Update! Prevailing Wage Law Changes

We explained during EdCounsel’s School Law Seminars, the passing of HB 1729 took an already confusing statute and added even more uncertainty to it. Even more problematic is that HB 1729’s changes to the Prevailing Wage Law will take effect on August 28, and the Missouri Department of Labor & Industrial Relations (“the Department”) has yet to issue any guidance on how it will interpret and enforce these changes. In light of this, we presented an interpretation of the bill’s effects. However, after further review and working with other education advocates, we believe the Department will likely apply a different interpretation of HB 1729 than what we presented to you, and this update is meant to provide further information about how HB 1729 is likely to be interpreted and enforced going forward.

When will the Prevailing Wage Law apply?

  • The Prevailing Wage Law will apply to any construction project with an estimated cost of $75,000 or more.
  • If the project is not estimated to cost $75,000 or more, then the Prevailing Wage Law will not apply.
  • If the actual cost of the project exceeds the estimate, putting the cost at over $75,000, then the Prevailing Wage Law will only apply to the portion of the project that exceeded the $75,000 threshold.

 

How is the estimated project cost determined?

  • The estimated project cost must be determined by either:
    • An estimate provided by the design professional (i.e., architect or engineer); or,
    • The bids submitted for the project.
  • Projects cannot be divided in order for the cost to fall below the $75,000 threshold. All parts of the project must be included in the estimate – including materials, supplies, and labor.

 

What if the cost of the project exceeds $75,000?

  • The Prevailing Wage Law will apply, and either prevailing wage or “the public works contracting minimum wage” must be paid to all laborers working on the project.
    • Prevailing wage must be used first. It is calculated by the Department using the wage rate from 1000+ reportable hours for that particular occupation in that county.
    • The “public works contracting minimum wage” fills the gap.
      • It equals 120% of the average hourly wage in the county.
      • It is calculated by the Missouri Economic Research and Information Center.
      • Is used if there are not at least 1000 reportable hours for that occupation in that county.

 

Action Items:

  • Include Prevailing Wage Law language in the bid documents.
  • Ensure all contracts reflect the requirement to follow the Prevailing Wage Law.
  • Ensure that the contract shifts the burden of compliance burden to the contractor.