Dept. of Labor Has Priority Over Subcontractor’s Lien
Kegler Brown Construction Newsletter August 1, 2000
An Ohio case has determined who has priority to the project funds when a general contractor on a federally funded project fails to pay prevailing wages to its subcontractors. In that case, the U.S. Dept. of Labor assessed for unpaid wages under the Davis-Bacon Act and the subcontractors filed mechanic's liens against the project funds.
The Court of Appeals for Ashtabula County ruled that federal law in the form of the Davis-Bacon Act preempted Ohio's mechanic's lien statute. Conneaut v. Allegheny Sur. Co. (1998), 128 Ohio App. 3d 724. As a result, the Court permitted the Dept. of Labor to withhold the funds from the contractor in the first instance, meaning that there were no contract funds owing to the contractor and therefore no recovery available for the subcontractors on their mechanic's liens.
Hopefully, the subcontractors on this public project also asserted timely payment bond claims so that they might recover against the contractor's payment bond.