some confusion between the state courts and a Federal District Court in New York. In a 2014 decision in Barragon-Aquino v. East Port Excavation & Utilities, Inc., E.D.N.Y. Index Number 13-cv-343, the District Court held that a general contractor could not be sued by a subcontractor’s workers for prevailing wage violations, because the general contractor was not those workers’ employer. This holding – which goes against decades of law within the New York court system – was used by numerous general contractors to try to avoid liability for their subcontractors’ underpayments.
Recently, the First Department Appellate Division rejected Barragon-Aquino, and clarified that general contractors can be held liable by their subcontractors’ employees for prevailing wage underpayments. In Wroble v. Shaw Environmental & Infrastructure Engineering of New York, (http://nycourts.gov/reporter/3dseries/2018/2018_08061.htm), the First Department specifically recognized that “the courts of this state have consistently held that, in public works contracts, a subcontractor's employees have both an administrative remedy under the statute as well as a third-party right to make a breach of contract claim for underpayment against the general contractor.” While this has been the law in New York for decades, the First Department’s clarification that workers on public works projects can sue general contractors regardless of who their employer is will serve to protect the rights of workers to receive prevailing wages. This is especially important in the construction industry, where subcontractors often do not have the resources to pay back prevailing wages which they had denied to their workers.
If you think you have been underpaid prevailing wages on a construction project, contact the attorneys at Virginia & Ambinder, LLP for a free consultation.