Open Shop Contractors Face Bidding Challenges For Prevailing Wage Violations

Kegler Brown Business Tax Alert

Two (2) recent bidding decisions arising from Franklin County’s new Huntington ballpark have ruled that the County can exclude low bidders who arguably do not satisfy the “Quality Contracting” standards, which say that a contractor cannot have more than three (3) prevailing wage violations in any two-year (2-year) period over the last ten (10) years. TP Mechanical v. Franklin County, Case No. 08CVH-01-304 (January 14, 2008); ABC v. Franklin County, Case No. 08CVH-03-3328 (March 31, 2008). Traditionally, prevailing wage violations have been initiated by union representatives against open shop contractors who frequently settled the violations to avoid the cost of disputing the violations.

These cases have broadly defined “violation” as any prevailing wage complaint, no matter how small, if the complaint is not thrown out on the merits. A settlement, without an admission of liability, does not help the contractor.

Open shop contractors are complaining that this interpretation is effectively sidelining them from public work in favor of union contractors, unnecessarily increasing construction costs funded by taxpayers.

The Ohio School Facilities Commission (“OSFC”) has recently voted to allow such “Quality Contracting” standards to be adopted by school districts, and the City of Columbus schools has adopted a standard which disqualifies contractors with more than three (3) prevailing wage violations over a ten-year (10-year) period, a standard even more strict than Franklin County’s, even though prevailing wages are generally not required on OSFC work.

This trend will cause contractors to more aggressively challenge prevailing wage complaints, regardless of their size, and to look at alternative bidding strategies to deal with this requirement.