The Legislature passed legislation that changed the way prevailing wages are set, saying that the prevailing wage will be the wage set by collective-bargaining agreements for those trades and in those counties with CBAs. When new prevailing wages, based on the new law, were announced in September, controversy ensued as dramatic increases in wages in some circumstances occurred.
Another element of the new bill has the potential to cause even more disruption in the industry. A line in the bill states that where two CBAs exist for the same trade in the same county, the higher one will be prevailed. This opens the door for CBAs that represent only a small fraction of the overall hours worked to be prevailed over CBAs, such as those negotiated by AGC, that represent the vast majority of the industry.
“We believe the intent of this wording is to address situations in which the geographic territory of a CBA covers only a portion of a county, with the rest of the county covered by a second CBA negotiated with the same trade but different local,” AGC Chief Lobbyist Jerry VanderWood recently explained to legislators at a Senate Labor and Commerce Committee hearing on issues raised by the new prevailing wage law. “It was felt that the line regarding two CBAs in the same county would have relatively rare application, and again would be a means to reconcile differences in a county that might have more than one Local from the same trade. Unfortunately, the application of this wording is much broader. Under the new law, it is now possible for a single company with a single worker to negotiate a CBA with a wage of any size… and that CBA will become the prevailing wage.”
VanderWood explained that the new law doesn’t describe the term “CBA” in any way. It simply says that if there are two of them in the same county, the one with the higher wage prevails. So even if there is one that represents only 0.1 percent of the hours worked, it would still prevail over the CBA that represents 99.9 percent of the hours.
“This is no mere hypothetical; such a situation has already occurred,” VanderWood said. “AGC recently reached agreement with Operating Engineers Local 302. The agreement involves the highest percentage wage increase ever, 17.7% over three years. One would assume that would set the prevailing wage in the counties it covers, but it may not. The Operators reached agreement with a group of relatively small firms at a higher wage. While that agreement involves several firms, the work hours represented by those firms is only 12.5 percent of the total operator hours in the area. Nevertheless, L&I has indicated that the wording of the law ties their hands, and this agreement that represents less than 13 percent of work will prevail when new rates are set in March 2019.”
AGC is currently working on legislative solutions to this issue. For more information, contact Jerry VanderWood, 360.352.5000.