Now that some federal stimulus-funded construction projects are underway, municipalities in Connecticut have been reminded by the U.S. Department of Labor (DOL) that they must comply with wage laws that apply to all American Recovery and Reinvestment Act projects--requiring them to pay laborers a specified minimum rate of pay.

Under the 1934 Davis-Bacon Act, local prevailing wages and benefits must be paid to all laborers and mechanics working on federally funded stimulus projects of $2,000 or more. The U.S. DOL will be looking to ensure full compliance with both federal and state laws. If violations are found, they will seek compliance with the law, back wages to employees and if appropriate, exclusion of contractors from future federal contracts.

Some municipal officials are very concerned that the prevailing wage mandate could result in higher project costs than could be secured through a normal bidding process—draining stimulus funds more quickly and reducing their effectiveness.

Similarly, the state legislature this year extended the standard wage to certain private-sector contractors doing business with the state (PA 09-183). Under the act, certain maintenance workers must receive the same prevailing wage rates and benefits as employees working under the union agreement covering the same work.

These measures, like others, have unintended consequences: making government projects more expensive and giving private-sector businesses a significant reason to avoid doing business with the state.

For more information, contact CBIA's Kia Murrell at 860-244-1900 or kia.murrell@cbia.com.