Senate Bill S1815

                                BILL NUMBER:S1815

TITLE OF BILL:
An act
to amend the labor law, in relation to reciprocity of debarments imposed
under the federal Davis-Bacon Act

PURPOSE:
The purpose of the bill is to close a loophole in the existing law
relating to the debarment of contractors. Under the current law,
contractors who have been debarred from federal job sites for having
violated the wage-and-hour provisions of the Davis-Bacon Act .are
under no such disability in New York, Federally debarred contractors
are on an equal footing with honest, law-abiding contractors in that
they are eligible and authorized to bid on and be awarded
construction contracts sponsored by the State of New York and its
political subdivisions. This bill would remedy that inequity by
granting reciprocity to debarments imposed by the federal government
on contractors who have violated the Davis-Bacon Act.

SUMMARY OF PROVISIONS:
The bill provides that any contractor who has been debarred from
federal job sites for having disregarded obligations to employees
under the Davis-Bacon Act shall also be debarred under the Labor Law
from bidding on or being awarded similar contracts on public work job
sites sponsored by the State or any of its political subdivisions.
              

JUSTIFICATION:
Under Article 8 of the Labor Law, contractors or subcontractors who
engage in a public work project sponsored by the State of New York or
any of its political subdivisions is required to pay their laborers,
workers and material men not less than the prevailing rate of wage.
This law has a long and venerable history. New York passed its
wages-and-hours law in 1894 in response to abuses that emerged during
the industrial revolution, when entire families were forced to work
long hours under dangerous working conditions for subsistence wages.
The rationale behind the law was that American labor markets should
provide skilled workers with decent wages so that workers would be
able to support their families and their children would be able to
pursue an education.

In recent years, New York's prevailing wage law has acquired
additional stature as a bulwark against wages-and-hours fraud. Recent
studies indicate that fraud in the construction industry in New York
State has reached epidemic proportions. Dishonest contractors, in an
effort to cut corners and save on labor costs, have engaged in a
number of schemes to avoid paying
workers the wage to which they are statutorily entitled. They include
the kickback of wages, dual payrolls and cash-off-the-books schemes.

The practice of paying wages in the form of cash-off-the-books has
come to be known as "the underground economy," and it has deleterious
and far-reaching consequences for the individual workers, reputable
contractors and society as a whole. Analysts report that one of the
most invidious effects is that it has a profoundly destabilizing
effect on labor markets by destroying the level playing field. Honest


employers, who are incurring significant additional operating
expenses in the form of unemployment insurance tax, administrative
costs for the collection of with holding taxes and the high premiums
associated with workers compensation insurance are unable to compete
for work with their dishonest counterparts.

Mindful of the crisis in the construction industry, in 2008 the
legislature passed, and the governor signed into law, a far-reaching
amendment that significantly expanded the criminal penalties for
willful violations of the prevailing wage law. (Chapters 7 and 8, L.
2008). But the first line of defense in protecting both workers and
honest employers are the debarment provisions set forth in Labor Law

§ 220-b. Under the existing law, a contractor may be debarred from
participation in public work projects if the Bureau of Public Works
finds that the contractor has knowingly committed two violations of
the prevailing wage law within a six-year period, or one violation
relating to the falsification of payroll records or the kickback of
wages or supplements. Debarments are also imposed when a person or
corporation, or any officer or shareholder who owns or controls at
least ten percent of the outstanding stock of such corporation has
been convicted of any of an enumerated list of felonies for conduct
relating to obtaining, performing or attempting to perform a public
work contract with the state, any municipal corporation, public
benefit corporation or public body (q.v., Labor Law §220-b 3b(2) (ii)).

Its federal counterpart, the Davis-Bacon Act, imposes a similar
penalty on contractors who are found to have disregarded their
obligations to employees under federal wage-and-hour laws. At the
present time, however, New York Labor Law fails to recognize
debarments imposed by the united States Department of Labor under the
Davis-Bacon Act. Hence, contractors who have been debarred by the
federal government for wage-and-hour violations are permitted to bid
on and be awarded public work contracts or subcontracts offered
through the State of New York and its political subdivisions.

Working at a public work job site is a privilege, not a right. New
Yorkers are entitled to expect the highest standard of integrity from
contractors who bid on these projects. It is inequitable to allow
previously debarred contractors - contractors who have a proven track
record of dishonesty to compete against honest contractors in the
bidding process. By strengthening the debarment provisions, this
amendment should help to ensure that honest employers and their
workers will have an equal opportunity to compete at public work job
sites.

LEGISLATIVE HISTORY:
2010 - Died in Labor Committee.

FISCAL IMPACT ON THE STATE:
None.

EFFECTIVE DATE:
This act shall take effect immediately.