AGC files suit over prevailing-wage legislation

On January 23, 2019, AGC of Washington filed suit to overturn recently-enacted legislation (SB 5493) that dramatically changes how prevailing wages are set in the state. Before discussing the specifics of our suit, I want to point out that this filing in no way diminishes the scope of prevailing wages. AGC of Washington has always supported, and continues to support, prevailing-wage laws as important safeguards for workers.

The new law does two things: It says that prevailing wages for a trade will be set as the collective-bargaining agreement wages for that trade in those counties for which a CBA exists. L&I would no longer have an active role in setting prevailing wages in those instances. Plus, the law says that, in counties for which two CBAs exist for a trade, the higher one will prevail. We now realize that a CBA that covers only a few workers and a fraction of hours would override a CBA that represents the vast majority of workers and hours worked. 

This is no mere hypothetical; such a situation has already occurred. As you may know, this past summer, we 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 this would set the prevailing wage in the counties it covers per the new law, but it will not. The Operators reached agreement with a group of relatively small firms at a higher wage. The hours represented by those firms is only 12.5 percent of the total operator hours in the area, by our calculation. Nevertheless, L&I says 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.

This is truly an existential crisis for traditional multi-employer collective bargaining. It is now possible for CBAs representing negligible numbers of workers' hours to supersede, for prevailing wage purposes, CBAs negotiated by AGC.

We have concluded that a legislative solution to this is not feasible with the current make up of the Legislature. And for us to do nothing would mean that the “one-off” Operators' agreement would prevail and the door would be wide open for similar occurrences.

While there may be room for the use of CBAs in establishing prevailing wages in some situations, we believe that our only recourse is to overturn SB 5493 altogether, which would mean nothing more than we would return to L&I’s survey method of setting prevailing wages, and to have a new discussion of how CBAs could inform the prevailing wage-setting process. The crux of our legal argument is that the bill is unconstitutional, as it completely delegates the State’s power to set prevailing-wage rates to private parties in violation of the State Constitution, which says that it is the exclusive province of the Legislature (or state agencies) to enact regulations governing private parties. 

I have heard that some AGC members may be concerned that this filing, combined with our separate recent filing of an unfair labor-practice charge regarding the 520 bridge project and its community-workforce agreement, may send the message that AGC is seeming anti-union. That is unequivocally not the case. In both cases, we are concerned solely with important, specific policy matters. And in both cases, we are seeking to preserve collective bargaining as we know it. In the case of the 520 bridge filing, we want to ensure that wages and conditions of work are negotiated directly between Labor and employers -- not between Labor and the government. With this prevailing-wage filing, we are seeking to ensure that bona fide multi-employer collectively bargained agreements are not supplanted, for prevailing-wage purposes, by “one-off” agreements.

- David D'Hondt
  Executive Vice President
  AGC of Washington